What is Bitcoin Cash. How is it different from Bitcoin?

On August 1, 2017, Bitcoin was hard forked and a new cryptocurrency appeared. Bitcoin, familiar to miners, has split into two cryptocurrencies - Bitcoin (BTC) and Bitcoin Cash (BCC, BCH).

In less than a day, the capitalization of BCC exceeded $ 7 billion. This corresponds to the 3rd place in terms of trading volume among all cryptocurrencies in the world. The price of "traditional" bitcoin has not changed much yet.

The block size in the Bitcoin blockchain is limited to 1 megabyte. When there were not too many transactions, this limitation almost did not affect anything, but significantly limited the possibilities of a DDoS attack. With the growing popularity of Bitcoin, the number of transactions increased, but due to the limitation of the maximum block size, not all transactions were “placed” at once, a queue periodically appeared. In May 2017, the situation deteriorated significantly. Some users have complained that they have to wait several days for confirmation. To speed up the processing, the user can assign a higher commission. But this makes the use of bitcoins quite expensive, especially for small payments - it makes no sense to use them, for example, in cafes and bars.

There were two ways to solve the problem:

    Bitcoin Unlimited - remove the 1 MB limit. Many miners advocated this, since increasing the block size will not only eliminate the queue, but also increase the profitability of miners by increasing the total commission in the block, even if the transaction fee falls. The developers were mainly against it - they believe that the removal of the limit will lead to an increase in the requirements for the capacity of equipment, small miners will go out of business, which will lead to the centralization of the system;
    Segregated Witness (SegWit) - store some of the information not in the blockchain, but in separate files outside the blockchain. The developers believe that as a result, a lot of space will be freed up, more transactions will be placed in the block and the confirmation rate will increase. Bitcoin Unlimited supporters believe this is only a temporary and more difficult solution.

As a result, a compromise protocol SegWit2x was developed - to store part of the information outside the blockchain and increase the block size to 2 MB.

On July 20, 2017, 95% of miners voted in favor of the Bitcoin Improvement Proposal (BIP) 91. It proposed to implement the new SegWit2x protocol on August 1, 2017, but without an immediate increase in block size. Some participants felt that the introduction of BIP 91 without increasing the block size will not solve the problem, but will only postpone it, and will act in the interests of those who see Bitcoin as an investment object, and not as a payment system.

A group of developers led by ex- engineer Amory Sechet announced the abandonment of SegWit2x, retaining the previous blockchain structure (without storing information outside of it), but increasing the block size to 8 MB. They named their branch Bitcoin Cash.

On August 1, 2017, a "forced branching" took place. Both cryptocurrencies share a common initial history. Block 478558 was the last common block. The next block, 478559, was formed twice in different formats. One of them complies with the SegWit2x protocol, the other - Bitcoin Cash, which actually became the first block of the new cryptocurrency. All subsequent transactions are separated - they fall into different branches of the blockchain, since the programs of each of the branches work with the previous block formats, but reject each others new formats.

Thus, everyone who had bitcoins before August 1, after the division, kept all their bitcoins, but automatically became the owners of a similar amount of Bitcoin Cash. In fact, the separation of branches created the possibility of double spending from the same wallet using the same access keys, but these are already two different cryptocurrencies, for which different software is used, although the differences are minimal.