BITCOIN CASH, WHAT YOU NEED TO KNOW.
In 2009 a new era in technology began with the arrival of bitcoin as the first cryptocurrency. With its properties and functionalities many people called it to be the FUTURE OF FINANCIAL SYSTEMS. Some years later BITCOIN became as worthy and popular as expected but this was not only a good thing since its popularity led to many problems which gave rise to the creation of BITCOIN CASH. We may ask ourselves, how can the popularity that everyone desired for bitcoin and which led to its worthiness be such a problem? What are those problems caused by that popularity? This article will be a response to those questions.
What is BITCOIN CASH and how did it came about?
Bitcoin Cash is peer-to-peer electronic cash for the Internet. It is fully decentralized, with no central bank and requires no trusted third parties to operate. It was created on 1st august 2017 during a HARD FORK of bitcoin where features like; segwit, BIP 148, UAHF were put in place for a proper functioning of Bitcoin cash.
- Popularity of bitcoin and the problems resulting from it.
Months after months, years after years, bitcoin became more and more popular, and more people began to use it. The chart below shows the number of transaction per months by bitcoin over the past years since it was created;
As we can see over the recent years the number of transaction have explosively increase due to the popularity of bitcoin making the blocks to be saturated rapidly.
Bitcoin is design with a capacity of 1mb per block and can support only 4.4 transactions per second but with this way up in the number of transaction, this made the block to fill up more rapidly and resulting in more and more people having to wait for new blocks to be created so that their transaction will proceed and the only way for the transactions to go faster is to pay high fees to attract miners to prioritize your transaction.
Different ideas were proposed to solve this problem. The one which came out the most was to increase the block size from 1mb to 8mb but different ideas about it came. The table below shows the arguments for, and against block size increase as stated by the bitcoin community members who were for and against it ;
|ARGUMENTS FOR BLOCK SIZE INCREASE||ARGUMENTS AGAINST BLOCK SIZE INCREASE|
To solve this problem they finally proposed a FORK. More precisely a hard FORK, before continuing we first need to know what is a fork and the type of fork that exists.
A fork is when a part of the network is made to have a different property and view on the previous transactions than another part.
There exists 2 types; the soft and hard fork.
Soft fork is when the chain is updated to a new one which is backward compatible i.e. information from the previous chain can be treated on the new one.
Hard fork is when the chain is updated to a new one which is not backward compatible i.e. information from the previous chain cannot be treated on the new one.
Due to the digital signature from the sender which occupies a very large space in the block , space which is already limited due to the 1mb space of the block they thought there was a need to implement a segwit and other important features for the FORK to be successful.
- SEGWIT(Segregated Witness)
Digital signature is important in that it verifies whether the sender has the necessary amount of fund required for the transaction to be done it is found in the input data. The problem with the digital signature is that it takes too much space. The segwit function in such a way to deal this problem.
When the segwit is activated, the sender and receiver detail will go to the main block and the digital signature to a new block, the “Extended Block”.
The changes which are brought by the segwit and which makes it suitable for the fork are;
Increases number of transactions per block , individual transactions size reduces, No more long time to wait for transaction to be confirmed, transaction fee decreases, makes bitcoin more scalable.
The clause for segwit to be activated was that 95% of the miners should approve it. But miners didn’t like it because they saw that since the block size will increase it will make transaction fee to decrease, meanwhile users and others wanted segwit to be activated.
They came up with the idea of a UASF aka User Activated Soft Fork called BIP 148.
- BIP :
BIP 148. a soft fork that has been activated by the users. It encloses the UASF and the SEGWIT. It states that any blocks that are being created without segwit ingrained in it will be rejected by the full nodes in the bitcoin networks. This is to motivate the miners to put segwit activation in the blocks that they mine for it to be part of the system.
By doing so they hope that more and more miners will use the BIP148 and eventually the 95% barrier will be crossed.
Bitmain foresee that there might be many problems arising from the complementation of the BIP148 and they proposed the UAHF (user activated hard fork) in contingency to the UASF
- UAHF ;
The UAHF is a hard fork proposed by BITMAIN to increase the size of block and hence create a new form of bitcoin. “Because it is a contingency plan, the UAHF will be implemented by us only if the UASF fork happens and poses an imminent risk to the Bitcoin ecosystem,” declared the bitmain team. It doesn’t require a majority of harshpower to be enforced and since it is a hard fork it doesn’t have any backward compatible with the previous bitcoin chain. All nodes who accept these rule set changes will automatically follow this blockchain regardless of the support it gets. The UAHF was finally adopted for the FORK which would lead to the creation of bitcoin cash.
The bitcoin ABC (bitcoin adjustable blocksize cap) project was announced in the conference “FUTURE OF BITCOIN”, after this the project Bitcoin cash was also announced and on the 1st august 2017 the new born that everyone was waiting for came out, Bitcoin cash made its arrival into the world of cryptocurrency.
THE CHART ABOVE IS THE GRAPH OF THE MARKET CAP OF BITCOIN CASH THESE
How And Where Do We Get It?
The arrival of bitcoin cash was subject of many debates, many people were for the arrival of bitcoin cash while other were against it, and other didn’t just have any faith in the worthiness of bitcoin cash. This led to a separation in the bitcoin community.
This separation also plays a role in the availability of bitcoin cash in that, some wallets and exchanges don’t accept bitcoin cash. At its beginning only a few authorized bitcoin cash and it was quite difficult to manage. Bitcoin cash have been rapidly working its way out and now more and more wallets and exchanges are authorizing bitcoin cash.
The following are some wallets, exchanges and services that authorize bitcoin cash;
How does it function?
On the previous lines at the top of this article, we have already seen in a general view have its functions, so let’s just add a little to it and enumerate some points previously stated, for those who have not been attentive.
- Everyone who had bitcoin before bitcoin cash was launched (01 august 2017) automatically had the same amount of bitcoin cash. But after this date any transaction of bitcoin to another person will not yield any bitcoin cash
- Bitcoin cash functions under the principle of demand. The more people demand and use it, the more its value increases.
- Bitcoin cash also use cryptography so that users make secure payments and store money with complete anonymity.
- Also, it uses a UAHF which computes an increase in the size of the block from 1mb to 8mb.
What Are The Advantages of Bitcoin Cash over Bitcoin?
- Bitcoin cash have a block capacity of 8mb while bitcoin have a block capacity of 1mb
- With bitcoin cash transactions are faster than with bitcoin
- Transactions have low fees with bitcoin cash than bitcoin.
- Bitcoin cash allows more transaction per seconds than bitcoin.
- It offers a way to adjust the proof-of-work difficulty quicker than the normal 2016 block difficulty adjustment interval found in Bitcoin.
What makes it a secure tool?
Bitcoin cash is a secure tool due to many reasons but we will try to explain the most important ones. Bitcoin cash is coded using CRYPTOGRAPHY, a form of coding which makes transfer of data such that only the person to whom the information is sent can receive, and if alteration is made on its way to the recipient it will be noticed.
Bitcoin cash is design to prevent replay attack. Before continuing we need to know what a replay attack is. A replay attack is a type of hack where data is maliciously replayed. That is, a transaction done in the bitcoin cash block chain is replayed in the bitcoin blockchain. It is very common after a FORK.
To prevent replay attack Bitcoin cash uses a SIGHASH algorithm which makes the transaction invalid on the non-UAHF, as different sighash algorithm makes transaction invalid.
From what we see it is obvious that bitcoin cash is really planned to be the future of bitcoin and cryptocurrency as a whole. Then, the question we need to ask ourselves is with the evolution and the popularity that bitcoin gained will the value of bitcoin cash be ever greater than that of bitcoin? I leave to you the honor to answer this question with the knowledge you acquired.
See you then for a new vision on cryptocurrency.
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