Tired of the infighting and perceived lack of progress on Bitcoin’s scaling debate, and unhappy with the decision to go ahead with the Segregated Witness or SegWit upgrade (which would increase block capacity, but not its size, by restructuring how transaction data was stored), a group of community participants developed an alternative bitcoin with different characteristics. The new version, Bitcoin Cash, increased the block size from 1MB to 8MB.
It also excluded SegWit, which some felt was no more than a temporary patch to Bitcoin’s scaling problem. Some were also worried that the second layer networks that SegWit enabled would deflect transaction volume from the main network and diminish Bitcoin’s importance.
A further difference in the Bitcoin Cash protocol is the difficulty adjustment mechanism. To maintain a relatively even flow of blocks, the Bitcoin protocol adjusts the difficulty factor of the hash puzzle (how hard it is to find the nonce that produces a hash within the specified parameters) every 2,016 blocks. With Bitcoin Cash, the difficulty adjustment is much more agile, adjusting every 600 seconds according to the amount of computing power on the network.
This gave the protocol a fighting chance at survival. If miners don’t mine a coin, it dwindles away. With bitcoin’s price so much higher than that of bitcoin cash (BCH), the latter would only be profitable to mine if it were much easier to do so. In other words, the value of the coin may be lower, but a miner would successfully process blocks more frequently, and collect more BCH as a reward.
Bitcoin cash can be traded at a wide range of big-name exchanges.
After some initial confusion, most exchanges have settled on the ticker symbol BCH over the alternative BCC (which is also confusingly used to denote the currently spinoff Bitcoincash Classic and BitConnect).
At time of writing, over most BCH volume comes from trades out of bitcoin, with U.S. dollar and tether (UDST) volume also significant. Most of the demand from fiat currencies comes from the US dollar and the South Korean won. Its market capitalization was $4.58 billion as of June 3, 2020.