What is Bitcoin Cash and How Does It Work?
Everything you need to know about Bitcoin Cash, the first hard fork of the Bitcoin network!
Bitcoin Cash (BCH) is a cryptocurrency created in 2017 as a fork of Bitcoin. It was designed to fix one major issue — Bitcoin’s slow and expensive transactions. By increasing the block size, Bitcoin Cash allows more transactions to be processed simultaneously, making payments faster and cheaper.
Like Bitcoin, it runs on a decentralized network with a fixed supply of 21 million coins. BCH aims to be a practical digital currency for everyday use, whether buying coffee, sending money abroad, or paying online. In this article, we’ll explore how Bitcoin Cash works and why it still matters today.
What is Bitcoin Cash?
Bitcoin Cash (BCH) is a decentralized digital currency launched in 2017 as a fork of Bitcoin. It was created to solve Bitcoin’s scalability issues by increasing the block size limit, allowing more transactions to be processed faster and at lower fees. This made BCH more practical for everyday payments.
Like Bitcoin, Bitcoin Cash runs on a blockchain — a decentralized ledger that records all transactions. It has a maximum supply of 21 million coins and uses a proof-of-work system where miners verify transactions and earn rewards.
The goal of Bitcoin Cash is to be “electronic cash for the world.” It aims to provide a fast, low-cost, and reliable payment system suitable for daily use, including small purchases and international money transfers.
Bitcoin Cash was born from a disagreement within the Bitcoin community. As Bitcoin became more popular, its 1MB block size limit caused congestion and higher fees. Some developers and users wanted to raise the limit, but others disagreed. This led to a “hard fork” on August 1, 2017, which created BCH with an 8MB block size (later expanded to 32MB).
BCH has also faced internal splits, most notably in 2018 when some members launched Bitcoin SV. Still, Bitcoin Cash remains a major cryptocurrency.
How Does Bitcoin Cash Work?
Bitcoin Cash (BCH) works much like Bitcoin. It records transactions on a public blockchain, which is permanent and viewable by anyone. Miners validate these transactions by solving complex puzzles using computing power. When they successfully confirm a block, they earn BCH as a reward.
Users store BCH in digital wallets, which can be apps, desktop programs, or physical hardware devices. To access and send your funds, you use a private key — a secure code that proves you own the coins in your wallet.
What sets Bitcoin Cash apart is its focus on fast, cheap transactions. Thanks to its larger block size, BCH handles more transactions per second than Bitcoin, which helps keep fees low and speeds high. This makes BCH ideal for everyday purchases, especially in areas where users need affordable and efficient payment options.
On May 15, 2025, Bitcoin Cash upgraded its network. The update introduced virtual machine limits to improve scalability and prevent slowdowns from heavy transactions. It also added high-precision arithmetic to support more advanced smart contracts. With these improvements, BCH is evolving into a platform not only for quick payments but also for DeFi, tokenized assets, and complex financial applications.
Bitcoin Cash vs. Bitcoin: What’s the Difference?
There are two big differences between Bitcoin Cash and Bitcoin. Here they are:
Block Size and Transaction Speed
The biggest difference between Bitcoin Cash and Bitcoin is block size. Bitcoin Cash allows blocks up to 32MB, while Bitcoin is limited to 4MB. This gives Bitcoin Cash the ability to process around 25,000 transactions per block, compared to just 1,000 to 1,500 for Bitcoin. As a result, Bitcoin Cash can confirm transactions more quickly and with less congestion. Despite this, Bitcoin still processes far more daily transactions. For example, on February 18, 2025, Bitcoin handled over 422,000 transactions, while Bitcoin Cash processed just 15,000.
Transaction Fees
Bitcoin Cash is known for its low transaction costs. Its average fee is less than $0.01, while Bitcoin’s average fee ranges from $1 to $5. As of mid-February 2025, Bitcoin Cash had an average fee of $0.006, compared to Bitcoin’s $1.78, according to CoinMarketCap. These lower fees make Bitcoin Cash more attractive for small, everyday payments.
Use Cases of Bitcoin Cash
Bitcoin Cash isn’t just a theoretical improvement on Bitcoin — it’s being used in the real world. Some common use cases include:
Everyday Payments
Bitcoin Cash (BCH) is widely used for buying goods and services thanks to its fast transactions and low fees. Merchants and platforms like BitPay accept BCH both online and in physical stores.
Cross-Border Transfers
BCH is a low-cost solution for sending money internationally. It’s especially useful in developing countries where traditional services charge high fees and take days to complete.
Donations and Tips
Because BCH supports microtransactions, it’s ideal for sending small tips to content creators or making charitable donations quickly and affordably.
DeFi and Smart Contracts
BCH supports decentralized finance through sidechains like SmartBCH. This allows developers to create tokens and build DeFi apps, similar to what’s possible on Ethereum.
Hedge Against Inflation
With its fixed supply of 21 million coins, BCH can act as a store of value and a hedge against inflation in regions with unstable currencies or rising prices.
Closing Thoughts
Bitcoin Cash was created to make cryptocurrency payments faster and cheaper. While it hasn’t matched Bitcoin’s success, it still serves a clear purpose. BCH is ideal for users who want low fees and quick transactions, especially for everyday spending or sending money abroad. It may not have the hype of Bitcoin, but it offers real-world utility.
Whether BCH gains broader adoption depends on how well it adapts and stays useful. As with any investment, do your own research and never invest more than you can afford to lose. BCH may not be #1, but it’s still part of the crypto future.
