In the world of crypto assets, one of the updates that made a splash was the arrival of Bitcoin Cash (BCH). Bitcoin Cash (BCH) results from a hard fork, an update launched by the community for the original Bitcoin blockchain protocol or code.
The fork occurred on August 1, 2017, intended to increase the block size to 8MB. On November 16, 2018, BCH underwent another hard fork and split into two branches: Bitcoin SV (Satoshi’s Vision) and Bitcoin ABC.
With the block size increased to 8MB, BCH is trying to achieve its main goal: restore decentralization to crypto assets.
Now, to understand more about Bitcoin Cash, its advantages, disadvantages, and how to buy it on INDODAX, see the following review!
What is Bitcoin Cash and Who invented it?
Quoting bitcoincash.org, Bitcoin Cash is an electronic peer-to-peer (P2P) currency for the internet. It is fully decentralized, with no central bank involvement, and requires no trust in third parties to operate.
As mentioned earlier, the Bitcoin protocol underwent a hard fork that divided the blockchain into two, creating Bitcoin Cash. The community did this split so that no single individual could be identified as the creator of this new altcoin.
One of the figures instrumental in the BCH network is Amaury Séchet, the founder of Bitcoin ABC. Amaury has significantly developed the software required to run full nodes on the BCH network, ensuring its smooth operation.
The Main Reason Why Bitcoin Cash Was Created
Quoting gemini.com, transaction speed is critical to a crypto asset’s scalability, functionality, widespread adoption, and ultimate success. The original Bitcoin can process seven transactions per second, while Bitcoin Cash can process an average of 116.
In comparison, Visa processes 24,000 transactions per second. In the eyes of BCH supporters, a speed of seven transactions per second will not suffice in the long run.
The main reason behind the Bitcoin Cash hard fork was to increase the number of transactions that can occur every second, reflected in the increased block size of BCH.
Additionally, the developers took steps to reduce the total amount of data that needs to be verified in each transaction, further speeding up the process.
How Bitcoin Cash Works
From a technical perspective, Bitcoin Cash operates similarly to Bitcoin. Miners confirm and enter transactions into the blockchain using cryptography to solve equations. Afterward, they receive BCH tokens in exchange for their contributions.
Additionally, Bitcoin Cash and Bitcoin have an identical supply limit of 21,000,000 units. No more than 21,000,000 Bitcoin Cash or Bitcoin will circulate worldwide.
Not only that, Bitcoin Cash also uses a proof-of-work (PoW) consensus algorithm to validate transactions and reach agreements on the network.
Bitcoin Cash Roadmap and Upgrade 3 Protocol
To achieve its goals, the Bitcoin Cash development team is progressively improving the system technically. As a peer-to-peer payment tool, the crypto asset will reach its full potential through protocol optimizations and upgrades. Technical improvements can be categorized in the following three aspects:
- Increase Bitcoin Cash capacity from 100 transactions per second (TPS) to over 5,000,000 TPS.
- Improve the payment experience by ensuring payment speed and reliability. Transaction security should be guaranteed within three seconds.
- Encourage the development of Bitcoin Cash so that it can continue to grow.
On May 15, 2023, Bitcoin Cash implemented a protocol upgrade called Chiptokens CHIP or Bitcoin Cash Improvement Proposal (CHIP). Chiptokens CHIP enables the BCH network to implement on-chain UTXO-based smart contracts and decentralized applications (dApps) through the upgrade.
Jason Dreyzehner, a Bitcoin Cash developer, stated that with this upgrade, dApps on Bitcoin Cash can compete on par with Ethereum, with an efficiency advantage of more than 1,000 times in transactions and block validation.
Previously, in June 2021, Bitcoin Cash also introduced SmartBCH as a sidechain of the Bitcoin Cash network.
Is Bitcoin Cash Different from Bitcoin?
Quoting glints.com, here are some of the differences between Bitcoin Cash and Bitcoin, including:
1. Price
As a form of investment, price plays an important role in the valuation of digital currency or crypto assets as measured by the extent to which the currency is used in transactions.
Bitcoin remains the most desirable and frequently used crypto asset compared to Bitcoin Cash. This factor contributes to the lower price of Bitcoin Cash compared to Bitcoin.
In addition, the lower exchange rate also plays a role in determining the lower price of Bitcoin Cash. Under these conditions, Bitcoin Cash shows potential as a promising trading asset and can serve as protection in the event of a price drop in Bitcoin.
2. Block Size
As is known, the Bitcoin block size is limited to 1 MB. This constraint makes it difficult to use Bitcoin for larger volume transactions.
Bitcoin Cash comes as a solution to this problem. Unlike Bitcoin, Bitcoin Cash has a block size that reaches 8 MB, allowing for the completion of larger volume transactions.
With a larger block size, Bitcoin Cash can perform large transactions faster than Bitcoin.
3. Transaction Fees
With its larger size, Bitcoin Cash transaction fees are more economical than Bitcoin. Bitcoin Cash transaction fees are 0.0019 dollars for each transaction, while Bitcoin transaction fees reach the range of 0.39 dollars for each transaction.
4. Hash Rate
Hash Rate reflects the power in mining, equivalent to currency exchange in the digital ecosystem. Today, Bitcoin remains a giant in digital currencies, just as the dollar dominates globally.
That is why Bitcoin is more often used in transactions on the digital currency market than Bitcoin Cash. As for the relatively young Bitcoin Cash, it is still rarely used due to its lower value when compared to Bitcoin.
Why is Bitcoin Cash Cheaper than Bitcoin?
Quoting investopedia.com, as of early June 2023, Bitcoin Cash is trading at a fraction of the price of Bitcoin, but the volume is also much lower because the demand is not as great in the crypto market.
Bitcoin Cash has cheaper transfer fees, so transactions with BCH save traders more money than BTC. However, in both cases of these tokens, it is important to remember that the value of Bitcoin and Bitcoin Cash only exists because people believe they have value.
Pros and Cons of Bitcoin Cash
Quoting forbes.com, the following are some of the advantages and disadvantages of Bitcoin Cash that are important to know, including:
1. Pros
- Faster and cheaper transactions:
With transaction fees of less than a penny and the potential to process more than 100 transactions per second, Bitcoin Cash could become a viable payment platform. That said, Visa’s network still processes 2,000 transactions per second so Bitcoin Cash still has a ways to go.
- More scalable compared to Bitcoin:
The larger blocks on Bitcoin Cash allow for a more scalable blockchain, lowering user fees and making running easier.
- Decentralized money:
For those concerned about too much-centralized control in the financial system by banks and central governments, Bitcoin Cash offers a decentralized currency-like system that is not controlled by one specific entity.
- Accessibility:
Of the thousands of cryptocurrencies, Bitcoin Cash is one of the more popular and can be purchased through most major exchanges, in contrast to lesser-known competitors. The BCH/USD price is only around $370 per coin, making it more affordable than buying a single Bitcoin.
2. Cons
- Relatively low adoption rates:
“While most of the debate revolves around technical issues related to processing time and security, I think there is one factor that is often overlooked but is perhaps the most crucial element in emerging technologies: adoption,” said Russell Star, head of capital markets at DeFi Technologies. “The success of any type of network, currency, or technology depends on the number of users who adopt it.” With fewer Bitcoin Cash users than Bitcoin, it may be a challenge for Bitcoin Cash to grow as an accepted investment or as an accepted medium of exchange.
- Weaker security:
Bitcoin Cash processes transactions faster and at a lower cost than Bitcoin because it requires less mining power to verify new blocks. This makes the system less secure than Bitcoin.
- Brand issues:
After the fork, there was a battle to see which coin would become more popular. Bitcoin was the clear winner, making it difficult for Bitcoin Cash to differentiate itself, especially since both have similar names.
- Environmental impact:
Bitcoin Cash still uses the blockchain proof-of-work system, where miners must run computers to solve cryptographic equations to process transactions using significant energy. While Bitcoin Cash uses less electricity than Bitcoin, it still has a high environmental impact.
How to Buy Bitcoin Cash on INDODAX?
If you want to buy Bitcoin but still don’t know the steps, then you can follow the complete guide on how to buy Bitcoin Cash on INDODAX below:
1. Create An INDODAX Account
First, go to https://indodax.com/. Then, click “Register” and complete the form with accurate information. Afterward, verify your account via email and follow the KYC (Know Your Customer) process as directed.
2. Make A Deposit
After successfully creating an account, log in to your INDODAX account. Next, select the “Deposit/Withdraw Rupiah” option to deposit the rupiah into your account. After that, choose an available payment method, such as bank transfer, and follow the guidelines provided.
3. Find Bitcoin Cash (BCH) Asset
The next step after the rupiah funds have been deposited, go to the “Marketplace” menu and find a trading pair of Bitcoin cash (BCH to IDR)
4. Create A Buy Order
Next, select your preferred order type and fill in the amount of Bitcoin you wish to purchase and the price according to your preference. Then, confirm your asset purchase order by selecting the “Buy Bitcoin Cash” option in the trade section.
5. Keep Bitcoin
Once the Bitcoin purchase order is fulfilled, the Bitcoin will automatically be added to your account balance. For greater security, storing your Bitcoins in a secure crypto wallet is recommended.
Conclusion
In conclusion, Bitcoin Cash (BCH) is a hard fork of Bitcoin aimed at scaling transactions with larger block sizes.
The advantages of Bitcoin Cash include faster transactions and lower fees than Bitcoin, while its main disadvantages are relatively low adoption and weaker security.
As a disclaimer, this information does not constitute investment advice but only a general explanation of Bitcoin Cash.
It’s important to remember that investment decisions should be based on personal research and careful consideration of risk.
Well, now you understand what Bitcoin Cash is, the pros and cons, and how to buy it on INDODAX. You can also read other interesting articles only on INDODAX Academy.
Furthermore, plan to use personalized services to buy and sell crypto assets in large quantities, exceeding the order book processing capacity. You can visit the OTC Bitcoin page on INDODAX.
It is important to note that prices in OTC services will always follow market price movements because transactions are carried out on the spot market. Even if the purchase volume increases, it does not guarantee a price drop.
This service is focused on providing convenience during the transaction process for users. A dedicated team will guide you through the procedure to ensure security and maintain user privacy.
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