In the Bitcoin post I made a brief reference to the hard fork which started Bitcoin Cash, but figured it deserved its own separate post as well. I have lots of topics in mind for future posts, so please subscribe via email to make sure you get notified whenever one is published!
Bitcoin Cash started due to a disagreement in the Bitcoin community over how to make the blockchain more performative. On July 21, 2017 the developers of Bitcoin pushed through an update which would soon enable layer 2 solutions such as the Lightning Network to speed up transactions. But some of the community thought that instead the block size should be increased to find the desired speed improvement. They also perceived that those supporting the original layer 2 plans supported Bitcoin’s use as a long-term investment more so than a fluid means of economic exchange. Bitcoin was largely seen as the digital equivalent of gold, and normally you wouldn’t go about your daily activities spending gold. Instead, you’d spend cash, hence the name for the new offshoot of Bitcoin Cash.
On August 1, 2017, the fork took effect and anyone who owned Bitcoin at the time came into possession of an equivalent number of units of Bitcoin Cash. It started trading at around $240 while Bitcoin itself was around $2,700. On December 20, 2017 it reached a high of $4,355 but by August 23, 2018 fell back down to $519. At the time of this writing (May 1, 2023) it’s at about $116.
One thing that Bitcoin Cash did differently (other than block size) after the fork was modifying the difficulty adjustment algorithm controlling how hard the mining nodes would have to work to process blocks. They made the adjustments more sensitive and aimed to bring difficulty down to about 20% less than the original level. This ended up unbalancing the progress rate and before long Bitcoin Cash’s blockchain was thousands of blocks ahead of Bitcoin’s. They ended up scaling back their adjustments to the algorithm.
That’s not the only confusion Bitcoin Cash has created. Plenty of people have purchased it thinking that, because of the similar name, they were purchasing Bitcoin for a much lower price. But whether this happened by honest mistake or fraud, they later came to realize what they had was something different yet similarly named.
Bitcoin cash also experienced another split among its own community in the form of a hard fork creating Bitcoin SV, which targets even larger block sizes. But the original Bitcoin continues to lead on as the first cryptocurrency and the internet’s closest thing to digital gold.
There’s lots more to talk about in the cryptocurrency space. So subscribe via email if you want to keep reading more about cryptocurrencies and related topics.
I have several plans for this blog which even expand beyond these posts, but I need funding to make it all happen. You can make a small contribution by linking a wallet to this platform (Mirror) and using the collect button to compensate me for my work.
If you’d rather support me another way by setting the amount you’d like to contribute or in an alternative coin to ETH, I’d gladly accept donations of BAT, GRT, LINK, MATIC, SHIB, UNI, USDC, WBTC, AAVE, ENS, or WETH at the following wallet address.
0x0979109435E1c570E15A6c1bd939Cb2aBeB6eF28
