Cryptocurrencies have revolutionized the financial landscape, and Bitcoin, as the pioneering digital currency, continues to dominate the market. However, in the midst of Bitcoin’s success, a significant fork occurred, giving rise to Bitcoin Cash. While both cryptocurrencies share a common origin, they have diverged in terms of philosophy, technical aspects, and overall purpose.
In this article, we aim to unravel the differences between Bitcoin and Bitcoin Cash, delving into their distinct features, consensus mechanisms, transaction speeds, scalability solutions, and community philosophies. By grasping these nuances, you’ll gain a comprehensive understanding of the diverging paths of these two prominent cryptocurrencies, enabling you to navigate the digital financial realm with confidence.
Table of Contents
- A Side-By-Side Comparison Of Bitcoin & Bitcoin Cash
- Introduction Of Bitcoin Cash
- The Difference Between Bitcoin And Bitcoin Cash
- Conclusion: No Direct Exchange
A Side-By-Side Comparison Of Bitcoin & Bitcoin Cash
Bitcoin, the most popular cryptocurrency, has often been questioned of its effective scaling abilities. This digital currency exists in computers and within a blockchain. Even though it is a popular cryptocurrency, its technology is slow. It performs only seven transactions per second while Visa, one of its main competitors, performs 24,000 transactions per second. Since there are so many transactions to handle, the technology required a radical change to improve the scalability of digital tokens.
Introduction Of Bitcoin Cash
Experts came up with two solutions to deal with the scaling issue of Bitcoin – one, to use a smaller amount of data to verify each block to make each transaction cheaper and faster, and second, to make the data blocks bigger to allow more information to process at one time. This led to the introduction of Bitcoin Cash. It was the best way to address the scalability issue.
Bitcoin Cash follows the second solution to scale Bitcoins. It maximizes the block size limit parameter to increase the transaction speed of the Bitcoin codebase. This cryptocurrency uses a fork of the primary Bitcoin network. So, if you had Bitcoins when it was first forked in August 2017, you will not have an equivalent Bitcoin Cash amount on the respective Bitcoin Cash blockchain. Although the block size of Bitcoin remains at 1 MB that allows approximately 250,000 transactions per day, the block size of Bitcoin Cash has an 8 MB size. The considerable difference allows Bitcoin Cash to perform more than two million transactions in a day.
The Difference Between Bitcoin And Bitcoin Cash
As a user, you will hardly understand any difference between Bitcoin and Bitcoin Cash. Apart from the block size, their primary difference is the equal
Some of the critical differences between these two digital currencies are:
1. New Transaction Signatures
Every cryptocurrency has a different transaction signature. Although Bitcoin Cash exists because of Bitcoin, it uses a different signature to verify its difference from Bitcoin.
2. Replay And Wipeout Protection
There is no possibility of the replay between Bitcoin and Bitcoin Cash as the two chains don’t operate on the same platform. Bitcoin uses a different hash algorithm to the one Bitcoin Cash uses.
3. Emergency Difficulty Adjustment
Bitcoin Cash uses a new algorithm EDA that ensures usual chain work even when there is a significant change in the number of miners. This has been a game changer when it comes to differentiating Bitcoin from Bitcoin Cash. The latter now offers additional stability to the users than Bitcoin.
4. On-Chain Scalability
As already mentioned, Bitcoin Cash has a block size limit of 8 MB making it 8-times faster than Bitcoin. Experts believe that BCH can improve the block size limit in the future and increase the transaction speed to bypass the drawbacks of Bitcoin.
5. Decentralized Development
On the one hand, Bitcoin is becoming the new asset class for many investors and is slowly moving towards the future of digital payments while Bitcoin Cash is trying to secure the future of both the digital currencies by improving the transaction speed. Since it is independent of protocol development, the scope for improvement is more for Bitcoin Cash than Bitcoin.
6. Better Nodes
Experts believe that Bitcoin has a bigger and better network than Bitcoin Cash. With 10-times more fuller nodes than Bitcoin Cash, investors feel it is safer to invest in Bitcoins even if the transaction is slower.
Conclusion: No Direct Exchange
Even though Bitcoin Cash comes from the concept of Bitcoin, you cannot directly exchange the two cryptocurrencies. They are entirely different, and you can’t keep them in the same wallet either.
What should you use?
There is a growing competition between Bitcoin and Bitcoin Cash, but for different reasons. Investors who want quick transactions are shifting from Bitcoin to Bitcoin Cash, but those who want more reliability are sticking to Bitcoin.
If you are in a dilemma to choose between these two, the above differences will help to understand your preference better. Bitcoin Cash offers a reliable rate of transaction and lower fees compared to Bitcoin. If you consider their development and what the future holds for them, then you can expect the same kind of competition in the coming years. The growing need of altering existing software and improvising the transactions facilities will keep Bitcoin Cash slightly ahead.
The easiest way to sort your priorities is to think of what you will do with your cryptocurrencies. If you use them as an investment, you should choose Bitcoin; if you want them for completing quick transactions, you should select Bitcoin Cash.
Want to learn more about the history of Bitcoin and its inception? Well, check out our official documentary list here to watch one of our favorite feature documentaries on this subject to your