It is the most popular cryptocurrency in the world, but it is not without its problems. The nature of the technology makes it difficult to scale, making it nearly impossible for the average person to use BTC for everyday transactions like buying gasoline or milk.
Offshoots like Bitcoin Cash have been developed as potential solutions to this problem, but to fully understand the differences between these options, it helps to know a little bit about Bitcoin’s history.
Bitcoin
Bitcoin was created in 2009 by Satoshi Nakamoto – an anonymous Internet user or group working under a pseudonym – against the backdrop of the recession. It emerged as a form of peer-to-peer currency that did not rely on a central bank.
Whereas fiat currencies such as the U.S. dollar are subject to spontaneous government manipulation, the number of bitcoins is limited to 21 million. Until this cap is reached, new coins are constantly introduced to the market through a process called mining, in which powerful computers perform calculations to confirm the validity of transactions. As payment for using the machines, miners receive a fee from the confirmed transactions, as well as the newly generated bitcoins.
Although Bitcoin is used as digital cash, the volatility of this new cryptocurrency attracts investors while discouraging its use as legal tender.
The Scalability Problem
People are concerned about the of the Bitcoin network Concerns about the limitations of the Bitcoin network began even before the first blocks were mined. The first public response to the original proposal expressed doubts about its scalability.” As I understand it, your proposal does not seem to scale to the required size.”