Bitcoin Cash

Introduction to Bitcoin Cash

Bitcoin Cash emerged from one of cryptocurrency’s most contentious debates: how to scale Bitcoin for mass adoption. In August 2017, disagreements over Bitcoin’s future led to a hard fork, creating Bitcoin Cash with an increased block size limit designed to handle more transactions at lower fees.

The fork represented a fundamental philosophical split. Bitcoin Cash supporters believed Bitcoin should prioritize being “peer-to-peer electronic cash” as described in Satoshi’s whitepaper, while Bitcoin’s direction emphasized being a store of value with scaling happening on Layer 2 solutions like Lightning Network.

The Block Size Debate

Bitcoin’s Scaling Problem

The original issue:

• Bitcoin’s 1MB block limit
• ~7 transactions per second maximum
• Rising fees during congestion
• Long confirmation times

Two Scaling Philosophies

Small Block Approach (Bitcoin):

• Keep blocks small
• Scale via Layer 2 (Lightning)
• Prioritize decentralization
• Accept higher on-chain fees

Big Block Approach (Bitcoin Cash):

• Increase block size
• Scale on-chain
• Keep fees low
• Prioritize usability

How Bitcoin Cash Works

Technical Foundation

Shared Bitcoin heritage:

• Proof of Work consensus
• SHA-256 mining algorithm
• UTXO transaction model
• 21 million supply cap
• Halving schedule

Key Differences from Bitcoin

Bitcoin Cash modifications:

• 32MB block size (vs Bitcoin’s ~4MB with SegWit)
• Different difficulty adjustment algorithm
• No SegWit or Taproot
• CashAddr address format
• Additional opcodes enabled for smart contracts

Technical Specifications

Metric	Value
Block Size	32 MB
Block Time	~10 minutes
Consensus	Proof of Work (SHA-256)
Max Supply	21 million BCH
Current Supply	~19.5 million
Halving	Every 210,000 blocks

The Fork History

2017: Birth of BCH

Initial fork:

• August 1, 2017 fork
• 8MB initial block size
• Replay protection implemented
• Community divided

2018: The Hash War

BCH splits again:

• Bitcoin Cash vs Bitcoin SV
• Craig Wright’s Bitcoin SV fork
• Hash power battle
• BCH retained ticker

Post-Split Evolution

Continued development:

• Block size increased to 32MB
• Schnorr signatures added
• CashFusion privacy
• Smart contract improvements

Use Cases

Payments Focus

Primary design goal:

• Low-fee transactions
• Fast confirmations
• Merchant adoption
• Everyday purchases

Remittances

Cross-border transfers:

• Lower fees than traditional
• No intermediaries
• Global accessibility
• Immediate settlement

Micropayments

Small transactions:

• Viable with low fees
• Tipping and donations
• Content monetization
• Gaming transactions

Ecosystem and Adoption

Merchant Acceptance

Payment processors:

• BitPay support
• Coingate integration
• Various POS systems
• E-commerce plugins

Wallets

Software options:

• Bitcoin.com Wallet
• Electron Cash
• Blockchain.com
• Hardware wallet support

Development Tools

Builder resources:

• CashScript (smart contracts)
• Bitbox SDK
• Full node software
• Developer documentation

Smart Contract Capabilities

CashScript

Limited scripting:

• Bitcoin Script-based
• Covenant transactions
• Escrow capabilities
• Time-locked contracts

CashTokens

Token standard:

• Fungible tokens on BCH
• NFT support
• No additional fees
• Native protocol support

Competition and Positioning

vs. Bitcoin

Aspect	Bitcoin	Bitcoin Cash
Block Size	~4MB (SegWit)	32MB
Focus	Store of value	Payments
Scaling	Layer 2	On-chain
Market Cap	Much larger	Smaller

vs. Litecoin

Aspect	Bitcoin Cash	Litecoin
Algorithm	SHA-256	Scrypt
Block Time	10 min	2.5 min
Origin	Bitcoin fork	New chain
Features	Larger blocks	Faster blocks

vs. Payment Stablecoins

Advantages:

• No issuer risk
• Censorship resistant
• Decentralized
• Fixed supply

Disadvantages:

• Price volatility
• Smaller network effect
• Less merchant adoption

Challenges and Criticism

Centralization Concerns

Larger blocks criticism:

• Higher node requirements
• Fewer full nodes
• Mining centralization
• Bandwidth demands

Market Position

Competitive challenges:

• Bitcoin dominance
• Stablecoin competition
• Layer 2 progress
• New payment chains

Community Fragmentation

Historical issues:

• Multiple forks
• Developer disputes
• Brand confusion
• Reduced momentum

Development and Governance

Multiple Implementations

Node software:

• Bitcoin Cash Node (BCHN)
• Bitcoin Unlimited
• BCHD
• Flowee

Decentralized Development

No central authority:

• Multiple development teams
• Community-driven
• Consensus-based upgrades
• Open development

Recent Developments

CashTokens Launch

May 2023 upgrade:

• Native token support
• NFT capabilities
• Smart contract improvements
• Ecosystem expansion

Continued Adoption

Merchant growth:

• Payment processor expansion
• Regional adoption
• Developer activity
• Wallet improvements

Future Roadmap

Development priorities:

• Scaling: Further capacity improvements
• Tokens: CashTokens ecosystem growth
• Privacy: Enhanced transaction privacy
• Adoption: Merchant and user growth
• Infrastructure: Wallet and tooling improvements

Conclusion

Bitcoin Cash represents a coherent vision for cryptocurrency as peer-to-peer electronic cash, prioritizing low fees and on-chain scaling over Layer 2 solutions. The 32MB block size provides substantial transaction capacity for payment use cases.

The chain has proven resilient through multiple forks and continues active development with features like CashTokens expanding capabilities. However, it faces significant competition from both Bitcoin with Lightning Network and newer payment-focused cryptocurrencies.

For users seeking Bitcoin-like security with lower fees for payments and for those who philosophically align with on-chain scaling, Bitcoin Cash provides a functional alternative. Its long-term relevance depends on adoption growth and maintaining its position in an increasingly competitive payments landscape.