In 2010, the average size of each block on the Bitcoin blockchain was less than 100 KB, and the average transaction fee was a few cents. This makes the Bitcoin blockchain vulnerable to dust attacks. These attacks are entirely composed of dust transactions and may affect the normal operation of the system. To avoid this, the block size on the Bitcoin blockchain is limited to 1 MB. A block is mined every 10 minutes, leaving space and time between consecutive transactions. The storage space and time constraints required for block propagation and transaction packaging increase the security of the Bitcoin blockchain.
However, with the development of Bitcoin and the increase in people's awareness, these safeguards have become the main obstacles hindering the development of Bitcoin. As of January 2015, the average size of a block has increased to 600KB, and the number of transactions using Bitcoin has surged, leading to an increase in unconfirmed transactions. The average time for confirming transactions is no longer stable, and sometimes even takes several hours. Ground, transaction confirmation fees have also increased, and these have become factors that weaken Bitcoin as a credit card competitor. (The transaction fee of Bitcoin on the blockchain is specified by the user. Miners usually push higher-fee transactions to the top of the queue to maximize profits.)
At that time, community developers proposed two solutions to solve this problem: increase the block limit or delete some parts of the transaction to put more data into the blockchain. Core, the Bitcoin core team responsible for development and maintenance, rejected the proposal to increase the block size. At the same time, a new Bitcoin project was born as an experiment with an adaptive block cap without adding a block limit, but this blockchain project called "Bitcoin Unlimited" was eventually hacked Attacks, which raised doubts about its feasibility as a currency for daily transactions.
The failure of BU did not make the community give up the idea of increasing the block limit. The calls for expansion have been louder than waves, causing various controversies in the Bitcoin community. Ultimately, in the war of words and competition between miners and other stakeholders in the Bitcoin community, Bitcoin Cash was launched in August 2017. Every Bitcoin holder received the same amount of Bitcoin Cash, which made BCH inherit the huge user base of Bitcoin at the beginning, and then Bitcoin Cash was listed on a cryptocurrency exchange for the first time at an amazing price of $900. When Bitcoin Cash was born, it was supported by Bitcoin miners, and the security of BCH was guaranteed. In December 2017, at the peak of the bull market, the price of Bitcoin Cash soared to $4,091.
As Bitcoin designer Satoshi Nakamoto proposed, Bitcoin is a peer-to-peer cryptocurrency used for daily transactions. Over the years, as it has gained mainstream attention and prices have risen, Bitcoin has become an investment tool, not a currency. The Bitcoin blockchain has problems with scalability because it cannot handle more and more transactions. The confirmation time and fees for Bitcoin blockchain transactions have surged. This is mainly due to Bitcoin's 1MB block size limit. The transaction is queued, waiting for confirmation, because the block cannot handle the increase in transaction size.
Bitcoin Cash corrects this situation by increasing the block limit to between 8 MB and 32 MB, allowing each block to process more transactions. The average number of transactions per block on Bitcoin is between 1,000 and 1,500. In the stress test in September 2018, the number of transactions on Bitcoin Cash's blockchain surged to 25,000 per block.
The main supporters of Bitcoin Cash, such as Roger Ver, often cited Satoshi Nakamoto's original intention of payment services as a reason for increasing the block limit. They believe that the increase in the Bitcoin block limit will enable Bitcoin to be used as a medium for daily transactions and help it compete with credit cards (such as Visa), which have been charging high fees to process cross-border transactions.
Bitcoin Cash is also different from Bitcoin in another aspect. BCH does not have Segregated Witness (SegWit). Segregated Witness is another solution to increase the number of transactions in a block. SegWit only retains information or data related to transactions.
In addition to ideology and block size differences, there are some similarities between Bitcoin and Bitcoin Cash. Both use a Proof of Work (PoW) consensus mechanism to mine new coins. The upper limit of Bitcoin Cash is 21 million, which is the same as Bitcoin. However, BCH currently uses the ASERT DAA difficulty adjustment algorithm. The BCH block time is now more accurate and regular, while BTC is still using the backward difficulty adjustment mechanism. The BTC difficulty adjustment mechanism has a lagging feature. Every 2016 block (14 Days) to make a difficulty adjustment. For example, in this year's halving, BTC's computing power dropped sharply after the halving and the difficulty adjustment could not keep up. For a long period of time, it was very difficult for BTC to generate blocks and normal network operation could not be guaranteed.