Bitcoin cash is a cryptocurrency is a fork of Bitcoin Classic that was created in August 2017. Bitcoin Cash increases the size of blocks, allowing more transactions to be processed.
What is Bitcoin Cash?
Bitcoin Cash is peer-to-peer electronic cash for the Internet. It is fully decentralized, with no central bank and requires no trusted third parties to operate.
Is Bitcoin Cash different from ‘Bitcoin’?
Yes. Bitcoin Cash is the continuation of the Bitcoin project as peer-to-peer digital cash. It is a fork of the Bitcoin blockchain ledger, with upgraded consensus rules that allow it to grow and scale.
If I own Bitcoin, do I automatically own Bitcoin Cash too?
Yes. Because Bitcoin Cash is a fork of the ledger, that means you own the same amount of Bitcoin Cash as you did Bitcoin at the time of the forking block. However, if your Bitcoins are stored by a third party such as an exchange, then you must inquire with them about your cash.
How is transaction replay being handled between the new and the old blockchain?
Bitcoin Cash transactions use a new flag SIGHASH_FORKID, which is non standard to the legacy blockchain. This prevents Bitcoin Cash transactions from being replayed on the Bitcoin blockchain and vice versa.
On July 20, 2017, the bitcoin miners voted, 97% in favor, on the Bitcoin Improvement Proposal (BIP) 91. The proposal, by Bitmain Warranty engineer James Hilliard, was to activate Segregated Witness (SegWit).
Some members of the bitcoin community felt that adopting BIP 91 without increasing the block-size limit would simply delay confronting the issue and that it favored people who wanted to treat bitcoin as a digital investment rather than as a transactional currency. They announced implementation of Bitcoin Cash as a hard fork for August 1. It inherited the transaction history of the bitcoin currency 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 wallet started to reject BTC block and BTC transactions since 13:20 UTC, August 1, 2017 because it used a timer to initiate a fork. It implements a block size increase to 8 MB. Bitcoin Cash started futures trading at 0.5 BTC on July 23, but dropped to 0.1 BTC by July 30. Market cap appeared since 23:15 UTC, August 1, 2017. As of 29 October 2017, one Bitcoin Cash was being traded at roughly 0.084 bitcoin.
On August 9, it was 30% more profitable to mine on the original chain. Even though the fork allows for a higher block size, block generation was so sporadic that the original chain was 920 MB bigger than the chain of the fork, as of 9 August 2017. Due to the new Emergency Difficulty Adjustment (EDA) algorithm used by Bitcoin Cash, mining difficulty has fluctuated rapidly, and the most profitable chain to mine has thus switched repeatedly between Bitcoin Cash and incumbent bitcoin. As both chains use the same proof-of-work algorithm, miners can easily move their hashpower between the two. As of 30 August 2017 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 amount of miners proportional to the previous total processing power.
A fix for these difficulty/hashrate/profitability fluctuations was introduced on November 13th, 2:06PM UTC. The existing EDA algorithm has been replaced with a new difficulty adjustment algorithm that hopes to prevent extreme fluctuations in difficulty while still allowing Bitcoin Cash to adapt to hashrate changes faster than incumbent bitcoin.
Bitcoin Cash (BCH/BCC) addresses use the newer P2SH style (up to 35 characters) type address starting with the number 3. It is important to note that while the alphanumeric address style is the same as the incumbent bitcoin (BTC), that Bitcoin Cash (BCH/BCC) should not be sent to a bitcoin (BTC) address. Like the incumbent bitcoin, Bitcoin Cash addresses can be used more than once, but should not be reused if privacy is a concern. However there are plans to change the address format.