What is Bitcoin Cash? How Does Bitcoin Cash Works

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In August 2017 from a fork of bitcoins a cryptocurrency was created called Bitcoin cash. Bitcoin Cash increased the
size of blocks allowing more transactions to be processed and improving scalability.
Later in the year 2018 in November the cryptocurrency underwent another fork. This further splited bitcoins into
two:
1. Bitcoin Cash ABC
2. Bitcoin Cash SV (Satoshi Vision).
Bitcoin Cash is referred to as Bitcoin Cash because it uses the original Bitcoin Cash client. 
Let’s take a close look on the bitcoin cash:
Bitcoin was meant to be a peer-to-peer cryptocurrency as proposed by Bitcoin inventor Satoshi Nakamoto, that
was used for daily transactions. Over the years, Bitcoin became an investment vehicle instead of a currency, as it
gained mainstream traction and its price surged.
When the number of transactions increased rapidly, the blockchain witnessed scalability issues. The confirmation
time and fees for a transaction on bitcoin’s blockchain surged because of the 1MB block size limitation for bitcoin.
Resulting the transactions to get queued up, waiting for confirmation, because blocks could not handle the
increase in size for transactions.
By increasing the size of blocks to between 8 MB and 32 MB Bitcoin Cash proposes to remedy the situation,
thereby enabling the processing of more transactions per block. When the bitcoins were introduced for the first
time the average number of transactions per block on Bitcoin was between 1,000 and 1,500. In Sep. 2018 surged
to 25,000 per block, this was the number of transactions on Bitcoin Cash’s blockchain during a stress test.
Roger Ver, major proponent of Bitcoin Cash, often invoke Nakamoto’s original vision of a payment service as a
reason to increase the block size. According to them, the change in bitcoin’s block size will enable bitcoin’s use as a
medium for daily transactions and help it compete with multinational credit card processing organizations, such as
Visa, which charge high fees to process transactions across borders.
In another aspect the Bitcoin Cash also differs from bitcoin as it does not incorporate Segregated Witness (SegWit),
another solution proposed to accommodate more transactions per block. Relating to a transaction in a block
SegWit retains only information or the metadata. Typically, all details are stored in a block pertaining to a
transaction.
Apart from ideological and block size differences apart, there are several similarities between Bitcoin and Bitcoin
Cash. A major similarity of both is that they both use the Proof Of Work (PoW) consensus mechanism to mine new
coins. Secondly, they also share the services of Bitmain. Bitmain is the world’s biggest cryptocurrency miner. Along

with these similarities the supply of Bitcoin Cash is capped at 21 million, the same figure as Bitcoin. In terms of
algorithm also Bitcoin Cash started off using the same mining difficulty algorithm. This algorithm was known
technically as Emergency Difficulty Adjustment (EDA). This adjusts difficulty every 2016 blocks or roughly every two
weeks.
By alternating their mining activity between Bitcoin and Bitcoin Cash miners took advantage of this similarity.
While it was profitable for miners, the practice was detrimental to the increasing supply of Bitcoin Cash in the
markets. Hence, Bitcoin Cash has revised its EDA algorithm to make it easier for miners to generate the
cryptocurrency.
When we compare both bitcoins and bitcoin cash the we observe that apart from the differences in philosophy
and block size, Bitcoin Cash and Bitcoin are pretty identical in terms of how they work.
With the help of miners who verify transactions to earn rewards, they both use a peer-to-peer network of
computers or nodes, this made functional or use Proof of Work (PoW) consensus to mine new tokens. The supply
of these tokens is limited to 21 million.
After every 2016 blocks, the algorithm of Bitcoin Cash was used to raise the mining difficulty in the past. But,
recently, as miners were making a shift to BTC the process of mining has become easier because of the developers.
It also makes use of what developers call Segregated Witness solution or SegWit.
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