What is Bitcoin cash? The perfect guide for beginners.

Bitcoin is one of the most incredible innovations so far. It has also come under a lot of criticism for its scalability issues which has given rise to a lot of politically and ideologically motivated debates. In 2017, Bitcoin came up with Bitcoin Cash. For all the what is Bitcoin cash and what does it do questions, read along.


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. The difference between Bitcoin and Bitcoin Cash is as follows:


  • The block size is 8 MB.
  • It won’t have segwit.
  • It won’t have the “replace by fee” feature.
  • It will have replay and wipeout protection.
  • It offers a way to adjust the proof-of-work difficulty quicker than the normal 2016 block difficulty adjustment interval found in Bitcoin.


Bitcoin cash and replay attacks

A replay attack is data transmission that is maliciously repeated or delayed. One of the best features of Bitcoin Cash is to prevent the replay attack. Here’s how a replay attack is prevented:

  • Use a redefined sighash algorithm. This sighash algorithm is only used when the sighash flag has bit 6 set. These bitcoin transactions would be invalid on the non-UAHF chain as the different sighashing algorithm will result in invalid bitcoin transactions.
  • Use the OP_RETURN output which has the string “Bitcoin: A Peer-to-Peer Electronic Cash System” as data.


What is segwit?

The digital signature is extremely important because it is what verifies whether the sender actually has the required amount of funds needed to get the bitcoin transaction done or not.  Now, while this is all very important data there is an issue with it. It takes up way too much space, which is already limited in number. A solution for this is called segwit or Segregated Witness.  

The advantages of Segwit are listed below:

  • Increases a number of transactions that a block can take.
  • Decreases transaction fees.
  • Reduces the size of each individual transaction.
  • Transactions can now be confirmed faster because the waiting time will decrease.
  • Helps in the scalability of bitcoin.
  • Since the number of transactions in each block will increase, it may increase the total overall fees that a miner may collect.

The disadvantages of Swegwit are as follows:

  • Miners will now get lesser transaction fees for each individual transaction.
  • The implementation is complex and all the wallets will need to implement segwit themselves. There is a big chance that they may not get it right the first time.
  • It will significantly increase the usage of resources since the capacity, transactions, bandwidth everything will increase.


BIP 48

The BIP 148 is a user activated soft fork i.e. a soft fork that has been activated by the users. What it states is that all the full nodes in the bitcoin networks will reject any and all blocks that are being created without segwit ingrained in it. It is hoped that by encouraging more and more miners to come over to the BIP 148 side, eventually the 95% threshold limit will be crossed and segwit will be activated.