What Is Bitcoin Cash and How Is It Different From Bitcoin?

What Is Bitcoin Cash?

Bitcoin Cash is a decentralized crypto with the ticker BCH, which runs on a public blockchain. Anyone can check the transactions on that blockchain without needing a bank or any other central party.

BCH was created on August 1, 2017 through a hard fork of Bitcoin. A hard fork is basically a split where part of the network continues under new rules. Up through block 478,558, Bitcoin and Bitcoin Cash shared the same history. After that, they continued as two separate chains with their own rules and their own coins.

Important to know right away: Bitcoin Cash is not the same as bitcoin with ticker BTC. They do share a common origin story, but BCH and BTC have been separate cryptos since the split.

Just like Bitcoin, the maximum supply of BCH is capped at 21 million. New BCH enters circulation through mining. Miners add transactions to blocks and receive a reward for doing so. That fixed block reward is called the block subsidy and gets cut in half every 210,000 blocks.

Example: You can think of Bitcoin Cash as Bitcoin's twin brother. They share the same DNA and the same origin, but at some point each chose a different career path. Bitcoin Cash chose a different approach to make crypto better for fast and cheap payments.

Key Takeaways

• Bitcoin Cash is a decentralized crypto with ticker BCH.
• BCH was created on August 1, 2017 through a hard fork of Bitcoin.
• Bitcoin and Bitcoin Cash share their history through block 478,558.
• Since the split, BCH and BTC have been separate cryptos on separate chains.
• A maximum of 21 million BCH can enter circulation.

How Does Bitcoin Cash Work?

Bitcoin Cash works with a network of computers that checks and stores transactions on the blockchain. When you send BCH, you sign the transaction with your private key. That is the secret key that proves you’re allowed to control the BCH at your address.

The transaction is then sent to the peer-to-peer network. That means participants share data directly with each other, without a central processor. Miners check whether the transaction follows the rules and put valid transactions into a new block.

Once your transaction is in a block, it has one confirmation. More confirmations usually mean more certainty, because more blocks have been added on top of it. So a sent transaction is not the same as a fully confirmed payment right away.

Bitcoin Cash uses proof-of-work. Miners use computing power to solve a cryptographic puzzle with the SHA-256 hash function. Whoever solves the puzzle first usually gets to add the next block and receives the block subsidy plus the transaction fees from that block.

The network tries to create a new block about every ten minutes on average. That’s why the protocol adjusts the puzzle difficulty. If the network has more computing power, the puzzle gets harder. If computing power drops, the difficulty can go down again.

For addresses, BCH uses CashAddr, among other formats. An address like this starts with bitcoincash on mainnet. This format has a recognizable prefix and built-in typo checking. That makes it less likely that you’ll confuse a BCH address with an older address type that was also used with BTC.

Since May 15, 2024, Bitcoin Cash has used the Adaptive Blocksize Limit Algorithm, usually shortened to ABLA. This rule lets the maximum block size gradually rise or fall depending on how full the blocks are. So BCH does not have a simple fixed block limit that always stays the same.

Example: Say you send BCH to someone. First, your transaction goes out to the network. Then a miner includes it in a block. From that moment on, the payment has one confirmation. If the recipient wants extra certainty, they can wait for more blocks to follow.

Why Was Bitcoin Cash Created?

Bitcoin Cash was created because of a long-running conflict about how Bitcoin should handle more transactions. The debate was mainly about the capacity of the base layer, meaning the blockchain where transactions are processed directly.

Part of the Bitcoin community wanted to use larger blocks. The idea was simple: if there is more room in a block, more transactions can fit in at once. The original BCH rules therefore raised the default limit from 1 MB to 8 MB.

In 2017, Bitcoin chose a different route with Segregated Witness, usually called SegWit. SegWit changed the way certain transaction data is counted. Because of that, Bitcoin works with a limit of 4 million weight units. That is not the same as a fixed amount of MB, because the final size depends on the types of transactions in a block.

The hard fork made those different choices permanent. Anyone using the BCH rules followed the Bitcoin Cash chain from that point on. Anyone who kept using the existing Bitcoin rules stayed on the Bitcoin chain with BTC.

Which approach is better is not a fixed technical fact. They are different choices: BCH focused on more block capacity on the base layer, while Bitcoin used SegWit to activate a different scalability change.

What Is the Difference Between Bitcoin and Bitcoin Cash?

Bitcoin and Bitcoin Cash are separate cryptos with a shared history up to August 1, 2017. Bitcoin uses the ticker BTC and Bitcoin Cash uses the ticker BCH. After block 478,558, both networks continued as independent chains with their own consensus rules.

There are also clear similarities. Both use proof-of-work, the SHA-256 hash function, and a target block time of about ten minutes. In both cases, miners compete with computing power to add blocks.

The biggest technical difference is the chosen approach to capacity:

• Bitcoin Cash: chose larger blocks on the base layer at the fork. The limit first went to 8 MB and later to 32 MB. Since May 2024, ABLA can gradually adjust the limit based on demand.
• Bitcoin: activated SegWit and uses a limit of 4 million weight units. How many bytes a block ends up containing depends on the transactions inside it.

Bitcoin Cash also added replay protection with SIGHASH_FORKID at the split. That sounds complicated, but the goal is pretty practical: a BCH transaction should not automatically also be valid on the Bitcoin chain. Without that protection, a transaction could potentially have been replayed on both networks.

BCH later added more features. Since May 15, 2023, Bitcoin Cash has supported CashTokens. That lets developers issue and send fungible tokens and non-fungible tokens on the BCH blockchain. This was not part of the original split from Bitcoin, but a later upgrade to Bitcoin Cash.

What Is Bitcoin Cash Used For?

At its core, Bitcoin Cash is used to send value directly from one person to another, basically just like the regular Bitcoin network. You can receive and send BCH without a bank processing the payment on the base layer.

For a payment like this, you enter a receiving address and an amount. You also pay a transaction fee, which gives miners an incentive to include the transaction in a block. After that, the transfer is publicly verifiable on the blockchain.

CashTokens also make it possible to issue other tokens on Bitcoin Cash. These can be fungible tokens, where every unit is the same, or non-fungible tokens, where each token can be unique.

Technically, these tokens can be used for things like tokenized assets, tickets, loyalty points, voting rights, or positions in decentralized applications. The BCH scripting language can also handle programmable conditions. That makes certain applications with smart contracts possible, although it works differently from blockchains that were built entirely around smart contracts.

Important to know: just because something is technically possible does not automatically mean it is widely used or treated the same way legally everywhere.

What Are the Benefits of Bitcoin Cash?

One major benefit of Bitcoin Cash is its relatively large block capacity on the base layer. When demand for block space is high, larger blocks can in theory process more transactions at once. That can reduce the pressure to outbid each other with higher transaction fees compared with limited block space.

That is not a guarantee that transactions will always be fast or cheap. The actual fees and wait times depend on things like network congestion, the settings in your crypto wallet, and how many confirmations you want to wait for.

BCH payments go directly through the peer-to-peer network. So you do not need a central processor on the base layer. Once a transaction is in a block, anyone can verify it on the blockchain.

CashAddr is also a practical plus. The bitcoincash prefix shows which network the address is meant for. The checksum also helps catch typing mistakes. That can prevent confusion when you send BCH.

Since 2023, BCH has also offered CashTokens at the protocol level. That means developers can build fungible tokens, non-fungible tokens, and certain smart contract applications without needing a separate token layer.

What Are the Downsides of Bitcoin Cash?

Bitcoin Cash is still a volatile crypto. Its value can rise and fall sharply, just like other crypto in the crypto market. Buying or holding BCH therefore comes with real price risk.

You are also responsible for your BCH if you self-custody it. If you lose the private key to your crypto wallet and do not have a usable backup, you can permanently lose access to your BCH. So you should never share that secret key with anyone.

Proof-of-work also has a security risk if one party gets enough hash power. In a 2025 measurement, the three largest BCH mining pools together controlled more than half of the measured hash rate. That is not a description of the current situation, but it does show why the distribution of mining power matters.

A 2020 analysis pointed out under specific assumptions that Bitcoin Cash could be more vulnerable to selfish mining than Bitcoin. In selfish mining, a miner temporarily keeps found blocks secret to possibly gain an advantage. That is not proof that BCH is being attacked right now, but it is a technical risk worth understanding.

Larger blocks also have a downside. They can require more bandwidth, storage space, and computing work from nodes. If blocks move through the network more slowly, that can increase the chance of orphan blocks. Those are valid blocks that ultimately do not become part of the chosen blockchain. Over time, this can create pressure toward centralization, because not everyone can run a node as easily.

Protocol changes can also lead to splits. If different groups of nodes and miners keep using incompatible software, another hard fork can happen with separate chains and separate coins.

CashTokens add extra possibilities, but also extra risks. Not every crypto wallet supports every token format. So always check carefully which wallet you use and which address you send your tokens to.

Conclusion

Bitcoin Cash is a separate crypto that was created from Bitcoin in 2017 through a hard fork. BCH and BTC share their early history, but for years now they have been independent cryptos with their own rules and their own blockchains.

The main difference is the chosen scalability path. Bitcoin Cash focuses on more available block space on the base layer, while Bitcoin chose a different technical approach with SegWit. BCH also offers CashTokens, which make tokens and certain smart contract applications possible.

At the same time, BCH remains a volatile crypto and self-custody requires good protection of your private keys. Understanding how transactions, confirmations, and the differences from BTC work helps you better judge Bitcoin Cash's value.