Bitcoin vs. Bitcoin Cash: Battle of the Generations
What if I told you there’s more than one version of Bitcoin (BTC) ? Sure, Bitcoin is, and has long been, the most popular cryptocurrency , but it’s also adapted and evolved into different variations since its inception.
The most popular example is Bitcoin Cash (BCH), a network commonly mistaken for its counterpart despite being quite different in its capabilities and functions.
Sponsored
In fact, some investors have even argued that Bitcoin Cash could supersede Bitcoin as the top dog of the crypto market. But is this just a hopeful fantasy? Or is it more of a realistic prediction?
Table of Contents
- What Is Bitcoin (BTC)?
- What Is Bitcoin Cash (BCH)?
- Why Was Bitcoin Cash Created?
- Bitcoin & Bitcoin Cash: Key Differences
- Scalability
- Fees
- Security
- Mining
- Smart Contracts
- Token Value
- Pros and Cons of Bitcoin & Bitcoin Cash
- Bitcoin Pros
- Bitcoin Cons
- Bitcoin Cash Pros
- Bitcoin Cash Cons
- Which Should I Use?
- Other Bitcoin Hard Forks
- On the Flipside
- Why This Matters
- FAQs
What Is Bitcoin (BTC)?
Bitcoin is a peer-to-peer digital asset that acts as a medium of exchange. It was first introduced to the world in 2008 through Satoshi Nakamoto’s whitepaper.
Because Bitcoin is decentralized , much like most cryptocurrencies, it doesn’t require any intermediaries to verify payments when using BTC tokens in a transaction.
What’s important to note about Bitcoin, though, is how old it is. On the one hand, this has given it plenty of time to climb to the top of the food chain and become the most popular cryptocurrency on the planet.
On the other hand, it also means that some of Bitcoin’s built-in mechanisms can seem outdated by today’s standards, which is exactly what led to the creation of Bitcoin Cash.
What Is Bitcoin Cash (BCH)?
Bitcoin Cash is a hard fork of Bitcoin, which was created in 2016 to be a more modern version of its iteration.
To be clear, a hard fork is when a blockchain diverges into two. Think of it like cutting a cake in half. Both pieces would inherently be the same, but they can be designed and modeled differently once separated.
Why Was Bitcoin Cash Created?
Bitcoin’s aging infrastructure had divided the development team. Some felt it was time for a radical upgrade to improve transaction speeds and fees, which had only worsened over time.
This caused Bitcoin to be seen as more of a store of value rather than a day-to-day trading service. The latter was the original Bitcoin vision set out by Nakamoto, and it’s, therefore, what prompted a group of developers to create this hard fork.
While Bitcoin Cash proves its superiority in numerous ways, it also sacrifices a few important elements that can be seen as drawbacks.
Bitcoin & Bitcoin Cash: Key Differences
On the surface, Bitcoin and Bitcoin Cash can seem pretty similar, especially since they serve the same purpose and sound almost identical.
When taking a peek under the hood, though, their integral differences begin to appear.
Scalability
The most obvious and important difference is their scalability: how quickly transactions are processed on the blockchain.
Because of the increased block size, Bitcoin Cash is much more scalable than Bitcoin. When transactions are registered on a blockchain, they are placed into a block, so having bigger blocks allows more transactions to be processed faster.
Bitcoin’s blocks can only reach up to 4MB in size, while Bitcoin Cash’s were upgraded to 32MB in 2018. As a result, the number of transactions Bitcoin can register each second is between 3 and 7, which can be as high as 200 for Bitcoin Cash.
Not only does Bitcoin Cash’s larger block size mean users’ wait times for making transactions will be much shorter, but it also impacts the transaction fees they will pay.
Fees
Both Bitcoin and Bitcoin Cash run on a PoW (Proof of Work) model. This means both networks have groups of ‘miners’ who verify blocks of transactions, but doing so takes time and effort.
Transaction fees partly compensate for the miners’ work, but since there are fewer blocks on Bitcoin Cash and they don’t require as much energy to mine, transaction fees across the board are lower.
On average, Bitcoin Cash transactions typically cost less than a penny, while Bitcoin’s transactions range between $0.75 and $1.99.
Security
Bitcoin Cash has its fair share of advantages, but security isn’t one of its strong suits.
Bitcoin Cash’s reliance on bigger blocks has made the blockchain ‘heavy.’ This means nodes that place the transactions into the blocks require more storage capacity to fulfill their jobs. This can make people less likely to become nodes, weakening the network.
This is why Bitcoin uses smaller blocks in the first place, so that anyone and everyone, no matter their equipment or prior experience, can become a node, making it an open-source network available to all.
On the other hand, Bitcoin Cash attempts to make up for this shortcoming, specifically by removing the lack-by-fee option. This is a built-in system on Bitcoin that allows bad actors to cancel or double-spend unconfirmed transactions. Unconfirmed transactions cannot be altered or changed on Bitcoin Cash, negating this issue altogether.
While Bitcoin is the safer option overall, Bitcoin Cash still has several security systems that help bolster its defenses.
Mining
Mining is a critical component of the Bitcoin and Bitcoin Cash ecosystems, but there are still some crucial differences to be aware of.
Bitcoin Cash possesses a system called aserti3-2D, or ‘difficulty adjustment.’ Essentially, when a block lags behind schedule or is too far ahead, the difficulty of mining it will be lowered or raised, respectively, ensuring that the network doesn’t become congested and sluggish.
One drawback of Bitcoin has been the worry that pools of miners skilled at solving blocks could centralize the system, locking everyone else out. Aserti3-2D helps to negate this issue by making the difficulty unpredictable, meaning even beginner miners have a chance at participating.
However, miner rewards are also gifted to miners after their work is complete. Both networks reward miners with native digital currency, but Bitcoin has always possessed a higher value than its younger brother. Therefore, while mining can require expensive equipment for both, many miners see Bitcoin as the more profitable option.
Smart Contracts
Bitcoin has always struggled to integrate smart contracts – tools that allow developers to build apps and tokens on top of a blockchain.
The Taproot upgrade and the Lightning network have allowed the Bitcoin network to integrate some basic smart contract functionality. However, these are quite basic and only really restricted to apps concerned with privacy and scaling.
For example, Bitcoin-based smart contracts can redirect funds to a person’s wallet or require multiple signatures to open a wallet.
Bitcoin Cash uses CashScript, a streamlined programming tool that facilitates the creation of more sophisticated and complex DeFi apps primarily tailored toward financial transactions. Therefore, any smart contract can be written onto the Bitcoin Cash blockchain, providing more unique tools and apps for investors than Bitcoin.
Token Value
By far, Bitcoin’s biggest and, in many ways, most important advantage over Bitcoin Cash is its token value. As of August 2024, Bitcoin Cash’s market cap is around $7.8 billion, roughly $389 for a single coin. In stark contrast, Bitcoin has a market cap of $1.24 trillion, with tokens estimated at $62,800.
A major reason the values are so drastically different is that Bitcoin Cash has failed to reach Bitcoin’s level of popularity. Part of this is because Bitcoin has simply been around for longer, but it’s also down to suspicion, as many people, in a world full of scammers and fraudsters, can mistakenly suspect Bitcoin Cash as a devious knockoff at first glance.
Only time will tell whether Bitcoin will be able to maintain its immense popularity. Still, it does seem unlikely that Bitcoin Cash, despite all its advantages, will ever reach the token value of its competitor.
Pros and Cons of Bitcoin & Bitcoin Cash
Now that we’ve examined how these two versions of Bitcoin differ let’s compare their benefits and drawbacks as cryptocurrency networks.
Bitcoin Pros
- Trading Options: Bitcoin is the first cryptocurrency recognised by most cryptocurrency exchanges, making it accessible. It also comes with more trading pairs, which expands its investment options.
- Security: In the June 2023 River Financial report , it was estimated that Bitcoin had 81.7 million users. More users equals more nodes and miners to protect from those who seek to take advantage.
- Popularity: Bitcoin’s popularity means finding online chatrooms and communities dedicated to the network is easy. It’s also easy to keep up with Bitcoin market fluctuations due to its popularity in the press.
- Token Value: Though Bitcoin is known for its volatility, its value has seen a meteoric rise since 2015, making it a valuable token in market terms.
Bitcoin Cons
- Scalability: Bitcoin’s old age means its total throughput lags behind many of its competitors, making transaction speeds slow and sluggish.
- Centralisation Issues: Miners with the best gear and most experience can overtake and centralize the network if they hog all the transactions.
- Divided Developers: Since November 2023, there have been over 100 Bitcoin hard forks which suggests that there’s division between the developers. This could be why upgrades and roadmaps seem so late and unambitious.
- Higher Fees: Transaction fees on Bitcoin range between $0.70 and $2, higher than those on Bitcoin Cash.
Bitcoin Cash Pros
- Transaction Speed: Bigger blocks allow Bitcoin Cash to process over 100 transactions per second.
- Lower Fees: Bitcoin Cash’s cheaper transaction fees lower the financial barrier to entry for trading markets.
- Token Issuing: Creating a token atop the Bitcoin Cash blockchain is quick and easy with the SLP protocol.
- Difficulty Adjustment: Changing the difficulty of blocks for miners ensures that no single group can reliably overrun the process.
Bitcoin Cash Cons
- Lack of Investor Confidence: Bitcoin Cash has struggled to rival Bitcoin in terms of popularity, and as a result, its development and evolution could be prolonged due to lack of broader acceptance and recognition.
- Security Worries: People are less inclined to become nodes or miners on Bitcoin Cash because of the storage space needed, and the lower value of mining rewards, impacting the network’s security.
- Less Trading Recognition: It’s harder to find Bitcoin Cash on exchanges, and there are fewer trading pairs, limiting its accessibility.
- Lack of Clarity: Bitcoin Cash’s name makes it seem like a suspicious knockoff rather than a legitimate network, impacting its acceptance among a wider audience.
Which Should I Use?
Though you should consider all of the above factors when deciding between Bitcoin and Bitcoin Cash, the token’s value should be at the core of your decision.
Bitcoin has a much higher price value, but it lags in other major areas like speed and fees. Therefore, anyone interested in storing crypto long-term as a hedge fund, like digital gold, will be more suited to Bitcoin.
On the other hand, those who want to regularly participate in peer-to-peer or daily transactions will feel more at home using Bitcoin Cash, where they can enjoy quick, cheap, and snappy trading without being bogged down by Bitcoin’s blockchain technology.
Other Bitcoin Hard Forks
As mentioned at the beginning of this article, Bitcoin has had more than a few hard forks outside of Bitcoin Cash. Here are a few of the most popular, along with details on why they were created:
- Bitcoin SV: A network that tries to adhere to the original vision of Satoshi Nakamoto. Implements cheap fees and no block size limit.
- Bitcoin Gold: Designed to strip back the mining process to lower difficulty and energy intensity.
- Bitcoin Unlimited: Allows miners to decide on the size of their blocks. Has failed to gain much recognition and remains an enigma.
On the Flipside
- Bitcoin’s dated infrastructure has made it less of a peer-to-peer network and more of a storage fund, which is not what it intended.
- Bitcoin Cash is yet to receive the acceptance needed to compete with Bitcoin.
Why This Matters
Everyone knows about Bitcoin, but understanding how its counterpart, Bitcoin Cash, works provides an alternative for those who might want a slightly more comfortable trading experience.
FAQs
Popular exchanges that support Bitcoin Cash include Coinbase, Binance, HTX Global, and OKX.
As of July 2024, the Ethereum network can process roughly 20 to 30 transactions per second, significantly faster than Bitcoin’s.
Proof of Work is a consensus algorithm in which miners verify transactions on a blockchain, eliminating the need for banks.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
You may also like
ENS Labs introduces Namechain for Ethereum scalability
Crypto airdrops to watch in mid-November
Solana rises to $211 amid growing network activity
Render price gains 28% as bullish trend continues