Halving, CashTokens update, and payments to Mt. Gox creditors: Bitcoin Cash (BCH) news review
Bitcoin Cash (BCH) halving.
Like Bitcoin, Bitcoin Cash had its second halving in April 2024. Halving occurs approximately every four years and is a deflationary mechanism that halves the reward to miners. It reduces the rate of cryptocurrency issuance and makes it less inflationary. When demand increases, halving should boost the cryptocurrency's exchange rate.
The Bitcoin Cash network halved on April 4, at block 840,000, resulting in miners' rewards dropping from 6.25 to 3.125 BCH. One week after the halving, BCH cryptocurrency quotes rose 17% from $594 to $695. According to analytical services, the next halving in the Bitcoin Cash network should tentatively occur in early April 2028.
Protocol updates
As with the Bitcoin network, significant updates to Bitcoin Cash are pretty rare. The last one was in May 2023, when the CashTokens update was activated in the protocol. Before that, Bitcoin Cash only had a hard fork, which took place in November 2020.
The CashTokens update allowed the issuance of digital assets (tokens) right inside the Bitcoin Cash blockchain. This feature is also available for ordinary users: after the launch of CashTokens, anyone can issue their own fungible (FT) or non-fungible token (NFT). In addition, the update allows the release of decentralized applications based on the Bitcoin Cash network and reduces the size of transactions, which allows data to be transferred on the blockchain much faster.
In addition, the CashToken update has helped improve Bitcoin Cash smart contracts with features such as:
- recurring payments,
- cryptocurrency trading,
- crowdfunding (analogous to an initial token offering or ICO).
According to DeFi Llama, the total number of assets blocked in DeFi protocols (TVL) of the Bitcoin Cash network is still only about $15 million, and its ecosystem includes decentralized exchanges (DEXes) THORChain and Cauldron, as well as derivatives exchange AnyHedge. Of course, the ecosystem is still underdeveloped, and Bitcoin Cash ranks only 77th among all blockchain protocols regarding TVL. Still, you have to consider that the update only came out a little over a year ago, and things could change significantly.
Especially since Bitcoin Cash is still in high demand: in terms of capitalization, which is almost $6.4 billion as of August 2024, the BCH cryptocurrency is ranked 16th on CoinMarketCap — higher than NEAR Protocol (NEAR), Litecoin (LTC), Polygon (MATIC), and Internet Computer (ICP). Bitcoin Cash ranks 33rd among all cryptocurrencies in terms of trading volume.
Over the year, the price of the BCH cryptocurrency has risen nearly 70% from $224 to $324 — and that's taking into account the overall decline of the crypto market. At the local peak in April 2024, the Bitcoin Cash rate almost reached $700, but this is still six times less than the all-time high (ATH) recorded at $4355 in December 2017.
Payments to Mt. Gox creditors
In July 2024, bankrupt exchange Mt Gox began paying out funds to its affected creditors in Bitcoin and Bitcoin Cash, significantly impacting the crypto market. But first, a bit of backstory.
In 2014, the infamous Mt. Gox exchange went bankrupt after losing 200 000 BTC, nearly $11.9 billion at current exchange rates. In January 2014, Mt. Gox was the third largest crypto exchange in terms of trading volume among all existing crypto exchanges, but it repeatedly had security issues that caused the exchange to suspend trading twice — in April 2013 and February 2014.
Ten years after the bankruptcy in July 2024, Mt. Gox representatives announced the imminent start of payments to affected investors, which began the same month. In total, Mt.Gox needs to return 143 000 BCH to its creditors, as well as 142 000 BTC and 69 billion Japanese yen.
After the start of payments to Mt. Gox's affected creditors, the quotes of many cryptocurrencies began to decline. For example, in just one week, from July 30 to August 6, the price of the BCH cryptocurrency dropped from $439 to $309 — by about 30%.
The future of Bitcoin Cash
The roadmap presented by the Bitcoin Cash team does not yet include any major protocol updates or specific steps to develop the ecosystem: the document mainly presents minor changes, although necessary for the blockchain's operation.
For example, the developers plan to reduce transaction processing time to 3 seconds and make network commissions very low. Also provided in the roadmap are:
- a new, more compact transaction format. Thanks to this, blocks will be able to accommodate more transactions, which means that network throughput will be higher;
- consensus improvements that allow traders to make transactions before miners even confirm the transaction;
- new tokenized asset classes on the Bitcoin Cash blockchain;
- improvements to the Mankind Scale protocol, which are expected to process up to 50 billion transactions per day;
- acceleration of block mining.
Although the Bitcoin Cash ecosystem is not developing very quickly, developers continue to work on improving the protocol, and the cryptocurrency itself still holds a fairly high position in the crypto market. Whether Bitcoin Cash will be able to maintain this trend in the future depends on many factors that are often difficult to predict.