What is Bitcoin Cash?

Bitcoin Cash is a fork of Bitcoin, focusing on more efficient transactions between peers and businesses. It has consistently maintained a position in the top 50 cryptocurrencies by market cap. In Q2 of 2023, BCH saw a 104% increase in price, likely due to listing on EDX Markets. 

Key Takeaways

• Bitcoin Cash is a fork of the core Bitcoin blockchain. It fashions itself as the cash version of Bitcoin, with flexibility features that it claims to make it more suitable for routine financial transactions, as originally envisioned by Satoshi.

• Bitcoin Cash’s fork activity and the resulting conflict saw the original Bitcoin community split three ways, with the Bitcoin SV community also branching out from Bitcoin Cash. Bitcoin Cash has since maintained the position of the most successful fork of Bitcoin.

• Bitcoin Cash’s continuous positive price development in June 2023 is mainly thanks to its addition to the EDX market as one of the first four assets listed on the platform. Bitcoin, Ethereum, and Litecoin also made the list.

• EDX Markets plans to bring traditional financial practices to the crypto space, linking top players from both sides and connecting the relatively bigger mainstream finance with the crypto space.

The Bitcoin community grew strong as a united community during its earliest days. It saw impressive growth during this time, where the community explored the utility of the Bitcoin blockchain and the cryptocurrency it powers. 

Bitcoin’s growing community would soon split into different factions with slightly contrasting ideologies of how Bitcoin should function and how much the original Bitcoin conforms to these standards. Bitcoin’s era as a currency for a single united community would ultimately come to an end after seven years with the famous forking and creation of Bitcoin Cash.

History of Bitcoin Cash

The Bitcoin Cash faction split off because of Bitcoin’s limited capability as the main reason for splitting the network and set out to develop a more efficient network. From their perspective, Bitcoin’s seven transactions per second speed was simply not enough to support the growing adoption and, most importantly, not efficient enough for a technology created for routine financial activities. 

The original Bitcoin was also growing towards being a store of value and not an electronic form of digital cash, as proposed by Satoshi Nakamoto. To reflect the founding team’s goal of creating a more spendable electronic form of digital cash, it was named Bitcoin Cash.

Simply put, Bitcoin Cash is a more flexible version of Bitcoin. It is improved for a more efficient transaction between peers and designed to enable businesses to adopt a decentralized payment system. For context, the Bitcoin Cash community would split further a year later with the creation of Bitcoin SV by the faction led by Craig Wright in November 2018.

How Does Bitcoin Cash Work?

Bitcoin Cash retains many features of the original Bitcoin blockchain. It retains the Proof of Work consensus mechanism, with the majority of the initial miners on the network coming from the original Bitcoin network. The fork from the Bitcoin blockchain also saw Bitcoin holders receive a 1:1 airdrop of Bitcoin Cash on the new network. The total supply of Bitcoin Cash (BCH) is also pegged at 21 million. However, to achieve a faster and more flexible system, Bitcoin Cash does a number of things differently. These include;

An Expanded Block Size

At the time of the split, the Bitcoin blockchain had a block size of just 1MB; this allows it to contain just about 1,200 transactions per block and confirms just seven transactions per second. As an improvement to this, Bitcoin Cash introduced a larger block size, initially at 8MB and improving over time to a block size of 32MB at the time of writing. This block size supports over 25,000 transactions and enables the Bitcoin Cash blockchain to confirm about 100 transactions per second, 14 times faster than the Bitcoin blockchain. Bitcoin Cash also offers a cheaper means of P2P transaction with fees as low as a fraction of a cent.

Smart Contract

The advent of ordinal NFTs and BRC-20 tokens means that the original Bitcoin blockchain can function like other smart contract blockchains, even though these are very different from ordinary smart contracts. Bitcoin’s Layer 2 Lightning Network is also regarded as a smart contract application, as it uses its native smart-contract scripting language to enable off-chain transactions.

But the Bitcoin Cash network had developed smart contract features before this time, supporting smart contracts and side chains. Smart contracts on Bitcoin cash are developed with CashScript, a specially developed smart contract language for building applications on the Bitcoin Cash network.

SmartBCH, a Bitcoin Cash side chain, is compatible with Ethereum’s EVM and allows developers to create smart contract applications on the Bitcoin Cash ecosystem, although it is not directly interoperable with Ethereum as of time of writing. SmartBCH runs the Proof of Stake consensus mechanism, and validators on the network are elected by miners on the parent Bitcoin Cash network. It utilizes high throughput to ensure that transaction fees remain inexpensive even with a large userbase. 

Bitcoin vs. Bitcoin Cash

Despite exiting the Bitcoin community over six years ago, Bitcoin Cash, the network, and the community are still juxtaposed with the original Bitcoin. But these are two distinct assets. We look at the differences between Bitcoin and Bitcoin Cash.

The Rise of Bitcoin Cash

On the last day of June 2023, Bitcoin Cash hit a yearly high of $320, a little shy of a 200% increase from $110, its opening price on the first day of the same month. The Bitcoin Cash market cap has also blown past $6 billion during this time. Daily trading volume has also grown from an average of $52 million to over a billion dollars in the closing weeks of the month, an over 20X increase. The month of June has been an interesting one for the Bitcoin Cash community and investors.

On-chain metrics have also gone in a similar direction with relative growth in the number of holders and other statics. Bitcoin Cash holders’ exceeded 22 million as demand for the Bitcoin fork continued to rise during this time. On the network, the mining difficulty has also increased to over 390G, and the hashrate exceeded 3.1EH/s on June 30, 2023.

However, Litecoin, Bitcoin, and Bitcoin SV have also seen growth during this time. The main catalyst for the significant growth across these related asset classes has been a subject of speculation. While this is subject to further clarification, the most likely principal catalyst for this growth is the EDX Markets Launch.

EDX market is opening with four crypto assets listed on the platform; making this list are Bitcoin, Ethereum, Litecoin, and Bitcoin Cash. Getting listed on EDX markets is a positive development for Bitcoin Cash. First, it confirms it as a relevant crypto asset and likely to be a non-security, setting it apart from the ongoing debate on cryptocurrencies as securities, therefore reassuring native and mainstream investors. On the other hand, EDX Market is a good exposure for the asset, especially with the privilege of sharing the exposure from the hyped institution with only three other assets at this time. But what is EDX Markets, and why is it so relevant?

What is EDX Markets?

EDX Markets is a novel crypto trading platform backed by notable mainstream financial institutions, including Fidelity Digital Assets and Citadel Securities. EDX markets hope to introduce the crypto space to traditional finance (TradFi) with a focus on developing a trading platform compliant with regulatory specifications. By this, EDX markets claim to protect their users from the potential consequences of investing in securities and other asset classes that are not compliant with regulatory specifications.

Investors in the crypto space have suffered from cases of assets in their portfolios getting tangled up regulatory issues. A popular example is Ripple’s ongoing case with the US SEC. Recent development has seen exchanges like Kraken, Binance, and Coinbase fall into the crosshairs of these regulations while Ripple continues its case with the said organization. Kraken reportedly paid a fine of $30 million for its involvement in crypto staking. Papers served to Coinbase and Binance by the regulatory bodies note the trading of assets classified as securities as one of the major reasons for clamping down on these institutions.

Thanks to these regulatory complications, investors are often torn between taking their chances in the crypto space and staying away, as it could be hard to differentiate securities from non-securities. 

In a 2018 video, current SEC chief, Gary Gensler was quoted as saying:

“Over 70% of the crypto market is Bitcoin, Ether, Litecoin, Bitcoin Cash. Why did I name those four? They’re not securities”

These are also the four cryptocurrencies that are currently traded on EDX Markets.

With traditional popular institutions like Blackrock planning to dive into the crypto space with the launch of spot ETFs for Bitcoin and other crypto assets, a trustworthy crypto exchange is essential. EDX stands to benefit from this if it successfully develops a regulatory-complaint platform from which these ETFs can fill their spot. This has created the huge hype that EDX Markets (and also the first set of assets listed on the platform) enjoys.

EDX Markets will likely tread the listing path with extreme caution if they maintain the conformance they are currently known for. This could lead to a slower listing process and a limited number of assets on the platform. But this could be a lesser issue since the first four assets listed on the platform already control 67% of the total cryptocurrency market capitalization.

For Bitcoin Cash, it is uncertain if the price development will continue in the current trajectory, so always do your own research before committing to any asset.

Final Thoughts

Bitcoin Cash benefits from the emerging linkage between traditional finance and the crypto space with EDX Markets. Native crypto institutions (including some of the most reputable ones) have been very much intertwined with regulatory complications. EDX Markets’ goal is to create a platform for assets that are devoid of these issues and, by doing so, stay clear of the controversial regulatory implications while attracting the most viable investor class.

If it stays true to its claims, these mainstream investors will be given an avenue to dive into the crypto space without fear of investing in the wrong asset class and its implications. This could be a successful connection between the traditional finance and crypto space or just an inflow of resources from the larger TradFi sector to the relatively smaller crypto sector. Anyone of these will be positive for the crypto space. The surge in the value of Bitcoin Cash and the other listed assets (at the time of writing) is evidence of what this connection could offer to the crypto space. Having said this, it is also important that traders consider the volatility that this development could bring to the market at this early stage and plan their trade accordingly. Also, note that this article is only for educational purposes and should not be taken as financial advice.

An earlier version of this article incorrectly stated that Roger Ver was the founder of Bitcoin Cash. Instead, he lent his support to Bitcoin Cash after determining the utilty of bitcoin as a currency was damaged due to speculative interest.