Bitcoin Cash

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Bitcoin Cash (BCH) is the crypto currency that appeared on August 1st, 2017 as a Bitcoin branch. The project was started to help a comrade despairing on the trials to get things to work himself. Bitcoin Cash is a payment module integrating seamlessly into online-shops using xt:Commerce.

The main difference from the “mother” crypto currency is a bigger block capacity (8 Mb instead of 1 Mb), which affects positively the speed of operations.

History[edit]

The capacity of one block in a Bitcoin blockchain doesn’t exceed 1 Mb. When the number of the network users became big and the number of the fulfilled operations increased rapidly, such capacity was already not enough for checking all transaction. As a solution two options were offered: increasing the block capacity or putting a part of information out of a blockchain by making a free space for new operations.

Idea forms[edit]

On July 20, 2017 Bitcoin Improvement Proposal (BIP) 91, aka Segregated Witness, activated.

Some members of the bitcoin community felt that adopting BIP 91 without increasing the block-size limit would simply delay confronting the bitcoin scalability problem and that it favored people who wanted to treat bitcoin as a digital investment rather than as a transactional currency.[1]

The plan to do a hardfork was first announced by Bitmain. The project was originally referred to as UAHF: A contingency plan against UASF (BIP148) by Bitmain on their corporate blog, which the ASIC bitcoin mining hardware manufacturer would launch if BIP 148 (a User Activated Soft Fork) succeeded. Subsequently, developers took interest in the project. The Bitcoin Cash name was originally proposed by Chinese mining pool ViaBTC.[2]

The last common block of Bitcoin and Bitcoin Cash became block 478558. Block 478559 was already different for each crypto currency. As a result, everyone who had got Bitcoins before block 478559, have become owners of Bitcoin Cash automatically as well.

Initially, Bitcoin Cash were traded at a price of 0.5 BTC. However, as of the end of October 2017, its price fell up to 0.08 BTC. At that, the market capitalization exceeds 6 billion US dollars.

Development[edit]

The first implementation of the Bitcoin Cash protocol called Bitcoin ABC was revealed by Amaury "Deadal Nix" Séchet at the Future of Bitcoin conference in Arnhem, Netherlands. The Bitcoin Cash hard fork was announced to take place on August 1, 2017.

Launch[edit]

Upon launch, Bitcoin Cash inherited the transaction history of the bitcoin currency on that date, but all later transactions were separate. Block 478558 was the last common block and thus the first Bitcoin Cash block was 478559. Bitcoin Cash cryptocurrency wallet started to reject BTC block and BTC transactions since 13:20 UTC, August 1, 2017 because it used a timer to initiate a fork. It implements a block size increase to 8 MB. One exchange started Bitcoin Cash futures trading at 0.5 BTC on July 23; the futures dropped to 0.1 BTC by July 30. Market cap appeared since 23:15 UTC, August 1, 2017. [3]

Move of hashpower and change to difficulty[edit]

On August 9, it was 30% more profitable to mine on the original chain. Due to the new Emergency Difficulty Adjustment (EDA) algorithm used by Bitcoin Cash, mining difficulty has fluctuated rapidly, and the most profitable chain to mine has thus switched repeatedly between Bitcoin Cash and incumbent bitcoin. As both chains use the same proof-of-work algorithm, miners can easily move their hashpower between the two. around 1,500 more blocks were mined on the Bitcoin Cash chain than on the original one attracted a significant proportion of total processing power.[4]

A fix for these difficulty/hashrate/profitability fluctuations was introduced on November 13, 2:06PM UTC. The EDA algorithm has been replaced with a new difficulty adjustment algorithm (DAA) that hopes to prevent extreme fluctuations in difficulty while still allowing Bitcoin Cash to adapt to hashrate changes faster than incumbent bitcoin.

Technical characteristics[edit]

Since the Bitcoin owners before August 1st, 2016 have automatically become Bitcoin Cash owners, to prevent double expenses, the Bitcoin Cash transactions use a new algorithm of signature hashing, which isn’t valid in the Bitcoin Legacy network. It prevents repeated transactions of Bitcoin Cash in the Bitcoin blockchain and vice versa.

Bitcoin authors state that unlike Bitcoin, Bitcoin Cash doesn’t have a unified team of developers: instead of this, there are several independent groups. Such decentralization creates an additional protection degree. In prospect, the developers consider the possibility to increase the capacity of blocks even more.

Key-Objectives[edit]

  1. easy to use and maintain
  2. zero need for coding skills on setup/use
  3. can be run on an ordinary web-space

Features and Advantages[edit]

Bitcoin Cash on the Rise! - Why is BCH Going Up?
  • no Bitcoin-daemon necessary
  • it works on common webspace
  • no additional requirements to xt:commerce
  • no dependency on a gateway/exchange built in
  • no need to trust a third party holding your wallet
  • simple installation
  • copy the files and one click in admin-panel
  • no editing nor automated changes in other files
  • payment-informtion on checkout
  • will show up after selection of payment-method
  • payment-information included in E-Mail
  • to customers
  • and operator
  • identifiable customer in total sum
  • customizable length of identification (defeatable, standard: 3)
  • customer-id -> last digits
  • customizable receiver
  • address for bitcoin in admin-panel
  • current exchange-course for your currency
  • update on customizable period (defeatable, recommended: 0.25-24h)
  • customizable currency, standard: EUR
  • data source Bitcoin Charts
  • course-calculation
  • average without highest and lowest value
  • no dependency on stats of a single marketplace
  • currency for the order remains untouched
  • no trouble with billing information for tax
  • translation
  • language files available: English and German

Market acceptance and naming[edit]

Cryptocurrency exchanges[edit]

Eventually Bitcoin Cash was broadly adopted by digital currency exchanges. Exchanges such as Bitfinex, CEX.IO, ShapeShift and many others use the Bitcoin Cash name and the BCH ticker symbol for the cryptocurrency. Temporarily, Bitstamp and Bitfinex used the name Bcash, but after being criticized, they switched the name back to Bitcoin Cash.

Huobi exchange[5] uses the name Bitcoin Cash and the BCC ticker symbol.

Cryptocurrency wallets[edit]

While the alphanumeric address style is the same as the incumbent bitcoin (BTC), that Bitcoin Cash (BCH/BCC) should not be sent to a bitcoin (BTC) address. Like the incumbent bitcoin, Bitcoin Cash addresses can be used more than once, but should not be reused if privacy is a concern. However there are plans to change the address format.[6]

Cryptocurrency wallets such as the Ledger hardware wallet, KeepKey hardware wallet, Electron Cash software wallet, Bitcoin.com software wallet and many others use the name Bitcoin Cash for the cryptocurrency, using either BCH or BCC ticker symbol for it.

Trezor hardware wallet uses both Bitcoin Cash and Bcash cryptocurrency names. Its architect Marek "Slush" Palatinus explained: "The reason we prefer to use 'Bcash' is to protect users from using the wrong wallet by accident."[2]

Supporters[edit]

Notable supporters of Bitcoin Cash (both the idea of increasing the block size and the split of the cryptocurrency) include investor Roger Ver.[1]

Tax implications[edit]

Americans wondering whether their acquisition of Bitcoin Cash is taxable as income, or not taxable as a division of property, have received no guidance from the Internal Revenue Service.

Attitude of community and perspectives[edit]

Initially, Coinbase, one of the largest crypto currency exchanges stated that they are not going to work with Bitcoin Cash, however their opinion was changed later, and they promised to start supporting Bitcoin Cash transactions before January 1st, 2018. The exchanges Kraken, Bitfinex and Poloniex also announced their support of the new crypto currency. At the same time BitMEX, Exodus и Bitstamp spoke against Bitcoint Cash.

In October 2017, Bitmain, the largest manufacturer of mining equipment in China, which supplies about two thirds of the entire hash power in the Bitcoin network, announced that they are going to accept only Bitcoin Cash when selling the newest ASIC-miners. The reason lies in the economy: the transaction fee of Bitcoin Cash is significantly lower than in other crypto currencies.

According to the analysts’ estimations, such decision may lead to the rate growth of the new currency.

External links[edit]

Sources[edit]

See also[edit]

References[edit]

  1. 1.0 1.1 Some Bitcoin Backers Are Defecting to Create a Rival Currency
  2. 2.0 2.1 Bitcoin Cash or Bcash: What's in a Name?
  3. Bitcoin Cash (BCH) price, charts, market cap, and other metrics - CoinMarketCap
  4. fork.lo
  5. Statement about Huobi’s attitude to BTC and Bitcoin Cash
  6. linuxfoundation.org


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