Bitcoin Cash — history and reasons for the appearance, future prospects of the bitcoin hard fork
05.04.2022 | mnalilovich
To begin with, let’s look at what preceded the appearance of Bitcoin Cash and what problems it was designed to solve.
Although bitcoin has been around for more than a decade, however, the problem of network scalability remains unresolved, and if a partial solution has already been developed and implemented, then in 2017, when the first wave of the cryptocurrency boom started, there was a problem of transactions. In some cases, users had to wait for confirmations for several days or set disproportionate commissions, which killed the meaning of using bitcoin. So that a small payment took place at least during the day, there could be a situation that you had to pay a commission more than the amount transferred.
This situation has developed due to the small size of the block — only 1 megabyte. And two solutions were proposed. The first thing supported by miners is the removal of the block size limit. This would increase the amount of commissions in each block, even if it would have to pay less for the transfer, but the community and developers saw this as a threat to decentralization — a large block requires more powerful equipment for mining, which would put small miners out of the game.
The second solution involved removing some of the information from the block into separate files, which would reduce the size of the transaction information included in the block. This decision was supported by the majority of developers and community members. Already in July 2017, 95% of miners supported this decision with an implementation date of August 1, 2017.
The Birth of Bitcoin Cash
Disagreeing with the majority who adopted SegWit2x, several developers, headed by former Facebook employee Amory Sechet, announced the preservation of the previous approach of recording information in distributed registry blocks, however, increasing their size by eight times. The hard fork took place on August 1, 2017, receiving the new name Bitcoin Cash. Thus, two branches of bitcoin appeared on block 478,560, both of which retained all the coins mined up to this point. Thus, all owners of the first cryptocurrency automatically began to possess Bitcoin Cash as well.
Although it was initially stated that half of bitcoin would be given for one coin of the new cryptocurrency, its price quickly dropped to one tenth, however, many holders still managed to make a profit by selling the “twins” of the first cryptocurrency, not believing in the prospect of a new project. And there were reasons for that. In just a year of its existence, Bitcoin Cash has experienced two updates and three splits, so it’s too early to talk about any stability of this cryptocurrency at the moment. If Bitcoin Cash looks not so bad for the purpose of calculations, then the investment prospects remain rather vague.