If you are new to crypto, you may be confused: is there more than one Bitcoin? In this article, we’ll compare Bitcoin and Bitcoin Cash point by point and explain what’s the difference between them.
- Bitcoin vs Bitcoin Cash debate traces back to 2017 when the community decided to make two versions of the Bitcoin blockchain. Both are variations of the original protocol trying to follow their own way to become the “peer-to-peer electronic cash”;
- Bitcoin is seeing more retail use and is even recognized as legal tender. But as time goes on, Bitcoin Cash is catching up;
- Bitcoin still holds its place at the top of the crypto market and is hailed as “digital gold”. Bitcoin Cash, on the other hand, has significantly lower transaction costs.
What is Bitcoin?
To compare Bitcoin vs Bitcoin Cash, a general overview of both is in order.
Bitcoin is a decentralized and distributed open-source peer-to-peer ledger. It’s maintained by a network of nodes and miners, who add blocks to the blockchain and produce new bitcoins in a process called “mining”. To make it work, it uses a network of independent nodes which keep a copy of the ledger.
Bitcoin was designed by a pseudonymous cypherpunk known as Satoshi Nakamoto. In late 2008 they published a whitepaper in the community’s newsletter, and in early 2009 Bitcoin’s blockchain was launched. Bitcoin was developed as a solution to the debasement of national fiat currencies and an alternative to the existing financial system.
What is Bitcoin Cash?
Bitcoin served as a basis for many altcoins but even it had its limitations. For example, it proved to be more unwieldy in day-to-day transactions due to slow processing times.
In 2016, members of the Bitcoin community proposed a solution in the form of SegWit technology. However, a part of it disagreed and put forward another solution: increasing the block size. At the core of this debate are the pros and cons of both SegWit and the larger block size.
The SegWit protocol separated transaction data from “witness” data, which includes the encrypted signature. Incidentally, while the block space remained at 1 MB, the block weight limit was also increased. Those who opposed SegWit believed it would make the Bitcoin blockchain less secure and opted to increase the block size itself. It was not a popular solution because it would make the blockchain more bloated and harder to sync. No consensus was reached, and the two cliques parted ways and split the blockchain.
So how does Bitcoin Cash work? In addition to being able to execute transactions on the blockchain as Bitcoin does, it claims to have lower fees and higher throughput without compromised security.
Bitcoin vs Bitcoin Cash
What is the difference between Bitcoin and Bitcoin Cash? The first thing to come to mind would be their use cases.
Bitcoin originally was meant to become a digital currency for daily use, and definitely is used as such even today. The reason that this use case moved to the background is that in its current state the Bitcoin throughput is just 7 transactions per second. Not to mention, one has to wait at least 10 minutes to be sure the transaction won’t be reverted.
Bitcoin Cash is also used as a means of payment and is arguably better than BTC for that purpose. Its transactions per second (TPS) rate is around 116, which is definitely higher than in Bitcoin.
Cost of Transacting
One of the aspects in which Bitcoin Cash is undoubtedly better than Bitcoin is transaction fees.
The information is verifiable in independent sources: BCH transaction fees are consistently significantly lower than for BTC.
When it comes to scaling the network, BTC and BCH are more different than they seem on the surface. Since both networks have a relatively low throughput by default, there have been many attempts to solve this problem.
After SegWit which served as a stepping stone, Bitcoin Core opted for a layer-two solution, Lightning Network (LN) for quick transactions. In Lightning Network, transactions are performed almost instantaneously, and the record on the main blockchain is made only when the channel is closed. The main downsides to LN are it requires a degree of trust in the LN node operator and it requires upfront liquidity to work.
Since Bitcoin Cash does not have SegWit implemented, layer-two scaling solutions such as LN are not possible. Instead of making those, the developer community comes up with pruning and optimizing protocols. Xthinner and CTOR are a couple of those.
Both BCH and BTC use the Proof-of-Work consensus algorithm. It means miners who solve cryptographic hashes to propagate the chain secure the network.
Why is Bitcoin more secure than BCH? In raw numbers, it has more mining power to back the consensus. Attacking the chain would be prohibitively expensive for BTC vs BCH. A theoretical 51% attack on BTC would cost $713,967 and $4,213 for BCH, according to the Crypto51 simulations.
A very important facet of adoption is building a narrative around the currency, which outlines the use cases and the future. Since there is no common knowledge about these currencies on a mass scale, the narrative acts as an introductory version of it.
The dominant narrative surrounding Bitcoin these days is “digital gold”: it is an asset with only 21 million units in existence. This immutable scarcity is what makes it attractive for storing value long-term, especially when the fiat currency emission changes.
Since its early stages, it was important for Bitcoin Cash to set itself apart from the Core. At the same time, they maintain it is BCH’s vision that is true to Satoshi Nakamoto’s “digital peer-to-peer cash” vision. (A BCH fork Bitcoin SV would late even incorporate it into the name). One of BCH’s core principles is not to make its blockchain a settlement layer like BTC did.
When it comes to adoption, Bitcoin Cash can compete with Bitcoin. The latter became legal tender in El Salvador last year but BCH is also getting legal recognition in emerging nations.
As for merchants, the Cryptwerk registry has more than 7,800 points of purchase that accept Bitcoin worldwide and 2,900 that accept BCH. In terms of retail, BCH ranks 4th.
No matter which side of the Bitcoin vs BCH debate you are taking, everyone is equally concerned about future-proofing the tech. One of the topics of debate is the environmental impact of these currencies.
Proof-of-Work requires real electricity so the mining machines can compute hashes, and the hash rate directly corresponds to the number of miners online. The higher it is, the more electricity is required to mine the next block, so when it grows, it’s exponential.
Bitcoin miners are moving to renewable and sustainable energy sources. In America, there is the Bitcoin Mining Council which provides public reports on the process of transition.
Currently, Bitcoin Cash amasses only a fraction of the hash power of Bitcoin, so it is less of an issue. Bitcoin Cash was launched with the vision that mining would be done by professionals, and in that case, the transition to more sustainable practices would be even easier than in BTC.
Should I buy Bitcoin Cash or Bitcoin?
To compare the price dynamics of both currencies, let’s refer to the Bitcoin vs Bitcoin Cash price chart.
The last time BCH outperformed BTC was in early 2020. In the 2021 bull run, it actually came pretty close to showing the same gains as BTC, but at the time of writing, it is completely overshadowed.
|Price (at the moment of writing)||$16,753.71||$104.31|
|All-time high||$68,789.63 (11-10-2021)||$4,355.62 (12-10-2017)|
|Supply||19,210,537 BTC (91%)||19,232,237.50 BCH (92%)|
No matter which you choose, don’t forget both Bitcoin and Bitcoin Cash can be bought and exchanged on ChangeHero!
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This article is not a piece of investment advice. When dealing with cryptocurrencies, remember that they are extremely volatile and thus, a high-risk investment. Consider investing in cryptocurrencies only after careful consideration and your own research and at your own risk.