How does Bitcoin Cash work?

The best answer is found in the pages of the original Bitcoin whitepaper, written by Satoshi Nakamoto. You are encouraged to read it. Below is a very brief summary of the technology.


Bitcoin Cash operates on blockchain technology. The blockchain serves as a public ledger, recording all Bitcoin Cash transactions. This ledger is accessible to anyone and provides a comprehensive record of Bitcoin Cash addresses and their corresponding balances. Addresses function like accounts but offer the flexibility of multiple addresses without revealing personal information.

When users want to engage in a Bitcoin Cash transaction, such as making online purchases or transferring funds to a friend's wallet, they initiate a transaction and broadcast it across the network. This process mirrors the functionality of modern fiat currency payment apps but operates in a more streamlined, peer-to-peer manner, eliminating the need for intermediaries and preventing censorship of payments. Users don't have to know the all the complexities as wallet software handles the details.

Transaction Validity:

For a Bitcoin Cash transaction to be valid, the user must prove ownership of the coins by demonstrating knowledge of the associated private cryptographic key. The private key, stored in the user's wallet, matches the public key of the address from which the coins are spent, validating the transaction. Bitcoin Cash wallet software manages this process, making it user-friendly and efficient.

Mining Process:

All transactions are sent to a network of computers known as mining nodes. These miners compete to solve a cryptographic puzzle for a group of valid transactions, referred to as a block. The first miner to solve the puzzle adds the block to the blockchain and receives the reward, which includes transaction fees and newly-minted coins.

As participating in the validation of transactions and earning mining rewards is both more profitable and less challenging than attempting to reverse past transactions, rational miners consistently focus on extending the blockchain. This incentive structure creates a highly probable scenario where any transaction already recorded in the blockchain is effectively permanent. This mining process creates a continuous ledger of transactions.

Learn more from our article, "What is Bitcoin Cash?"

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