There is not a single person in the modern world who does not know about cryptocurrencies or is not wondering which crypto to invest in. All of us know about Bitcoin, but with current rates skyrocketing more and more people want to know about other valid crypto options - such as Bitcoin Cash.
Bitcoin Cash (BCH) was created as an aftereffect of Bitcoin (BTC) hard forks in a bid to manage its scalability problems.
However, this cryptocurrency, which was claimed to be faster and cheaper than BTC, has experienced two previous episodes of hard forks. The latest one came in November 2020.
Read on to understand how cryptocurrency is affected by these hard forks so that you can make a sounder investment decision.
1. First of All, What's a Hard Fork?
A hard fork is described as an extreme change in the blockchain that invalidates previous transactions or blocks and vice versa. When an event like this happens, users are forced to move to the latest software versions, as old ones can’t be used anymore. Hard forks often result in two groups: one part follows the old, and the other follows the new.
The coin that comes from a split tends to be of higher value than the parent coin. Typically, a coin enjoys the benefits of the split and becomes the winner, while the other follows behind.
2. Hard Forks Involving Bitcoin Cash
Bitcoin Cash was created in August 2017 after a hard fork of Bitcoin. It was just a short while before it was involved in another hard fork.
The second hard fork episode involving Bitcoin Cash happened in November 2018. This split is famously called “Satoshi Vision” because the intention behind it was for Bitcoin to retain its starting aim of completing everyday peer-to-peer commerce.
The third episode happened in November 2020, creating two groups: Bitcoin Cash Node (BCHN) and Bitcoin Cash ABC (BCHA). It happened because miners were asked to pay a tax of 8% on their gross payments to the Amaury Sechet-led BCHA development team, a move that was strongly contested by another group of miners, leading to the split.
3. A Hard Fork in 2020: BCHN Vs. BCHA
This started with Amaury Sechet and his development team introducing a contentious "Coinbase Rule" that will see them receive 8% of the BCH mines to find protocol development.
This rule was strongly rejected by a different set who didn't want any such "miner tax" in the source code. That was how the two different classes were formed. The second was named Bitcoin Cash Node, and the fork succeeded because both groups couldn't find an agreement.
Before the split happened, many miners declared their loyalty to BCHN and refused to pay the imposed 8% tax with BCHA. This meant that BCHN emerged as the victor of the latest split of Bitcoin Cash.
4. Life after Split
The winner of this split, BCHN, went on to claim the ticker symbol BCH. Currently, the CoinMarketCap ranking for BCHN is tenth, with a $9,751,906,938 market cap. Meanwhile, Bitcoin Cash ABC's market cap is $312,164,66 while ranked 215th.
Finally, if you want to exchange BCH to BTC or other coins, you can do it on a reliable online platform like Godex.
The nature of the hard fork favors the pre-fork assets. This often causes a price increase for the new coin, allowing it to grow past the parent coin.
Once the split happens, a coin leads, and the other one almost can't compete. BCHN emerged as the winner of the latest split of Bitcoin Cash, and Bitcoin Cash ABC comes in far behind. You can exchange your coins on the Godex online service.