Cryptocurrencies are making headlines across the world as a new form of finance that will revolutionize how we conduct business online. However there are barriers to mass adoption like scalability, usability and efficiency.
Many believe that for cryptocurrency to achieve mainstream acceptance it will have to be as intuitive to use as cash. What has created such online buzz about eCash as a viable form of digital cash?
What is eCash?
eCash is a cryptocurrency that was developed after a hard fork of the Bitcoin Cash blockchain. It was developed to be used as electronic cash. eCash enables users to send money directly to others online and pay for goods and services. The token is denominated by XEC. The developers have focused on usability, transaction efficiency and speed.
eCash was created after a hard fork of the Bitcoin Cash blockchain due to disagreements in how Bitcoin Cash should develop in the future. Originally called Bitcoin Cash ABC, it was rebranded in July 2021 as eCash. Bitcoin Cash itself originated from a hard fork of Bitcoin and as a result, eCash retains some of the features of Bitcoin. Like Bitcoin, the total supply is capped to manage inflation, but at 21 trillion rather than 21 million.
However, many differences were implemented to focus on developing a mainstream form of digital money. The developers considered the main issues of Bitcoin Cash and Bitcoin to be scalability and the time it takes to validate transactions.
Bitcoin uses a Proof-Of-Work consensus algorithm and has a 1 MB block size. Transactions are validated using a large amount of computational power. This means a block takes approximately 1 hour to validate and only 1 MB of transactions are processed in a block.
This is limiting for digital cash as, for mainstream adoption, the blockchain needs to be able to handle a huge volume of transactions quickly. eCash increased the block size to 1 TB and adopted a Proof-Of-Stake consensus mechanism, Avalanche. This has resulted in a huge increase in the speed and volume of transactions processed in the blockchain.
eCash Use Case: Staking for Rewards
eCash has implemented a Proof-Of-Stake consensus algorithm called Avalanche. The proof-of-stake model allows owners of eCash XEC to stake XEC coins and create their own validator nodes. Staking is when you lock your coins to partake in verifying transactions.
These validator nodes record and verify transactions on the blockchain. The users then receive compensation in the form of XEC from transaction fees for their contribution. Avalanche is designed to allow a large number of validating nodes. This allows regular users to take part without the need for specialized mining or computing rigs.
Proof-of-Stake is gaining traction over Proof-of-Work as a consensus mechanism due to its efficiency and environmental effect. If someone who is verifying transactions on the blockchain tries to use an incorrect blockchain they will lose all or some of their staked coins.
eCash Use Case: Governance Token
One issue that presented itself, when Bitcoin had a hard fork resulting in Bitcoin Cash, was major market volatility and damage to the communities involved. Hard forks in blockchains can lead to market uncertainty or dips and be unattractive for investors. Rather than have the option of hard forks, eCash has changed how it makes upgrades or alterations to its blockchain. Instead, eCash has implemented biannual updates that are decided by the users.
XEC is used as a governance token within this system. XEC can be staked by holders to suggest changes or vote on decisions about the blockchain. Once a consensus is reached using the Avalanche consensus mechanism, changes will be enacted at the next scheduled update. This allows for more stability and predictability while maintaining a cohesive direction for the blockchain.
eCash Use Case: Online Payments
eCash was designed to be as easy and intuitive to use as cash with the benefits of cryptocurrency. A major focus is the speed of transactions. For cryptocurrencies to have mainstream adoption they will need to process transactions near-instantly.
Transactions can be settled in under 3 seconds using Avalanche, which is a vast improvement on Bitcoin and Bitcoin Cash. Privacy is maintained using a Zero-Knowledge subchain protocol, which gives security to all the users. Transaction fees are kept extremely low due to the consensus mechanism and low computing power needed to validate transactions.
When Bitcoin Cash ABC rebranded as eCash, they redenominated the tokens to improve the intuitive nature of the coin. Users traded in their BCHA for XEC at an exchange rate of 1 BCHA for 1,000,000. This was done to result in XEC having two decimals like the US Dollar and many other fiat currencies and aims to make the cryptocurrency easier to understand and use. Many cryptocurrencies have a large amount of decimals (like Bitcoin’s 8 decimal places) and this can be confusing for new users to understand the value of the coin.
eCash is Easy to Use
eCash is much more intuitive than other cryptocurrencies and is quick and easy to use. This makes payments online much easier than other cryptocurrencies. A user can make transfers or pay for services online and have their transaction cleared within seconds.
It isn’t limited by banking hours and transaction delays inherent to traditional fiat currencies. So a holder of XEC can transfer 20,000 XEC on a weekend and have it received by someone else near-instantaneously. Doing this with fiat currency could take days and entail high transaction fees. With Bitcoin this transaction would take close to an hour to clear.
There have been many hard forks on the Bitcoin blockchain that have attempted to improve upon Bitcoin or revolutionize how cryptocurrencies work. eCash claims to have designed a cryptocurrency to work as “digital cash”. Although eCash has implemented many features that could promote the use of XEC as a mainstream form of cryptocurrency, it is not alone in this aim.
Whilst tackling many of the issues of scalability, usability and governance that are a barrier to adoption, eCash has yet to show acceptance by major institutions and payment merchants outside of the cryptocurrency landscape. Unless eCash can prove itself as a leader in the mainstream adoption of cryptocurrency, its future remains unclear.