What is Bitcoin Cash (BCH/BCC)? A Bitcoin Cash Analysis | Blockchain Central

Hey everybody and welcome to another episode
of BLOCKCHAIN CENTRAL! Today, let’s look into Bitcoin Cash. Have you ever wondered why there are two kinds
of Bitcoin on your exchange? That’s why, today I want to talk about Bitcoin
and Bitcoin Cash. Bitcoin is almost like a dinosaur of blockchain. It was the first fully functional distributed
ledger network and hit its all-time high in December 2017, with a valuation of nearly
20 000 USD. But, as it is the case with new technologies, Bitcoin
too has run up against its limits in terms of scalability and transaction rates. In the current Bitcoin Network, one block
is limited to 1MB in size and is created around every 10 minutes. This yields a maximum transaction ratio of
7 transactions per second. As the network gained more attention, more
and more transactions were issued into the network. With a limit of 7 transactions per second,
unvalidated transactions started to pile up. In May 2017, users reported a waiting time
of up to four days before their deal was finally settled in the network. If users wanted to speed up their transaction,
they had to pay a very high transaction fee, which makes Bitcoin very unattractive as a
payment method. Imagine you want to buy a cup of coffee which
costs you 3 dollars but, either the transaction fee is 15 dollars, or it’s four days before
you get your coffee! For comparison, Visa can handle up to 56,000
transactions per second in peak times. The scalability issue is well known in the
Bitcoin community and discussions aiming to resolve that issue have been going on since
2013. Since Bitcoin is an open and globally distributed
network, it is used by various groups who benefit from the blockchain in different ways. While each of these groups has a vested interest
in Bitcoin, none of them have sole decision-making power over the upgrade process. Therefore, a discussion evolved into an “ideological
battle over the future of bitcoin” from which, two opinions emerged. One was centered around the Bitcoin Core developer
team which prefers off-chain solutions like the Lightning Network. In their opinion, a change in the Bitcoin
Block Size, resulting in a hard fork, violates the “code-is-law” principle which—according
to them–is one of the main achievements of blockchain technology. One way to avoid a fork is to apply the Segregated
Witness technology. Segregated Witness, SegWit for short, essentially
updates the transaction data format, increasing the amount of transactions which fit into
one block. Furthermore, the implementation of SegWit
allows scaling innovations like the Lightning Network. In a Lightning Network, two parties open a
transaction channel, through which various transactions can be conducted. At the end, only the final balances of the
channel will be settled via the public ledger, saving time and computational validation power. But there’s of course another possible appraoch. The second group wanted to simply increase
the block size in order to fit more transactions into one block. This disagreement between the two parties
yielded a hard fork of the Bitcoin Blockchain. The entire process of a hard fork can also
be described as a user-activated hard fork (UAHF) meaning the new blockchain has the
same old tale but, at one point, starts to use a new consensus rule, creating a new network
with its own miners. And that’s exactly what happened in August
2017. One part of the Bitcoin community announced
the fork, creating Bitcoin Cash. Bitcoin Cash wants to fulfill the original
promise of Bitcoin as “Peer-to-Peer Electronic Cash” by providing low fees and a fast, reliable
confirmation network. All Bitcoin holders until block 478558 also
own the same amount of Bitcoin Cash. Bitcoin Cash itself uses an upgraded block
size which, at first, allowed up to 8-MB blocks and was further increased in May 2018 to 32
MB Blocks. This increased the possible amount of transactions
per second while decreasing transaction fees. The development team behind Bitcoin Cash also
announced that they will adjust and perform necessary changes to the network twice a year
to keep Bitcoin Cash up to date. Interestngly, Bitcoin Cash solely provides
an on-chain scalability solution and does not support SegWit or Lightning. However, the upgraded block size is in no
way close to the 56.000 transactions, which Visa can handle in peak times. Therefore, one can argue, that Bitcoin Cash
is faster than the original Bitcoin network, but still does not entirely solve the scalability
issue in the long run. Apart from the potential advantages of Bitcoin
Cash, the entire project came with harsh critique by the Bitcoin community. First of all, larger blocks require more computing
and memory power and thereby out-price smaller miners. This brings a potential threat of large mining
conglomerates centralizing the decision-making process for Bitcoin Cash. Secondly, everyone holding Bitcoin before
the split, received and equal amount of Bitcoin Cash tokens. Therefore, the hard fork raised concerns of
being a money-making scheme. Overall, after initial difficulties, investors
seemed to accept Bitcoin Cash. It is currently the fourth strongest crypto
token in terms of market capitalization. Time will tell whether Bitcoin Cash really
persuades the majority of the Bitcoin community to use it and whether it becomes the new global
payment currency. Now you know the difference between Bitcoin
and Bitcoin Cash and you can decide yourself which one might have a bigger potential. That’s it for this episode of Blockchain
central make sure to hit that like button if you liked this video and don’t forget
to subscribe to Blockchain Central to never miss a beat! Happy investing!

7 thoughts on “What is Bitcoin Cash (BCH/BCC)? A Bitcoin Cash Analysis | Blockchain Central”

  1. BCH will support LN, if it ever comes even remotely close to working.

    BCH does solve scalability issues in the short, mid and long run, exactly as Bitcoin has been since 2008.

    Slow and steady blocksize increases do not bring any kind of centralization.

    Great summary regardless. Thanks.

  2. I have to say, very nicely surprised by the quality of the video. It is informative, yet not very long and professionally prepared. I hope that more people interested in this technology will manage to find your channel.

  3. This video has been published over a year ago and I find it today? I literally searched for any Bitcoin Cash video I could find over a long period of time. This is crazy.

  4. BTC is less so a dinosaur, and more so a genetically engineered super-being that's chained up and locked in a cage. BCH is just that same super-being without the limitations. The blocksize limit was always meant to be increased as usage increased. It was only implemented in the first place to prevent someone from poinsoning the network in its infancy with a discouragingly large block, back when it was trivial and effectively free to mine blocks on the bitcoin network.

    Also, small blocks have been a bigger centralization force than large blocks would have been for a long, long time. Small blocks disproportionately hurt smaller miners, since smaller miners have to join pools. Pools make regular payouts to the individual miners, and those payouts cost transaction fees. The less you make, the higher a percentage of your earnings go to those fees. That creates a higher barrier to entry to the mining industry, giving incumbent established miners and advantage, and also creates pressure for miners to merge so that a smaller percentage of their profits get sucked away by fees. So not only do small blocks have the drawbacks of leading to higher fees and slower confirmation times, they actually make the problem people say they solve MUCH WORSE.

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