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Welcome to the cryptohunt jam where we spend one minute a day to explain crypto. In plain english.
Today, let's talk about one of the first altcoins, Bitcoin Cash.
Bitcoin Cash is one of the oldest cryptocurrencies and goes all the way back to 2017. At the time, it became clear that Bitcoin itself could not handle high transaction volumes and the crypto community started fighting over its future.
There were two factions: Those that saw Bitcoin purely as a store of value – such as Gold – were happy. But those that saw it as a means to send payments around, noticed that Bitcoin was hitting its limits. But to make Bitcoin handle more transactions required deep technical changes and so the decision was made to go separate paths and create Bitcoin Cash as an alternative and keep the original Bitcoin running as a separate blockchain.
Bitcoin Cash improves upon Bitcoin by allowing miners to validate many more transactions in one computation. Remember that mining is the process of validating recent payments, and in order to qualify for doing that, each computer has to solve a very complicated puzzle first, which takes time before the work can even start. With Bitcoin cash, more transactions can be validated together after each puzzle, and the complexity of the puzzle can be lowered if there is high demand.
The effort was only a partial success though: Bitcoin Cash just wasn’t adopted widely as an alternative. Today, years after the separation, Bitcoin’s market capitalization is over 100 times larger than BitCoin Cash’s… and the gap is growing.
And next time we stay on the topic and discuss if Bitcoin’s best times are over - see you then!
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