What Is Bitcoin Cash (BCH)? Understanding Its Role as a Bitcoin Alternative

LeeMaimai

/Oct 24, 2025

Key Takeaways

• BCH was created in 2017 as a fork of Bitcoin to enhance transaction speed and reduce fees.

• It supports larger block sizes, allowing for more transactions on-chain.

• Recent upgrades like CashTokens enable advanced applications such as NFTs and smart contracts.

• BCH aims for predictable, low fees, making it suitable for everyday payments.

• Security and governance are important considerations for BCH users.

Bitcoin Cash (BCH) is a peer‑to‑peer electronic cash system launched in 2017 as a fork of Bitcoin. It keeps Bitcoin’s fixed 21 million supply and proof‑of‑work security model but prioritizes low fees and larger on‑chain throughput to make everyday payments practical. If you’ve heard about the “block size debate,” BCH represents the on‑chain scaling side of that long‑running discussion about how to make crypto usable at scale.

This guide explains how BCH works, what makes it different from Bitcoin, recent technical upgrades, and how to store it safely.

Why Bitcoin Cash Exists

In 2017, the Bitcoin community split over scaling methods. One camp emphasized small blocks and layered solutions like the Lightning Network; the other argued for increasing block space to keep simple, direct payments on‑chain. The latter approach resulted in Bitcoin Cash, which increased the consensus block size limit and optimized for throughput and low fees. For historical context, see the background of the block size controversy and the rationale for on‑chain scaling at the time. Reference: Block size discussion and history at the Bitcoin Wiki (click to read).

Philosophical goal: Make peer‑to‑peer payments fast and affordable, even during high demand.
Technical lever: Larger blocks (up to 32 MB) to accommodate more transactions directly on‑chain. Reference: BitcoinCash.org overview (open site).

How BCH Works: Key Technical Features

Consensus and supply
- Proof‑of‑Work using SHA‑256, with the same 21 million coin cap and halving schedule inherited from Bitcoin’s design. Reference: BitcoinCash.org overview (open site).
Difficulty adjustment
- BCH employs the ASERT Difficulty Adjustment Algorithm (DAA) to keep block times near the 10‑minute target while responding smoothly to hashrate changes. Reference: ASERT DAA specification (open reference).
Signatures and validation
- BCH supports Schnorr signatures, enabling smaller signatures, enhanced privacy characteristics, and efficient multi‑signature aggregation patterns for certain use cases. Reference: Schnorr signature overview (learn more).
Address format
- BCH introduced CashAddr, a Bech32‑style format that reduces errors and avoids cross‑chain confusion with Bitcoin addresses. Reference: CashAddr technical specification (view spec).

Throughput, Fees, and Confirmations

Because BCH increases block capacity, average transaction fees tend to remain low, even during busy periods. While exact values vary, you can inspect current fee and throughput statistics on public dashboards. Reference: Network stats and fees (open chart).

Typical confirmation time: One block (~10 minutes) for a base‑layer confirmation, similar to Bitcoin. Many merchants accept zero‑confirmation payments for small amounts after their own risk checks, but final settlement still relies on mined blocks.
Capacity trade‑offs: Larger blocks can increase node bandwidth and storage requirements, which some analysts argue may pressure node decentralization. Reference: Discussion of larger blocks and decentralization (read more).

CashTokens: Smart Contracts and On‑Chain Applications

In May 2023, BCH activated CashTokens, unlocking a native way to create fungible tokens, NFTs, and covenant‑style smart contracts directly on the base chain. This broadens use cases to include on‑chain exchanges, payment vouchers, stablecoin rails, and more — without requiring a separate L2.

What CashTokens add
- Token issuance and transfer with low fees
- On‑chain, contract‑like logic for advanced applications
Learn more: CashTokens overview and developer docs (visit site).

BCH vs. BTC: The Practical Differences

Scaling strategy
- BCH: Scale on‑chain with larger blocks for low‑fee payments.
- BTC: Keep blocks small and use layers such as the Lightning Network for throughput. Reference: Lightning Network project site (learn more).
Monetary policy
- Both share fixed supply (21 million) and halving every 210,000 blocks.
Fees and user experience
- BCH aims for predictable, low fees on‑chain, which can simplify point‑of‑sale experiences. BTC’s fee market and L2 approach can be efficient for those who adopt Lightning, but it adds operational complexity.
Trade‑offs
- BCH’s design can favor payment simplicity and throughput; BTC’s design can favor minimalism and base‑layer conservatism. Both approaches entail different decentralization and UX considerations.

Recent Developments and What to Watch

Halving cadence and miner economics
- BCH follows the same halving interval as Bitcoin, impacting issuance and miner incentives. The most recent halving cycles have kept issuance on schedule, which market participants watch closely for effects on security budgets and fee dynamics. Background: BitcoinCash.org overview (open site).
Protocol upgrades
- BCH continues to introduce targeted improvements through its upgrade process, with open discussion and peer review occurring in public forums. Reference: Bitcoin Cash Research community (open forum).
Ecosystem growth
- With CashTokens live, developers are experimenting with on‑chain markets, remittance flows, and merchant tools that leverage BCH’s low fees.

Risks and Considerations

Hashrate and security
- As a SHA‑256 network, BCH competes for miner hashrate with other chains. Miner participation and fee markets are important for long‑term security.
Network and governance
- Protocol changes are coordinated in public, but disagreements can still occur. Users should keep software up to date and monitor upgrade announcements.
Market volatility
- As with any crypto asset, price volatility can be significant. Manage exposure accordingly.

Custody: How to Store BCH Securely

For long‑term holders and active users alike, self‑custody reduces counterparty risk. General best practices include:

Use a hardware wallet for private keys, verify receive addresses on the device screen, and prefer CashAddr format to avoid cross‑chain confusion. Reference: CashAddr technical specification (view spec).
Keep firmware and wallet apps updated.
Consider passphrases and multi‑signature setups for higher‑value holdings.
Maintain secure, offline backups of recovery phrases.

If you want a hardware wallet that pairs ease‑of‑use with strong security, OneKey supports BCH with offline signing, open‑source firmware, and an intuitive experience for both first‑time users and professionals. It’s a practical match for BCH’s payment‑first ethos: fast transactions on‑chain, with keys secured in a device you control.

Getting Started

Learn the basics of BCH, its roadmap, and community resources at the official site: BitcoinCash.org (open site).
Explore CashTokens and on‑chain app patterns: CashTokens.org (visit docs).
Check current network metrics, including fees and transaction activity: BitInfoCharts BCH dashboard (open chart).
Follow technical discussions and improvement proposals: Bitcoin Cash Research forum (open forum).

Bottom Line

Bitcoin Cash is a Bitcoin‑compatible alternative focused on making peer‑to‑peer payments simple, cheap, and reliable directly on‑chain. With features like CashAddr, Schnorr signatures, the ASERT difficulty algorithm, and CashTokens for advanced use cases, BCH aims to be practical money for everyday transactions while staying true to a fixed‑supply, proof‑of‑work model. If that payment‑centric approach aligns with how you plan to use crypto, consider adding BCH to your toolkit — and secure it with a hardware wallet such as OneKey for resilient, self‑custodied control.

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