Bitcoin is the first cryptocurrency and is recognized as Digital Gold. It also has a high trading volume due to more trading pairs and higher liquidity. Simply saying that Bitcoin is popular would be a big understatement. Bitcoin is a term that is known by almost everyone, from a small kid to an elderly person. It has indeed become a household name. If you ask anyone to name one crypto-currency that comes first in their mind, it would be Bitcoin. It is the first-ever cryptocurrency to come into existence and is by far the most valuable. Bitcoin (or BTC) is also preferred as a digital currency and as an inflation hedge.
In contrast, Bitcoin Cash (or BCH) is a cryptocurrency that was developed as an electronic payments mechanism that was cheap and simple to operate. Bitcoin Cash is spreading its roots in the crypto space and has faster transaction times as it has a larger block size and can handle more transactions at a time. Each blockchain can create only 21 million coins and the number of issued coins is halved every 210000 blocks. It is forecasted that 2140 would be the year in which the last BTC and BCH would be mined.
In this blog, we discuss the differences between Bitcoin Cash and Bitcoin. So let’s get started.
The Birth of “Bitcoin Cash”
Bitcoin Cash was born through the ‘Hard Fork’ of Bitcoin. A hard fork is a transmutation to the open-source software of Bitcoin’s blockchain. This results in two branches of the blockchain in which one branch follows the old set of protocols, while the other follows a new set of protocols.
Before getting to the descriptive differences between BTC and BCH, let’s quickly have an overview of the hard fork of Bitcoin Cash.
On May 23, 2017, a large number of Bitcoin businesspeople and miners, that constituted about 85% of the total Bitcoin holding entities, held a closed-door meeting to decide what the future of Bitcoin would look like. The result of the meeting was the SegWit2x upgrade.
SegWit2x or Segregated Witness was the proposed upgrade that would potentially scale Bitcoin by segregating the data outside the block’s finite space and adjusting the size of the blocks to 2MB. This was meant to be implemented through a hard fork. The proposal faced resistance from the community because the centralizing force i.e. Bitcoin’s main codebase was not taken into consideration.
In this debate, those who were in the favor of small blocks were against the increase in the block size, as it would lead to difficulty for full node hosting, which could centralize the currency. On the flip side, the people supporting larger block sizes debated for an agile solution raising the flag of Bitcoin’s surging transaction fees, which might put the currency’s growth in a pitfall. This debate gave rise to the Hard Fork as the individuals supporting bigger blocks decided to fork the blockchain of Bitcoin on August 1, 2017. As a result, Bitcoin Cash came into existence.
Delineating the Differences
The number of distinctions between Bitcoin and Bitcoin Cash kept increasing as developers working on both networks had different visions. And this led to a continuous increase in the changes of the currencies. Even though both networks have a common code base and transaction history, they are now two different assets.
|Bitcoin or BTC
|When it comes to investor confidence and market penetration, BTC emerges as the superlative currency. Bitcoin is the segment’s base currency, and almost all currencies trade against it.
|BCH is a younger currency as opposed to BTC, which holds the position of being the first crypto-currency in the domain. BCH is still in the process of being recognized and can potentially become a top asset in the market.
|The maximum block size of a BTC is 1MB. This results in lesser scalability, due to the execution of lesser transactions per second with respect to BCH.
|Bitcoin Cash’s maximum block size is 32MB. This facilitates more scalability, providing BCH with the execution power to make more transactions per second.
|The development community of BTC is said to lack effective leadership. The group is said to be disintegrated and as a result, has slower implementations and updates. This does hold BTC back, and other third-generation currencies can take lead due to this issue.
|The development team of BCH is fast and adroit at implementing updates. The BCH team believes in Satoshi Nakamoto’s (Creator of Bitcoin) pioneering vision for Bitcoin – A decentralized electronic cash system that can take the place of fiat currencies.
|BTC is more costly to move around in the exchanges. BTC has a slower moving rate and costs way more per transaction. Due to this, it becomes less profitable than BCH.
|BCH is comparatively cheaper to move around in exchanges. It has a faster-moving rate and hence costs way less per transaction. This makes it more profitable than BTC.
|For issuing tokens through the BTC network, the projects have to leverage the Omni layer. It is a protocol built to develop and trade smart contracts and custom digital assets.
|Simple Ledger Protocol or SLP is a token mechanism developed by Bitcoin Cash. It enables its users to issue and trade electronic tokens that are based on the same security model of BCH.
|BTC is considered to be more secure than BCH due to its smaller-sized blocks that can gyrate in a better manner.
|BCH is pertinently less secure than BTC due to its larger-sized blocks.
|BTC has significantly more transaction fees than BCH.
|BCH typically has lesser transaction fees compared to BTC.
So till now, you must have got a clear idea about the difference between Bitcoin Cash and Bitcoin. To get more information about Bitcoin Monetary policy click here. Both of them are also good inflation hedges and can help in the diversification of your investment portfolio. But before you invest your hard-earned money into crypto-currency, you should do a substantial amount of research. We hope that you found this helpful.
(Note: Nothing mentioned in this blog is financial advice. Please do an ample amount of research before investing any money in cryptocurrencies.)
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