The Bitcoin Cash problem

The transaction fees on the Bitcoin Network are rising to huge amounts – 10€ for a basic transaction – and its competitor, Bitcoin Cash, is doing really well. In the last week, Bitcoin Cash’s price tripled, you can view the graph here. However, I’d like to tell you why Bitcoin Cash won’t last for long.

Some explanations

We explained some terms here, so you can understand this article even if you’re not a Bitcoin expert.


What’s Bitcoin Cash?

Bitcoin Cash is a variation of the Bitcoin. It was created with a hard fork when the Bitcoin community wouldn’t agree on a solution to the scaling problem. The Bitcoin (BTC) has a block size of 1 MB, whereas Bitcoin Cash (BCC) has 8 MB.


What’s a hard fork?

A hard fork is a copy of the blockchain, that will be continued in a different way. As an example, Ethereum was hard forked. They made a copy of their blockchain and started over just before the DAO Hack, effectively undoing all the damage.


What scaling issue?

In its current state, the Bitcoin network can only handle approximately 3 transactions per second, whereas companies like Visa can process 1000 per second. This limit of 3 transactions is created by the block size. A block is 1 MB big and is created every 10 minutes. A simple transaction has a median size of 226 bytes, which means that there could only be 4424 transactions per 10 minutes or 7.38 transactions per second. However, this speed was calculated using simple transactions, which only consist of 2 recipients – the person you want to send money to and your return address.

If you’re interested in how many transactions Bitcoin Cash can handle per second, have a look at this article: How many transactions per second can Bitcoin Cash handle?

 

So, what is the problem?

At the moment, the block size is locked to 1 Megabyte and there is much controversy regarding its solutions.

One of these solutions is Bitcoin Cash, a hard fork of the Bitcoin with a block size of 8 Megabytes. Some might call this a solution but in my opinion, it’s just a delay.

Increasing the block size allows ~60 basic transactions per second and that’s about it. The blockchain will grow 8x faster in size and the BTC’s is already huge – 141 GB. Currently, the BCC blockchain is growing slower due to fewer users, but would you like to store a blockchain that can grow up to 1.1GB per day?

Currently, it’s value is rising because of the Segwit controversy and the Bitcoin’s price. Users are panicking and seeking desperately for an alternative. They believe that BCC has solved BTC’s scalability issue but forget that BCC is creating a whole new problem. Instead of increasing block size, they should aim to reduce the transaction size. If you’re interested in this, have a look at the Lightning Network.

Conclusion

As I state in most of my articles, the price of a coin does not determine its actual value. BCC is doing really well right now but it doesn’t have a future. Bitcoin Cash will have many problems in a few months from now when its blockchain is bigger than most hard drives and users hit the limit of 60 transactions per second.

 

Comments

Telesfor

Half a year has passed, there are already 32 MB blocks and is something bad happening with Bitcoin Cash? No. Bitcoin Cash have no problems. The size of Bitcoin Cash’s blockchain is still no problem. The blockchain does not grow 1.1 GB per day (currently it is 160 GB – BTC 202 GB). No normal user store the whole blockchain. Normal users use spv wallets (if someone pays with smartphone today, they don’t have a blockchain on it either). TB-Blockchain will be stored by the miners, exchanges, large merchants. There will also be some private people to store them. But do you really think there will be millions of people who want to store BTC Blockchain? Since March 2018, the number of BTC nodes has even been declining (in contrast to bitcoin cash nodes) . Furthermore, there are solutions to split the blockchain and to keep only the newest transactions available (the older part should only be loaded if necessary).

21. June 2018

Evan

Exactly, you made your own point! No one wants to store all this, which will lead to a centralization of the Currency.

21. June 2018

Telesfor

Many companies and merchants can store the blockchain decentralized. With “no one” I mean people. Did you hear about UTXO-Commitment?

23. June 2018

Telesfor

I’m a private person, by the way. I used to run Bitcoin Core. On Jan. 2018 I switched to BiItcoin Cash now I run Bitcoin Unlimited. I have unlimited data volume and can also attach very large hard drives to my raspberry pi. That’s no problem for me. I’m sure I’m not alone. Check out the growth of the nodes at https://cash.coin.dance/nodes

Netter Blog übrigens. Glückwunsch.

23. June 2018

Lio

Awesome post. It really clarified somewhat the issue of bitcoin cash. One thing that is important to mention is that visa can process around 50k transactions a sec. And most people don’t even use visa. So how will bitcoin or bitcoin cash be able to compete against that?

29. April 2018

Evan

They don’t. Handling 50’000 transactions per second is impossible with the blockchain technology BTC and BCC use. I believe that Nano could be able to handle 50’000tx/s as there is no centralized blockchain.

30. April 2018

Lio

Thx for your reply. So you are from Switzerland… me too! Do you know any good crypto/blockchain enthusiasts meetup in Zurich?

1. May 2018

Evan

I made a thread about this: https://coinanalysis.io/forum/index.php?/topic/7-public-crypto-related-events-are-awful/

It would be nice to create such a meetup that doesnt focus on BTC exclusively.

1. May 2018

Evan

I deleted all copies of this comment, no need to spam the site.
How is this a scam site if we don’t sell anything? Also the screenshots have 0 relation to this site.
Also, our reviews are legitimate, just read them…

PS: Its called Zcash, not ZCOIN.

27. November 2017

Bitcoin Pro

BCC is a cheap copy which will die out very soon, once all the nodes have no storage left.

23. November 2017

Telesfor

23. November 2017 – 1,45k Bitcoin Cash nodes
23. June 2018 – 2,12k Bitcoin Cash nodes

46% increase

source: https://cash.coin.dance/nodes/all

23. June 2018