Bitcoin Cash is a cryptocurrency. It is a result of a prolonged disagreement on how to handle the bitcoin scalability problem. A group of people not content with the Segregated Witness feature scheduled to activate decided to increase bitcoin transaction capacity eight times. The change, called a hard fork, took effect on August 1, 2017. As a result, the bitcoin ledger called the blockchain and the cryptocurrency split in two.
Up until July 2017, bitcoin users maintained a common set of rules for the cryptocurrency. On July 20, 2017 at block height 476768 Bitcoin Improvement Proposal (BIP) 91 was locked in (i.e. scheduled to activate at block height 477120). It was designed to reject blocks created by miners not supporting Segregated Witness.
Some members of the bitcoin community felt that adopting BIP 91 without increasing the block-size limit favored people who wanted to treat bitcoin as a digital investment rather than as a transactional currency.
The plan to do a hard fork was proposed by the Bitcoin Unlimited group in BUIP055 on May 10, 2017. This proposal was passed on June 3, 2017 with 21 votes for and 0 against. Early work occurred in the Bitcoin Unlimited repository or in clones; documentation work used the term UAHF on June 6, 2017, although code often used the term BUIP055.
Subsequently, the mining company Bitmain posted on their corporate blog a post titled UAHF: A contingency plan against UASF (BIP148), in which the ASIC bitcoin mining hardware manufacturer published the hard fork specifications and promised mining support if BIP 148 (a User Activated Soft Fork) succeeded. Subsequently, some developers took interest in the project. The Bitcoin Cash name was originally proposed by Chinese mining pool ViaBTC.
A stated goal of the fork was to increase the number of transactions its ledger can process by increasing the block size limit to eight megabytes. CoinDesk said that these motivations might have been behind the development and launch of Bitcoin Cash:
The first implementation of the Bitcoin Cash protocol called Bitcoin ABC was revealed by Amaury “Deadal Nix” Schet at the Future of Bitcoin conference in Arnhem, Netherlands. Subsequently, Bitcoin Unlimited made its first release of Bitcoin Cash compatible software, named BUCash and Bitcoin XT also released before the activation of the Bitcoin Cash fork. This meant that 3 full node clients were available before the Bitcoin Cash hard fork activated on August 1, 2017.
These initial clients implemented the following differences from bitcoin code which caused a blockchain split and therefore a separate Bitcoin Cash currency:
Upon launch, Bitcoin Cash inherited the transaction history of the bitcoin cryptocurrency on that date, but all later transactions were separate. Block 478558 was the last common block and thus the first Bitcoin Cash block was 478559. Bitcoin Cash cryptocurrency wallets started to reject bitcoin blocks and bitcoin transactions after 13:20 UTC, August 1, 2017 because it used a timer to initiate a fork. It implements a block size increase to 8 MB. One exchange started Bitcoin Cash futures trading at 0.5 BTC on July 23; the futures dropped to 0.1 BTC by July 30. Market cap appeared since 23:15 UTC, August 1, 2017.
On August 9, 2017 it was 30% more profitable to mine on the bitcoin chain. As both chains use the same proof-of-work algorithm, miners can easily move their hashpower between the two. As of August30, 2017[update] around 1,500 more blocks were mined on the Bitcoin Cash chain than on the original one as the high profitability periods attracted a significant proportion of total processing power. Due to the new Emergency Difficulty Adjustment (EDA) algorithm used by Bitcoin Cash, mining difficulty fluctuated rapidly, and the most profitable chain to mine switched repeatedly between Bitcoin Cash and mainline bitcoin.
A fix for these difficulty, hashrate, and profitability fluctuations was introduced on November 13, 2017 at 7:06p.m. UTC. The EDA algorithm has been replaced with a new difficulty adjustment algorithm (DAA) that hopes to prevent extreme fluctuations in difficulty while still allowing Bitcoin Cash to adapt to hashrate changes faster than the original bitcoin algorithm adjusting the difficulty every 2016 blocks.
Bitcoin Cash has been adopted by digital currency exchanges. Exchanges such as Coinbase, CEX.IO, Kraken, ShapeShift and many others use the Bitcoin Cash name and the BCH ticker symbol for the cryptocurrency. Bitstamp and Bitfinex temporarily used the name Bcash, but after being criticized, they switched the name back to Bitcoin Cash.
Bittrex, Binance, and Huobi exchange use BCC as Bitcoin Cash’s ticker symbol instead. BCC is more commonly used as the ticker symbol for Bitconnect.
While the alphanumeric address style is the same as bitcoin, Bitcoin Cash should not be sent to a bitcoin address. Like bitcoin, Bitcoin Cash addresses can be used more than once, but should not be reused if privacy is a concern.
Cryptocurrency wallets such as the Ledger hardware wallet, KeepKey hardware wallet, Electron Cash software wallet and Bitcoin.com software wallet use the name Bitcoin Cash for the cryptocurrency, using either BCH or BCC ticker symbol for it. Trezor hardware wallet supports Bitcoin Cash too. Blockchain.info is one of the largest bitcoin wallet providers. They integrated Bitcoin Cash a few months after its fork.
Notable supporters of Bitcoin Cash include investor Roger Ver, entrepreneur Calvin Ayre, developer Gavin Andresen, and entrepreneur Rick Falkvinge.
Americans wondering whether their acquisition of Bitcoin Cash is taxable as income, or not taxable as a division of property, have received no guidance from the Internal Revenue Service.
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