Difference Between Bitcoin (BTC) and Bitcoin Cash (BCH)
Many crypto newbies often confuse bitcoin with bitcoin cash. This is not surprising seeing as they are somewhat similar. In fact, it is not unusual to find newbies mistaking bitcoin cash for bitcoin, and buying those tokens in bulk because they think bitcoin’s price has drastically dropped.
This is why we have created this guide: to show you the various differences between the two. This way, you won’t mistake one for the other. That said, let’s jump right in and examine each of these cryptocurrencies.
Bitcoin is the world’s pioneer cryptocurrency. Represented by the BTC token, this is the crypto token that everyone knows about. In fact, it is synonymous with cryptocurrency as a term.
So, when most lay people talk about cryptocurrency, they generally mean bitcoin. Yet, bitcoin itself is just one of the many cryptos in circulation and available for exchange.
It has been in existence since 2009, and has grown to become the most valuable of all cryptos. This makes it the most in-demand cryptocurrency ever. Bitcoin is able to carry out and execute transactions courtesy of its proof of work (PoW) consensus mechanism.
While this is a pretty great consensus, it has its drawbacks, one of which is delay in transactions. This delay in transactions is actually tied to its inability to scale and expand as transaction volumes increase.
This is what resulted in the birth of Bitcoin Cash (BCH) through a hard fork. This was aimed at solving the scalability and growth problems that bitcoin was/is facing.
Bitcoin And Transaction Verification
In order for a transaction to be verified and executed, it needs the votes of miners who have to reach that consensus through the solving of particularly hard puzzles and problems.
When a predetermined number of miners arrive at the same answer, the transaction is approved and executed, and the data added to the new, running block.
While some individuals feel that the proof of work consensus mechanism is slow, most agree that it helps prevent a select few from hijacking the network and the occurrence of a 51% attack.
Bitcoin And Transaction Speed
The reality is that because of the process, bitcoin transactions that do not have an accompanying fee, tend to be placed at the back of the “queue”, while those with fees get moved forward. Eventually, all transactions are processed, but they can take so much time.
This is why transactions on the bitcoin network are very slow compared to other platforms where transactions can be executed within seconds. In fact, transactions on the bitcoin network are between 3 and 7 transactions per second (TPS).
Compared to Ripple’s 1,500 TPS and VISA’s 24,000 TPS, it’s easy to see that the number bitcoin’s transactions completed every second are ridiculously slow.
Part of the reason this happens is because the blocks are pretty small and capable of storing only 1MB data. Naturally, an increase in block size would mean increased transaction speeds. Unfortunately, altering this foundational element is too big a risk, and may actually destroy the network.
Segregated Witness As A Possible Solution?
To prevent this from continuing, the developer community decided to come up with solutions that could help with bitcoin’s scalability problems.
This is what led to the creation of Segregated Witness (SegWit), a soft fork and a process that’s meant to help bitcoin execute and complete transactions faster.
With this in place, block sizes went from 1MB to 4MB, thus allowing for faster data storage on the blocks. Alas, even SegWit proved completely incapable of solving the problem, resulting in it being abandoned.
This is another solution to Bitcoin’s limited block size and slow transactions. Bitcoin Cash is a hard fork of bitcoin that was created in 2017, with the aim of being a better version of bitcoin.
This resulted in the creation of two different blockchain protocols, with both running independently. Bitcoin Cash was the next viable option proposed to the community after SegWit refused to catch on.
Bitcoin Cash of course still utilizes the proof of work consensus, but transactions on the platform are faster, thanks to the increased block size. Naturally, all bitcoin owners received an equivalent number of BCH tokens as they had in their bitcoin.com wallets.
So, if at the time of its creation, you had 1000 BTC, you were liable to also getting 1,000 BCH at the creation of the hard fork. This incentive was used to sway the community in joining and adopting the blockchain tech.
The idea behind bitcoin cash is that it should be used as a cash equivalent, instead of bitcoin that’s primarily used as a store of value and investment tool.
What Are Bitcoin Cash’s Features?
As an improvement on bitcoin, BCH has quite a few impressive features, thus making it an attractive investment opportunity as well as a crypto that can be used more frequently for transactions.
The first edge that BCH has is that its blocks are comparatively bigger than bitcoin’s. Where bitcoin is limited to the 1MB blocks, BCH’s blocks can be as big as 32MB. This all depends on the transaction volume and speed at any given time.
This ability to expand and scale its block size makes for an excellent alternative to bitcoin. Please note that at the time of writing this article, BCH’s blocks are on the average, smaller than bitcoin’s.
This is probably due to its slower adoption and use by the crypto community. Therefore, were seeing a significantly smaller number of transactions being carried out on the bitcoin cash network.
The good news is that when the transactions eventually start becoming bigger and increasing in volume, we can expect the block size to adjust as it sees fit.
Less Blocks Than Bitcoin
Currently, bitcoin creates a lot more blocks per hour than bitcoin cash. This makes sense because bitcoin’s blocks aren’t as big as bitcoin cash’s. As a result, you have more miners mining new bitcoin blocks, and getting rewarded for it, than those mining BCH.
For now, bitcoin will continue to grow in value, while its mining becomes increasingly harder, and the rewards smaller. We envisage that we’ll probably see more people mining BCH as soon as bitcoin’s current reward of 12.5 BTC per block is further halved.
Bitcoin currently has more tokens in circulation than bitcoin cash. As we speak, the BCH only has almost 9 percent of bitcoin’s transaction volume and less than 7 percent of its wallets are active. Compared to bitcoin’s huge numbers, those are very paltry figures.
This is because bitcoin has more usage and adoption than bitcoin cash, even though the latter offers faster transaction speeds. This, combined with the former’s huge market cap makes bitcoin cash the token’s underachieving “cousin”.
Bitcoin Cash Vs Bitcoin –How Are They Different?
More Established Bitcoin Community
Bitcoin has been in existence for at least 7 years. Bitcoin cash on the other hand, has only been in existence for 1 year. This means that the former’s community and followership are far more established and have the preferred advantage over the latter’s.
With only 5 percent of the bitcoin community supporting BCH, it’s no wonder that it’s not gaining as much traction as it should. Bitcoin has more miners, more users, more circulated tokens and a bigger market cap than bitcoin cash. It’s honestly, the more successful of the two, even if it has major flaws.
Bitcoin Is Decentralized
A key component of cryptos is that it be non-centralized –that one entity or a select few not control it. Bitcoin completely embodies this with its decentralized nature. Bitcoin cash, not so much. It is centralized and controlled by a few entities.
The potential risks of this include possible successful hack attacks, increased network control by those few and higher security risks. In fact, a few cyber experts have found that almost 100 percent of all bitcoin cash nodes are owned by one entity, with about “54 percent of its reachable nodes running on Alibaba’s virtual servers in China”.
Most knowledgeable crypto developers have been talking about this and calling out the founders of bitcoin cash about this since its development in 2017.
While bitcoin cash was created for the sole purpose of solving bitcoin’s scalability problems, the reality is that the controversies surrounding it, its lack of massive adoption and poor numbers are potentially harmful to the survival of the crypto. However, it is possible that things will improve with time, seeing as it’s only a year old.
If you’re torn about which of the two tokens to invest in, we do suggest that bitcoin is the more solid of the two. However, just because we think it’s the better of the two, doesn’t mean you won’t benefit from investing in bitcoin cash.
Bitcoin is just better established, has an active community, is the crypto of choice and capable of driving market forces. Bitcoin would be where the smart money goes. However, if you have decent capital, you should invest in the two. After all, BCH has the fourth largest market cap in the crypto industry and is very highly valued for its short existence in the market.