When Bitcoin first came on the scene in 2008, it proclaimed itself to be a “peer-to-peer electronic cash system.” After its early years of relative obscurity, the original cryptocurrency burst onto the world stage in a big way in 2017.
With a price increase of nearly 20x, Bitcoin captured the conversation of investors, speculators and commentators worldwide. At the same time, a (sometimes) heated discussion about how to improve its scalability and usability for “peer-to-peer” payments was taking place among developers and long-time members of the Bitcoin community.
One result of this debate was the creation of Bitcoin Cash, which has, since 2017, continued to maintain its position among the top-ranked cryptocurrencies by market capitalization.
As mentioned already, Bitcoin Cash was born out of the discussion around the scalability of the Bitcoin network – and in particular its ability to handle transactions for use in day-to-day business. With a block size set at 1MB, transaction throughput was limited.
In early 2017, the Bitcoin developer community was divided about the implementation of a Bitcoin Improvement Proposal (BIP-91) to the Bitcoin network known as SegWit2x. In a nutshell, SegWit2x was designed to make transactions easier to verify on the blockchain by separating the signature data needed for each transaction and eventually increase the block sized from 1MB to 2MB.
This improvement was opposed by a certain number of miners and developers, most prominently Roger Ver and, on 1 August 2017, a hard fork was initiated which led to the split of the Bitcoin blockchain and the creation of Bitcoin Cash.
Following the hard fork, the Bitcoin Cash development community proceeded to implement technical changes that increased the block size to approximately 8 MB and then to 32 MB. With this upgrade, the throughput of the Bitcoin Cash blockchain increased dramatically.
The proponents of Bitcoin Cash strongly believe in the usage of the cryptocurrency for everyday transactions – micro-transactions and permissionless spending. With the implementation of an increased block size, this is now technically easier to realize.
The roadmap for Bitcoin Cash also envisions possibilities to eventually add more functionality to the Bitcoin Cash blockchain – for smart contracts, for example. Some attempts at this have already begun with at least two implementations having been announced – CashScript and Wormhole, based on the OmniLayer protocol.
If successful, these new functionalities would enable a new range of use cases by adding “if, then that” logic to the execution of transactions.
What does the future hold for Bitcoin Cash?
So far, adoption of Bitcoin Cash as a medium of exchange has followed the overall trend of cryptocurrency adoption in the payment industry – meaning it has been limited.
Some reports indicate a growing number of independent retailers accepting payments in Bitcoin Cash. It is also supported by major crypto payment providers such as BitPay, Coinify and GoCoin. In November 2019, Roger Ver announced the launch of a $200 million ecosystem fund for startups looking to build applications and solutions on top of Bitcoin Cash.
How much all of this this will affect the cryptocurrency’s price remains to be seen. After an initial price of around $300 at the time of the hard fork, Bitcoin Cash rose to an all-time high of over $4 000 in December 2017.
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