A Beginner’s Guide To Bitcoin Cash

Bitcoin is a peer to peer decentralized, digital currency system and a group of people called “miners” manage the entire system of bitcoin

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By Vishal Gupta, Chief Architect, and Co-founder Digital Assets and Blockchain Foundation of India (DABFI)


It all began with the creation of the Bitcoin in 2009 by a programmer or a group of programmers going by the name Satoshi Nakamoto. They created a radical new currency named “Bitcoin”, redefining the understanding and premise behind currency. A digital currency protected from vulnerabilities of human nature; Bitcoin offered an alternative to traditional fiat currencies. Independent from government backing or tie up with a valuable commodity, Bitcoin has grown into a movement that is said to be a defining moment in human history after the creation of the Internet.

Bitcoin is a peer to peer decentralized, digital currency system and a group of people called “miners” manage the entire system of bitcoin.


⦁ Mine for blocks

⦁ Add transactions to the blocks


Miners use their computing power to look for new blocks to be added to the blockchain. A miner gets a reward on the discovery of a new block, currently 12.5 bitcoins per block. When a miner or a group of miners discover and mine a new block, they also control the block. In order to fulfill a transaction, i.e. add transactions to the block, miners can charge a fee in order to “cut in line” and speed up the transaction.

A block in the chain is 1 MB in size and with this size, Bitcoin can handle only 4.4 transactions per second. Now with the fame and popularity of Bitcoin, transactions are being entered at a far higher rate than the blockchain can take and the only way a transaction can be prioritized is by paying the miner fees enough to do so. If one doesn’t pay the miner fees to expedite transactions, it would take 13 minutes for one’s transactions to get complete.

Enter Bitcoin cash, a few new lines of code and a verbal agreement, creating a newer, more nimble version of Bitcoin. Since its inception on August 1 2017, the infant cryptocurrency has more than doubled in value from $300 to $600 upwards.

Bitcoin Cash is essentially a clone of the existing Bitcoin blockchain with one important feature. Additional block size capacity. Bitcoin Cash got off to a slow start but sprang to life as cryptocurrency’s mining algorithm self-corrected to attract profit-seeking miners.


Bitcoin Cash has the following features

⦁ 8 MB blocksize

⦁ No “cut in line” feature

⦁ Replay and wipeout protection

What is a replay attack?

A replay attack is data transmission maliciously repeated or delayed. In the blockchain context, it is taking a transaction that’s happening in one blockchain and maliciously repeating it in another blockchain.

What benefit does Bitcoin cash hold for miners?

The success or failure of a cryptocurrency heavily depends upon its miners. Bitcoin cash has set a rule as to when to decrease its difficulty via a rule Median Time Past (MTP). The median of the last 11 blocks mined in a blockchain, the MTP helps determine the time at which future blocks can be mined as well.


This is the rule for difficulty adjustment in bitcoin cash. If the MTP of the current block and the MTP of six blocks before is greater than 12 hours, the difficulty reduces by 20%. It becomes 20% easier for miners to find newer blocks.

Another interesting thing to note is how and when the difficulty rate can adjust in a cryptocurrency. The difficulty rate adjusts according to the number of miners in the blockchain. If there are fewer miners, the difficulty rate goes down because the overall hashing power of the system goes down. During the initial days, Bitcoin cash was struggling to find miners and hence the difficulty rate was proportionately lower. This in turn attracted a lot of miners who found the opportunity to be lucrative, leading to an exodus from Bitcoin into Bitcoin Cash.

As of today, Bitcoin Cash is the second most expensive cryptocurrency in the world behind Bitcoin at $573.35 per unit with a market cap of $9.4 billion. Its value has gone above $700 once and is expected to surge again. More and more exchanges are agreeing to take up Bitcoin Cash and this is in turn adding to its value. Bitcoin Cash continues to attract miners, who add value by adding their hashing power. Since the block size is 8 MB, it will enable more and more transactions within the block, which in turn will generate more transaction fees for the miners.

What is the future of Bitcoin Cash?

It is difficult to speculate the future of Bitcoin Cash. This certainly seems to be a successful experiment, breaking off from Bitcoin and the 8 MB block size is definitely an alluring aspect. However, what will be the future of Bitcoin Cash will probably be defined by its miners and customers.

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