Bitcoin Cash was launched on August 1st 2017 as a result of “hard fork” of Bitcoin which resulted in the introduction of a new blockchain and cryptocurrency. So why did we need the hard fork and what was missing in Bitcoin?
In the first couple of years, Bitcoin operations were rather fast because there were not so many transactions happening on the network. However, as Bitcoin became more and more popular the 1MB limit for the size of every block became an impediment. In 2017, there were incidents when people had to wait up to three days to verify their transactions. One way to speed up the process was through paying higher transaction fees, but that was defeating the whole purpose of the coin. For instance, if you wanted to pay for a $4 coffee you had to pay $16 in transaction fee - this was not viable going forward. So community suggested two possible resolutions: Bitcoin Unlimited and Segregated Witness (SegWit).
Bitcoin Unlimited proponents suggested to get rid of size limit completely. Miners were the biggest supporters of this solution because it meant that overall miner’s fee will go up for every block. The main concern with this approach was that over time bigger players will consolidate more power and the whole network could end up belonging to humongous mining corporations.
SegWit approach is based on the idea that not all of the information has to be on the Blockchain and we can store some of it in separate files. Bitcoin Cash is based on compromised protocol that increased the block size limit to 8MB and stores some of the information outside of the Blockchain. After the split, everyone who owned Bitcoin was awarded an equal amount of Bitcoin Cash and this has been recorded into the Bitcoin Cash forked blockchain. The reason of this is to maintain the current value of Bitcoin cash through the transition period of introducing Bitcoin Cash cryptocurrency.
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