What is Bitcoin Cash?

Summary: Bitcoin Cash is a separate cryptocurrency created in August 2017 by splitting away from Bitcoin, after years of argument about how much data each block should hold. It kept Bitcoin's 21 million supply cap and ten-minute blocks, and raised the block size so transactions stay cheap. It is a different coin from Bitcoin, not a version of it, and its address format is different too.

• A hard fork of Bitcoin from August 2017. Anybody holding BTC then received the same amount of BCH.
• Bigger blocks mean fees stay a fraction of a cent even when Bitcoin's are high.
• Same 21 million cap, same halving schedule, same ten-minute target.
• BCH and BTC addresses are not interchangeable. Sending one to the other loses the funds.

The Argument That Caused It

Bitcoin blocks were limited to one megabyte of transaction data. That was ample early on and became a constraint as usage grew: when more transactions want space than a block can hold, they compete on fees, and fees rise. By 2017 a small Bitcoin payment could cost more than the thing being bought.

Two camps formed. One argued for raising the block size so more transactions fit and fees stay low. The other argued that bigger blocks make running a full node more expensive, which concentrates the network among fewer participants, and that scaling should happen in additional layers built on top instead. Bitcoin took the second path. The first camp forked away and created Bitcoin Cash.

Both positions were held in good faith by serious people. The disagreement was about what Bitcoin is for: everyday cash, or a settlement asset whose small payments happen elsewhere.

What a Hard Fork Actually Did

On 1 August 2017 the chain split. Up to that block the transaction history is identical, which is why anybody holding Bitcoin at that moment automatically held an equal amount of Bitcoin Cash. After it, the two networks ran separate rules and have diverged ever since.

This is a useful thing to understand generally, because forks recur. Bitcoin Cash itself split again in November 2018, producing Bitcoin SV after a further disagreement within the same community. A shared history does not make two coins the same coin, and the market prices them independently.

What Is the Same, and What Is Not

• Same: a hard cap of 21 million coins, a ten-minute block target, the halving schedule that cuts the mining reward every 210,000 blocks, and proof of work mining.
• Different: block size, raised well beyond Bitcoin's limit, so blocks are rarely full and fees stay negligible.
• Different: security budget. Bitcoin attracts vastly more mining power, and a chain with less hashrate behind it is, all else equal, easier to attack.
• Different: adoption. Bitcoin has institutional ownership, funds and near-universal acceptance. Bitcoin Cash has neither the recognition nor the scale.

The Address Trap

This is the practical warning and it is the reason to read this section even if the history bores you. Because the two chains share ancestry, older Bitcoin Cash addresses looked exactly like Bitcoin addresses, which caused a great deal of lost money. Bitcoin Cash now uses a distinct format, often prefixed to make the network obvious, and wallets will usually refuse an obvious mismatch.

Usually is not always, particularly with older software and legacy formats. Send BCH to a Bitcoin address and nobody controls the destination on the Bitcoin Cash chain, so the funds are unreachable. Check the coin selected in your wallet matches the coin the recipient asked for, and follow the standard sending checks every time.

Did the Fork Work?

On its own terms, partly. Bitcoin Cash does what it set out to do: transfers are fast and cost almost nothing, and it has never suffered the fee spikes that make small Bitcoin payments uneconomic. As a payment rail it works.

On the wider ambition of becoming the Bitcoin people actually use, no. Bitcoin kept the name, the network effect and the overwhelming majority of the value, and cheap-payment demand has largely gone to stablecoins on cheap networks rather than to any Bitcoin variant. The lesson most observers drew is that in a network business the brand and the liquidity matter more than the technical specification, which is not the lesson either side expected.

Where Bitcoin Cash Fits Now

It occupies a similar position to Litecoin: an older, liquid, cheap-to-move coin that most payment processors support because it has been around long enough to be integrated everywhere, without being anybody's first choice. If you hold it, spending it is easy and cheap. If you are choosing what to hold in order to pay for things, the comparison across coins puts a stablecoin ahead of any of them, for the plain reason that the amount does not move while you are paying.

A lot of people hold BCH without having chosen to, because they held Bitcoin in 2017 and received it. If that is you and it has been sitting untouched since, the full gift card range accepts it, which is a more useful destination than a wallet you never open.