Bitcoin Cash (BCH) is a cryptocurrency that emerged from a 2017 hard fork of Bitcoin. It was developed to increase transaction capacity by enabling larger block sizes, aiming to lower fees and speed up confirmations. BCH is intended as a low-cost payment system, offering faster transaction times and reduced costs compared to Bitcoin. ^[1]

Overview

Bitcoin Cash (BCH) is a proof-of-work blockchain network and cryptocurrency created as a hard fork of Bitcoin in 2017. It is designed to have faster and more cost-effective transactions than Bitcoin, offering lower fees of about $0.01 and speedier confirmation times. It is a peer-to-peer electronic cash system that removes regulatory authorities and other third parties from financial transactions.

Bitcoin Cash was created and maintained by a community of developers who see it as an alternative payment system to Bitcoin. It operates on Bitcoin Cash Node, an ecosystem that enables users to transact in Bitcoin Cash. Bitcoin Cash Node is the blockchain for Bitcoin Cash and can be considered the virtual machine that runs the network, powering transactions. ^[1]

History

Bitcoin Cash was created in 2017 in response to Bitcoin’s growing scalability issues. The network struggled to process more transactions as Bitcoin's popularity increased due to its 1MB block size limit. This led to long confirmation times and rising fees, which peaked at over $50 in December 2017. Disagreements within the Bitcoin community over how to resolve these problems ultimately led to a split.

Developers who supported larger blocks and on-chain scaling—aiming for a payment system rather than a store of value—launched Bitcoin Cash on August 1, 2017. It began with an 8MB block size, later increased to 32MB in 2018. The fork rejected Bitcoin Core’s focus on SegWit and second-layer solutions, with Bitcoin Cash proponents emphasizing ease of use, low fees, and peer-to-peer functionality.

Bitcoin Cash split in November 2018, when internal disagreements over block size and governance led to another hard fork, creating Bitcoin SV. The Bitcoin Cash community remains active, continuing to develop the chain as a medium for everyday transactions. ^{[3] [4] [5] [8] [11]}

Technology

The protocol for Bitcoin Cash is a distributed, time-stamped ledger of unspent transaction output (UTXO) transfers stored in an append-only chain of 32MB data blocks. A network of mining and economic nodes maintains this blockchain by validating, propagating, and competing to include pending transactions (mempool) in new blocks.

Economic nodes (i.e., "full nodes") receive transactions from other network participants, validate them against network consensus rules and double-spend vectors, and propagate the transactions to other full nodes that validate and propagate. Valid transactions are sent to the network's mempool, and mining nodes await confirmation via inclusion in the next block.

Mining nodes work to empty the mempool, usually in a highest-to-lowest fee order, by picking transactions to include in the next block and racing against each other to generate a hash less than the target number set by Bitcoin Cash's difficulty adjustment algorithm.

Bitcoin Cash uses a Proof-of-Work (PoW) consensus mechanism to establish the chain of blocks with the most accumulated “work” (i.e., energy spent on solved hashes) as the valid chain. ^[12]

The technical difference between Bitcoin Cash and Bitcoin is that Bitcoin Cash allows larger blocks in its blockchain than Bitcoin, which, in theory, allows it to process more transactions per second. ^[13]

Tokenomics

BCH (Bitcoin Cash) coins are created through mining, and the maximum supply of BCH is set to 21 million coins. Bitcoin Cash was distributed via a Bitcoin hard fork. New BCH were distributed to current Bitcoin private key holders by inheriting the new chain, the existing Bitcoin UTXO (unspent transaction output) sets before the fork. ^[16]

Roughly 16.5 million BCH were distributed on August 1, 2017 (block 478559), at which point Bitcoin Cash broke out of Bitcoin's consensus rules, making transactions incompatible. ^[15]

Governance

Bitcoin Cash development is open to the open-source community. Protocol development is governed by a proposal process, whereby anyone in the open-source Bitcoin Cash community can submit draft proposals. After the community debates, the client implementation editors accept or reject the proposals. Decisions from the process are written into the Bitcoin Cash specification and the software that runs the network.

Finally, protocol changes are “ratified” on-chain when most of the network adopts the upgrade and doesn’t break consensus. Although very similar to Bitcoin overall, as opposed to users signaling support for upgrades, Bitcoin Cash uses hash power signaling to indicate support for network upgrades. Bitcoin Cash implements planned upgrades biannually as part of its more progressive network upgrade philosophy. ^[18]

Utility

Long-term store of value

Bitcoin Cash has a fixed maximum supply of 21 million coins, a limit embedded in its protocol code. This cap is unlikely to change, as altering it would not align with the interests of network participants who seek to preserve the value of their holdings. The coin issuance follows a predictable schedule, decreasing over time in a process known as halving.

Approximately every four years, the reward for mining new blocks is reduced by 50%. In April 2020, the third halving lowered the reward from 12.5 BCH to 6.25 BCH per block. Around 87.5% of the total supply at that time—18,375,000 coins—had already been issued. The fourth halving in 2024 reduced the reward to 3.125 BCH. This pattern will continue until around 2136, when the block reward will decline to a negligible amount of 0.00000168 BCH. This gradual reduction in new supply makes Bitcoin Cash a disinflationary asset. ^[14]

Medium of exchange

Bitcoin Cash enables peer-to-peer payments between individuals, just like cash, but digitally. Fees for sending Bitcoin Cash typically amount to less than a penny per transaction, and settlement occurs almost instantly, regardless of the physical location of participants. This makes Bitcoin Cash useful for remittances, cross-border trade, and daily grocery transactions. Since the fees and transaction times are so low, Bitcoin Cash is also effective for micro-transaction cases like tipping content creators and rewarding app users. ^[14]

Economic freedom

On an opt-in basis, Bitcoin Cash provides an alternative form of money that supports economic freedom. Unlike national currencies, Bitcoin Cash integrates strong protection against monetary confiscation, censorship, and devaluation through uncapped inflation. ^[17][14]

Cash Upgrades

Bitcoin Cash implements annual protocol upgrades every May 15 through a decentralized and community-driven process. These upgrades are coordinated via Cash Improvement Proposals (CHIPs), which document proposed changes to the network’s consensus rules and scripting capabilities. To ensure stability and developer preparedness, upgrades are first activated on Chipnet, a dedicated test network, every November, six months ahead of mainnet deployment. ^{[1] [26]}

2021

Two key proposals were introduced in March 2021. The first, CHIP 2021-01 (Restrict Transaction Version), limited valid transaction version numbers to 1 or 2. This change helps streamline future upgrades by avoiding unused or undefined versions. The second, also under CHIP 2021-01, reduced the minimum valid transaction size from 100 bytes to 65 bytes. This revision enables smaller, more efficient transactions while protecting against legacy fraud scenarios involving 64-byte payloads.

By June 2021, Bitcoin Cash expanded its scripting capabilities. CHIP 2021-02 (Native Introspection Opcodes) introduced new opcodes allowing smart contracts to access internal transaction data directly, enabling more complex and autonomous behavior. Additionally, CHIP 2021-03 (Bigger Script Integers) increased the allowable size for integers used in scripts, improving support for more advanced contract logic. ^[26]

2022

In August 2022, significant upgrades were made to enhance Bitcoin Cash's ability to support decentralized applications and token functionality. That same month, CHIP 2022-05 (P2SH32) added support for 32-byte Pay-to-Script-Hash outputs. This resolved long-standing vulnerabilities in certain contract types and improved address flexibility and contract security. ^[26]

2023

The CashTokens upgrade was activated in May 2023. This introduced native support for fungible and non-fungible tokens, enabling BCH to handle tokenized assets like Ethereum. The update preserved low transaction costs and maintained decentralization, allowing users to issue and interact directly with token-based applications on the BCH blockchain.

In September 2023, the network adopted the Excessive Block-size Adjustment Algorithm (EBAA). This change altered the block size policy, allowing dynamic adjustments based on network usage and resource demand, improving scalability and responsiveness without requiring fixed limits. ^{[25] [26]}

2024

The Jessica update in May 2024, focusing on scalability and network reliability. It implemented the Adaptive Block Size Limit Algorithm (ABLA), which adjusts the block size based on current transaction demand. This dynamic approach helps prevent congestion and reduces inefficiencies when demand is low. Jessica also fixed a long-standing economic vulnerability in Bitcoin’s early design, improving resistance to double-spending attacks. The update included performance enhancements that reduced transaction processing times and costs. ^{[25] [26]}

2025

The VELMA upgrade will introduce two CHIPs for deployment in May 2025. These proposals focus on expanding the Bitcoin Cash Virtual Machine (VM) capabilities, which execute smart contract scripts. First, CHIP-2021-05 (Targeted Virtual Machine Limits) will increase the limit for stack elements from 520 to 10,000 bytes, remove outdated operation code limits, and add security controls to mitigate risks associated with script execution. These changes enable more complex contract logic and improve script reliability. 

Building on that, CHIP-2024-07 (High-Precision Arithmetic) removes the 64-bit integer limit, allowing for high-precision arithmetic. This supports more advanced decentralized finance (DeFi) applications and lays the groundwork for zero-knowledge proof systems and quantum-resistant cryptography. These upgrades prepare the network for future use cases requiring enhanced computational power and privacy. This enhancement allows smart contracts to operate on large numbers directly, eliminating the need for complex workarounds, improving performance, reducing transaction sizes, and lowering fees. ^{[25] [26]}