What Is Bitcoin Cash? How It Works and Why It Matters

Echo Team
Echo Team
07/10/2025
What Is Bitcoin Cash? How It Works and Why It Matters

What’s the point of cryptocurrency if you still can’t pay for lunch with it? That’s the question Bitcoin Cash ($BCH) tries to answer.

 Born from the ideological and technical fractures within the Bitcoin community, $BCH isn’t just another altcoin; it’s a back-to-basics movement. It bets on one bold idea: that digital cash should actually work like, you know, cash.

So, why should you care?

If you’re crypto-curious, a new investor, or just trying to figure out why the vending machine in your coworking space accepts $BCH (but not $BTC), this guide is for you. We’ll unpack what Bitcoin Cash is, how it works, and why, despite being somewhat of an underdog, it still plays a vital role in the cryptocurrency ecosystem.

Because if all you’ve seen of crypto is high gas fees and long waits, $BCH might just shift your perspective.

What is Bitcoin Cash, and Why Does It Exist?

Bitcoin Cash was launched in 2017 after years of heated debate in the Bitcoin community over one question: how should Bitcoin scale?

As Bitcoin grew more popular, its limited 1MB block size meant the network got clogged. Transaction fees soared and payment delays became the norm. One camp argued that tech like Segregated Witness (SegWit) and future Layer 2 solutions (e.g., Lightning Network) would solve this. 

The other camp said: “Nope, let’s just make the blocks bigger, right now.”

That second camp forked the Bitcoin blockchain and created Bitcoin Cash ($BCH).

A fork, in crypto terms, is like a software split. 

Imagine two dev teams taking the same app but going in different directions: one focuses on minimalism and stability; the other on speed and usability. $BCH is the latter.

Its main goal? Enable fast, low-cost, peer-to-peer payments without waiting minutes, or hours, for confirmation or paying $15 to send $5.

How does Bitcoin Cash work?

Like Bitcoin, $BCH runs on a public, decentralized blockchain with proof-of-work mining. But there’s one major tweak: it allows much larger blocks, up to 32MB vs. Bitcoin’s ~1MB. Why does that matter? 

Because block size directly affects how many transactions the network can process without creating a traffic jam.

How are Bitcoin Cash transactions processed?

Every time you send BCH, that transaction gets broadcast to the network and picked up by miners. These miners verify its validity and include it in the next block. Once confirmed, it’s etched permanently onto the blockchain.

It’s like Venmo, but decentralized and transparent; you can literally watch every transaction get verified in real-time via sites like Blockchair or $BCH Explorer.

What’s the difference in block size, and why does it matter?

Bitcoin Cash blocks can hold dramatically more transactions. With Bitcoin, a single block can become congested with several thousand transactions. BCH’s larger blocks can handle many more, smoothing out congestion and slashing fees.

Think of it like expanding a one-lane road to a 10-lane highway. Sure, it might require better infrastructure (bandwidth, storage), but traffic flows faster and more predictably.

How fast are transactions, and how much do fees cost?

Most Bitcoin Cash transactions are confirmed in seconds, with network fees typically under a penny. This isn’t hype, it’s observable reality.

Try paying for something online with BCH, and you’ll notice the difference right away. No agonizing wait, no surprise $8 fee. That makes $BCH less of an investment vehicle and more of a usable currency.

What’s the difference between Bitcoin and Bitcoin Cash?

Bitcoin and Bitcoin Cash share a name and a codebase origin, but their philosophies diverged hard in 2017.

Bitcoin ($BTC) is now viewed by many as “digital gold”, a scarce asset to HODL, not spend. It leans into its finite supply and increases institutional support. It’s your vault, your inflation hedge.

Bitcoin Cash, on the other hand, embraces the “money” side of the equation. Its community sees it as a decentralized medium of exchange, a replacement for fiat, not just a complement.

Can you use both Bitcoin and Bitcoin cash side by side?

Yes, and some people do. Most major multicoin wallets support both $BCH and $BTC.

Just be very mindful of the different tickers, $BTC vs $BCH. Sending to the wrong address type can lead to errors or, worse, loss of funds.

Is Bitcoin Cash safe to use?

From a tech standpoint, $BCH uses the same SHA-256 proof-of-work algorithm as Bitcoin. But because $BCH has fewer miners securing it, its total network hashrate is lower, a key metric when evaluating blockchain security.

It’s like having a smaller police force in a smaller city: crime might not be a problem today, but if it ramps up, vulnerabilities might be exposed faster.

How is $BCH secured?

BCH miners compete to solve complex mathematical problems and add blocks to the chain. In doing so, they secure the network and validate transactions.

But there’s a catch: lower mining power means it’s more susceptible to attacks, like a 51% attack where a malicious actor controls the majority of the network. While unlikely today, it’s still a theoretical risk.

What can you buy with Bitcoin Cash in everyday life?

Surprisingly, a lot.

You can use $BCH to buy everything from hosting services to plane tickets to electronics. Major merchants directly accept $BCH, and some VPN and subscription services allow $BCH for recurring payments.

It’s not just about buying stuff, either. $BCH is frequently used for global remittances, especially in regions where low fees and fast settlement matter more than the brand name.

Why do merchants accept BCH?

Simple: lower fees and faster settlement = better margins.

If you’re a coffee shop accepting Bitcoin, a single transaction may take 10 minutes or more to confirm, with network fees killing your profits on small items. With BCH, clearance is fast and costs pennies. That’s good UX, for both sides.

What Are the Pros and Cons of Bitcoin Cash?

Pros section? Easy.

BCH is designed to do what crypto was meant to: let people easily pay each other across the globe without middlemen or banks. It’s fast, cheap, and usable.

But let’s not sugarcoat the tradeoffs.

Bitcoin Cash has a smaller user base, less developer activity, and a lower hashrate than $BTC. Its ecosystem is growing, but still niche. Media coverage tends to lump it into the “Bitcoin knockoff” category, despite its unique approach.

It’s the classic underdog story: not as flashy, but the diehard fans swear by it, and use it.

Can Bitcoin Cash Support Smart Contracts Like Other Blockchains?

Yes, but with limits. Bitcoin Cash can support simple smart contracts using a built-in scripting language similar to Bitcoin’s. These contracts can handle basic tasks like time-locked transactions, escrow conditions, and betting logic. However, it doesn’t support complex, stateful smart contracts like Ethereum or Solana.

Picture it like a vending machine: Bitcoin Cash can process straightforward, rule-based logic, insert coins, and get snacks. But if you need a full kitchen running a recipe with dozens of ingredients and steps, you’ll need a programmable system like Ethereum.

That said, development is ongoing. SmartBCH, a sidechain of Bitcoin Cash, was an attempt to bring Ethereum-style smart contracts to the ecosystem. It gained some momentum but hasn’t seen the same adoption as other chains. So while Bitcoin Cash can do some smart contracting, it’s not where DeFi or NFT developers tend to build.

How Has Bitcoin Cash Adoption Changed in Developing Countries Recently?

In recent years, Bitcoin Cash has quietly gained traction in developing regions, especially where financial infrastructure is weak or transaction fees make Bitcoin impractical. Countries like Venezuela, Nigeria, and parts of Southeast Asia have seen grassroots adoption led by low-fee payments and local merchant onboarding.

Sending $1 with Bitcoin may cost $3 in fees, Bitcoin Cash doesn’t have that problem. That’s a big deal when remittances or microtransactions are your primary use case.

Grassroots teams and volunteer-led groups, such as the “Adoption Ambassadors,” have onboarded small merchants, created $BCH communities, and promoted local peer-to-peer usage. While it’s not stealing the global spotlight, in places with unstable banking, Bitcoin Cash’s speed and cost-efficiency offer real-world utility rather than speculation.

Is Bitcoin Cash more energy-efficient than Bitcoin?

Yes, marginally, primarily because Bitcoin Cash has a much lower hash rate than Bitcoin. Less mining activity means less total electricity consumption. That said, both use the same proof-of-work mining model, so the difference is more about scale than structure.

If Bitcoin is a busy global airport running 24/7, Bitcoin Cash is more like a regional terminal. Same infrastructure principles, but fewer passengers and less resource use.

However, energy efficiency isn’t a core differentiator that most users feel day-to-day. Bitcoin alternatives like proof-of-stake chains are better positioned to claim low-energy footprints. Bitcoin Cash’s advantage here is more about cost: its lower mining intensity means lower fees and lighter network requirements.

How Does Bitcoin Cash Handle Network Congestion Compared to Bitcoin?

Bitcoin Cash was specifically designed to handle higher transaction volumes with less congestion. Its 32MB block size means it can fit hundreds of times more transactions per block than Bitcoin, which typically sticks to 1MB. In practice, this makes network delays and fee spikes much less common.

Think of it like widening a highway to prevent traffic jams. Bitcoin Cash’s wider lanes mean smoother flow, even at peak times.

While Bitcoin sometimes sees fees shoot up to $20+ during high demand, Bitcoin Cash fees usually stay under a cent, even when usage spikes. That’s a win for day-to-day usability, especially for small or frequent payments. It’s not that $BCH is faster by design, it just has more breathing room.

Can You Use Bitcoin Cash With Lightning Network or Other Scaling Tools?

No, Bitcoin Cash doesn’t support the Lightning Network. Lightning is a second-layer solution made specifically for Bitcoin to enable near-instant, low-cost payments. Bitcoin Cash takes a different scaling path: it scales directly on-chain with larger blocks.

It’s like comparing a bullet train (Lightning) to simply building a wider road (Bitcoin Cash). Both aim to reduce congestion, but use totally different models.

That simplicity is intentional. Bitcoin Cash users don’t need to open channels or lock up funds to transact. The base layer is already fast and cheap, which sidesteps some of Lightning’s setup friction. But it also means you won’t find the same kind of experimental payment routing or micropayment streams in the $BCH ecosystem.

Understanding Bitcoin Cash in a Bigger Context

Bitcoin Cash is what you get when a chunk of the original Bitcoin community said: “This is about buying tacos, not building digital Swiss bank accounts.”

Whatever your take, $BCH has carved a real niche as the crypto made for spending. It functions well, is widely supported by wallets and some merchants, and keeps alive the dream of actual peer-to-peer electronic cash.

In contrast to newer scaling strategies like Bitcoin’s Lightning Network or Ethereum’s Layer 2 rollups, Bitcoin Cash chose to scale on-chain, using bigger blocks and simpler UX. It’s a bet that hasn’t played out at Bitcoin’s scale, but in daily use, it just works.

Does Anyone Still Use Bitcoin Cash Today?

While Bitcoin has evolved into a store of value (digital gold for the long game), Bitcoin Cash still chases the original dream of crypto as peer-to-peer electronic cash. 

That difference shows up in how people use them. On an average day, Bitcoin handles over 700,000 active addresses and hundreds of thousands of transactions, many of them high-value or routed through Layer-2s like the Lightning Network. 

Bitcoin Cash, by contrast, sees a steadier but smaller footprint: roughly 55,000 to 60,000 active addresses daily, with around 100,000 to 150,000 on-chain transactions. It’s not explosive growth, but it’s a functional slice of users who care about low fees, speed, and simplicity.

The divergence isn’t just architectural; it highlights the power of branding and community.

Bitcoin has embraced off-chain scaling, pushing activity into second layers and keeping the base layer lean and expensive. Bitcoin Cash went the other way, scaling on-chain with larger blocks and minimal fee pressure. 

That decision hasn’t unlocked the same network effects or ecosystem support, but it has preserved a user experience that’s fast, cheap, and familiar. If you’re comparing Bitcoin Cash vs Bitcoin today, it comes down to tradeoffs: $BCH still feels like a working checkout lane, while $BTC is more like a vault you rarely open.

Final Thoughts: Should You Learn More About Bitcoin Cash?

Whether you treat $BCH as a curiosity or a practical payment tool, getting your head around how it works sharpens your entire understanding of crypto. It represents one of the clearest takes on what a truly decentralized money system might look like: no banks, no toll fees, no waiting.

And while Bitcoin Cash might not be the future of money for everyone, for millions around the world, it’s already solving real problems today.