What Is Bitcoin Cash? How Does It Work? A Comprehensive Overview

What is Bitcoin Cash (BCH)?

Bitcoin Cash (BCH) was created in 2017 as a result of a hard fork from Bitcoin. The goal was to increase the number of transactions in a single block, which would theoretically reduce fees and transaction times. Despite sharing several technical similarities with Bitcoin, such as using the same consensus mechanism and capping their supply at 21 million coins1, Bitcoin Cash and Bitcoin have philosophical differences.

Since its creation, Bitcoin Cash has undergone a fork and split into two separate cryptocurrencies, Bitcoin Cash ABC and Bitcoin Cash SV. In 2021, Bitcoin Cash ABC changed its name to eCash.

Despite trading at a fraction of Bitcoin’s price, BCH has yet to achieve widespread consumer acceptance as a form of payment.

Key Takeaways

  • Bitcoin Cash was created in 2017 as a result of a hard fork from Bitcoin to increase the number of transactions in a single block and reduce fees and transaction times.
  • Bitcoin Cash and Bitcoin share several technical similarities but have philosophical differences.
  • Bitcoin Cash underwent a fork and split into Bitcoin Cash ABC and Bitcoin Cash SV. Bitcoin Cash ABC later changed its name to eCash.
  • Despite trading at a fraction of Bitcoin’s price, Bitcoin Cash has yet to achieve widespread consumer acceptance as a form of payment.

Bitcoin Cash 101

Bitcoin Cash is a decentralized cryptocurrency that was created in 2017 as a result of a hard fork from the Bitcoin blockchain. A hard fork in cryptocurrency refers to a significant and irreversible divergence in the blockchain.

This split resulted in two separate blockchains, each with its own cryptocurrency. Bitcoin Cash was designed to address some of the scalability issues of Bitcoin and to be used as a peer-to-peer electronic cash system.

Bitcoin Cash is a payment system that aims to be cheap and fast. Transaction fees are generally less than $.012, and transaction confirmation times are significantly faster, generally within seconds3 compared with Bitcoin’s average ten minutes to an hour. This makes it a more practical option for everyday transactions, such as buying goods and services.

Bitcoin Cash is maintained by an active community of developers who see it as a necessary alternative to Bitcoin. They believe that Bitcoin has become more of an investment instrument than a payment system. Bitcoin Cash was designed to be a peer-to-peer payment system that removes regulatory authorities and other third parties from financial transactions.

To transact in BCH, users must use the Bitcoin Cash Node ecosystem. Bitcoin Cash Node can be thought of as the virtual machine that runs the network, powering transactions. It enables users to transact in Bitcoin Cash and provides a secure and decentralized platform for transactions.

Why was Bitcoin Cash created?

One of the main issues was the continually rising transaction fees. In 2017, a surge of user activity on the Bitcoin blockchain drove transaction fees above $50 – a situation that was considered untenable by a sector of the community.

To address this issue, Bitcoin Cash’s lead developer, Amaury Séchet, and other creators sought to increase the size of the blocks within the blockchain so that more transactions could be stored. In theory, more transactions per block would decrease transaction fees.

The hard fork occurred when developers could not agree on updates to the software governing the Bitcoin blockchain. As a result, one group continued to operate under the same rules, while the other branched off and generated a new blockchain with an updated software setup. In the process, a second digital currency, Bitcoin Cash, was generated.

The scalability issues of Bitcoin’s blockchain were caused by its inability to handle the increased number of transactions. The confirmation time and fees for a transaction on Bitcoin’s blockchain surged. This was mainly due to the 1MB block size limitation for Bitcoin. Transactions queued up, waiting for confirmation, because blocks could not handle the increase in size for transactions.

In summary, BCH was created to address the scalability issues of Bitcoin’s blockchain. Its creators wanted to increase the size of the blocks within the blockchain so that more transactions could be stored, resulting in lower transaction fees. The hard fork occurred when developers could not agree on updates to the software governing the Bitcoin blockchain. Since its creation, it has experienced a few forks of its own.

How Is Bitcoin Cash Different From Bitcoin?

Bitcoin Cash (BCH) was created to address the scalability issues of Bitcoin (BTC). One of the main differences between the two cryptocurrencies is the block size limit. While Bitcoin has a block size limit of 1 MB, Bitcoin Cash has a block size limit of up to 32 MB. This enables more transactions to be processed per block, resulting in faster and cheaper transactions.

AspectBitcoinBitcoin Cash
Year Launched20092017
Creator(s)Satoshi NakamotoAmaury Séchet
Block Size Limit1 MB32 MB
Consensus MechanismProof-of-WorkProof-of-Work
Notable FeaturesStore of ValueFaster Transactions
Sources: Bitcoincash.org


Another difference between Bitcoin and Bitcoin Cash is that Bitcoin Cash does not incorporate Segregated Witness (SegWit). SegWit was proposed to accommodate more transactions per block on Bitcoin by retaining only information or metadata relating to a transaction in a block. In contrast, all details about a transaction are stored in a block in Bitcoin Cash.

Throughout its history, Bitcoin Cash has continued to increase the size of the blocks on its blockchain. In 2018, its block size was increased from 8 MB to 32 MB4. These changes have allowed Bitcoin Cash to process more transactions per second than Bitcoin.

Overall, Bitcoin Cash was created to address the scalability issues of Bitcoin by increasing the block size limit and not incorporating SegWit. These changes have resulted in faster and cheaper transactions on the Bitcoin Cash network.

Is Bitcoin Cash Still Available?

Bitcoin Cash (BCH) is still available for trading, with over 19.5 million coins in circulation as of December 20235. It currently ranks No. 21 in crypto market capitalization, with a market cap of $4.96 billion. At the time of writing, Bitcoin Cash is trading for around $253.73. In comparison, Bitcoin SV has a market cap of slightly over $1 billion and is trading at $53.97. It has a similar number of coins in circulation and ranks 64th in the market.

Has Bitcoin Cash Been Successful?

Bitcoin Cash was created to become the “best money in the world” by providing a fast, reliable, low-fee network that remains permissionless and affordable. However, despite its larger block size and transaction capacity aimed at increasing its acceptance as a form of payment, Bitcoin Cash has yet to see widespread consumer adoption. The cryptocurrency has experienced volatility, with its price fluctuating significantly over the years. While Bitcoin Cash has a dedicated community of supporters, its success as a mainstream payment option remains uncertain. Nonetheless, the Bitcoin Cash community continues to work on improving the network and making it more accessible to users.

Why is Bitcoin Cash Cheaper than Bitcoin?

Bitcoin Cash (BCH) is currently trading at a lower price than Bitcoin (BTC) due to lower demand in the cryptocurrency market. However, BCH has cheaper transfer fees, making it more cost-effective for traders to make transactions in BCH than BTC. It’s important to note that the value of both tokens is based on people’s perception of their value. Despite being cheaper than BTC, BCH still has value and can be a viable investment option for traders looking to save on transaction fees.

Frequently Asked Questions

Where Can You Buy Bitcoin Cash?

Bitcoin Cash (BCH) can be purchased on most major cryptocurrency exchanges including OKX, Coinbase and Kraken. To buy BCH, one needs to set up a trading account and a wallet before making an initial deposit to cover the purchase. It is important to research the exchange thoroughly before making a purchase.

What are the potential risks associated with investing in Bitcoin Cash?

As with any investment, there are potential risks associated with investing in Bitcoin Cash. One of the main risks is the volatility of the cryptocurrency market. The price of Bitcoin Cash can fluctuate rapidly, which can lead to significant losses for investors. Additionally, there is also the risk of security breaches and hacks of cryptocurrency exchanges and wallets.

What are the steps to start mining Bitcoin Cash?

To start mining Bitcoin Cash, you will need to have specialized mining hardware and software. You will also need to join a mining pool, which is a group of miners who work together to mine blocks and share the rewards. Once you have all the necessary equipment and have joined a mining pool, you can start mining Bitcoin Cash by solving complex mathematical problems to validate transactions on the blockchain.

How can I track the price history of Bitcoin Cash?

Many websites and apps allow you to track the price history of Bitcoin Cash and other cryptocurrencies. Some popular options include CoinMarketCap, CoinGecko, and TradingView. These platforms provide real-time price updates, historical price charts, and other market data.

What is the process to obtain a Bitcoin Cash wallet address?

To obtain a Bitcoin Cash wallet address, you will need to download a BCH wallet from a reputable provider. Some popular options include Bitcoin.com, Coinbase, and Electrum. Once you have downloaded and installed the wallet, you can generate a new Bitcoin Cash address, which you can use to send and receive BCH transactions. It is important to keep your private keys secure to prevent unauthorized access to your funds.

Through storytelling and detailed research, Mariquita connects the brightest developer talent and most motivated community members to web3 changemakers. From contributing top-of-funnel educational content for web3 onboarding projects like Surge.io to collaborating with Hedera’s HBAR Foundation on content marketing strategy, Mariquita has worked with some of the top artists, founders and builders in the space.

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