Bitcoin Cash (BCH) was developed as a response to concerns regarding Bitcoin’s (BTC) future direction. The two cryptocurrencies share many similarities besides their names, but they’re entirely different assets.
You might already know that Bitcoin is the world’s oldest and most popular cryptocurrency, with a US$1 trillion market cap, currently worth over US$55,000 per coin. Bitcoin Cash on the other hand is currently the 9th most popular crypto, with a market cap of over US$26 billion and trading at US$1408.64 at the time of writing. Like BTC, BCH has shown massive growth in the past year, rising over 480% since May 2020.
There are a host of factors to consider when comparing Bitcoin vs. Bitcoin Cash. The following Forkast.News guide will explain the key similarities and differences between the two.
In this guide:
- What Is Bitcoin?
- What Is a Hard Fork?
- What is Bitcoin Cash and How Is It Different?
- Development Teams
Bitcoin Cash Development
- Bitcoin vs Bitcoin Cash Future Outlook
- Bitcoin vs Bitcoin Cash – Key Takeaways
1. What is Bitcoin?
Bitcoin is the world’s first cryptocurrency. It is based on blockchain technology that prevents counterfeiting and eliminates the need for a trusted third party in financial transactions.
As of Q1 2021, there are over 18.5 million Bitcoins in circulation. The total number that will ever be mined is capped at 21 million. Cryptocurrency experts believe that its scarcity is, and will continue to be, a significant driving factor for Bitcoin’s price — especially once the limit is reached.
Similar to other currencies, one can use Bitcoin to buy and sell products, services, and investments. The way Bitcoin transactions work, however, is unique.
Transactions are broadcast to the network, processed, and verified by Bitcoin miners (who receive a fee to secure the protocol) resulting in the distributed ledger, or blockchain, being updated in the computers (nodes) that store it. These nodes can be owned by anybody, making the blockchain decentralized.
Transactions are submitted and stored in blocks — hence the name blockchain. The block size of Bitcoin is one megabyte, with the block creation time taking on average 10 minutes (There is a system called segregated witness which seeks to create more space in blocks by reducing the data carried by each transaction, but it is not universally employed). The network’s blocksize is one of the main reasons behind Bitcoin’s limited transaction processing capacity (around seven to ten transactions per second) and scalability concerns.
One of Bitcoin’s biggest advantages compared to Bitcoin Cash is its popularity. Being the first-ever cryptocurrency, it is by far the most widely adopted and has the most institutional trust behind it and third-party services supporting it. Bitcoin currently represents just under 48% of the entire industry.
Bitcoin’s biggest disadvantages, compared to Bitcoin Cash, are the aforementioned scalability issues. As the first cryptocurrency, Bitcoin also relies on the oldest blockchain technology. Hence, Bitcoin has slower transaction processing times and significantly higher fees.
On one hand, this could lead to Bitcoin losing its monopoly as new and more versatile altcoins come to market. But others argue that Bitcoin has already transcended into a store of value as “digital gold.”
2. What is a hard fork?
A hard fork represents the most radical change to the protocol of a blockchain network. This update splits the blockchain network into two paths, one that follows the previous protocol and one that follows the updated version — hence the name hard fork.
After the update, the original blockchain remains unaltered, while the updated nodes split off from the original network, creating a new blockchain. The coins on the forked blockchain are unique, creating an entirely new cryptocurrency.
Hard forks can be initiated by developers or crypto community members who want to implement more functionalities to the existing blockchain technology. This also requires all the network’s nodes and users to upgrade to the latest version of the software.
As a result of a hard fork, cryptocurrency holders will be automatically granted tokens in the new fork. For instance, if you held 10 Bitcoins before the Bitcoin Cash hard fork in 2017, you would have gotten the equivalent of your holdings in 10 BCH after the fork.
To date, Bitcoin has undergone numerous hard forks, resulting in projects like Bitcoin XT, Bitcoin Classic, and Bitcoin Gold — to name some of the most popular. Yet, Bitcoin Cash is undoubtedly one of Bitcoin’s most successful hard forks.
3. What is Bitcoin Cash and how is it different from Bitcoin?
Bitcoin Cash was created from the same code base as Bitcoin. The hard fork resulted in a currency that shares numerous technical characteristics with Bitcoin.
First, both cryptocurrencies utilize a proof-of-work consensus mechanism. This means that as miners do the work of mining new blocks, transactions are confirmed on the blockchain and the miners are rewarded with new coins.
Second, both digital assets utilize a difficulty adjustment algorithm (DAA). For BTC the network difficulty is adjusted every 2016 blocks (around 2 weeks). BCH difficulty is adjusted for each block (roughly every 10 minutes), calculated via a moving window of the previous 144 blocks. Simply put, difficulty is a measure of the computing power needed to mine a block. Difficulty adjustments help guarantee steady block production and secure the network.
Bitcoin Cash was created in August 2017 by developers concerned about Bitcoin’s scalability issues. Bitcoin Cash addressed these issues with a larger block size (8 to 32 megabytes) – leading to lower transaction fees and shorter wait times.
Overall Bitcoin Cash is cheaper and faster than Bitcoin, enabling more people to execute transactions on the blockchain at the same time. The average BCH transaction costs around US$0.03, while BTC transactions cost around US$20. BTC fees reached as high as US$60 in April.
Thanks to its optimized network, Bitcoin Cash is also cheaper to trade and move around within cryptocurrency exchanges.
Despite being the newer coin, Bitcoin Cash addresses Bitcoin’s scalability issues by supporting 116 transactions per second, compared to the Bitcoin network’s capacity of 10 transactions per second. The BCH network also offers smaller transaction fees and supports more concurrent users. But being a fairly new project, Bitcoin Cash still has a lot of room to grow. Current transactions per second on both networks can be compared here. Information about the May 15 update designed to further increase BCH scalability can be found here.
On the downside, Bitcoin Cash has fewer trading pairs and lower liquidity — making it less tradable. BCH’s intraday volume is also indicative of a lower demand, measuring US$14.3 billion, compared to BTC’s US$71.9 billion at time of publication.
4. Bitcoin and Bitcoin Cash’s development teams
Both Bitcoin and Bitcoin Cash are based on free, open-source software, meaning anyone can contribute or suggest changes to the code base. This has engendered enthusiastic developer communities behind the coins.
Yet, the Bitcoin developer community has been said to lack leadership and organization compared to some of the leading third-generation cryptocurrencies. The fact that the group is divided results in slower updates and more difficult implementation — a significant disadvantage for Bitcoin’s future in the market according to some.
Bitcoin Cash’s development
Bitcoin Cash updates come from a team of developers mainly coordinated via Github and Bitcoincashresearch, who believe in Satoshi Nakamoto’s original vision for Bitcoin — a decentralized, peer-to-peer electronic cash system that can replace fiat currencies and render financial institutions obsolete.
The BCH developer community’s roadmap for 2021 plans to improve the coin’s wider adoption by further increasing transaction speed and addressing double-spending-related concerns.
Developers passionate about Bitcoin Cash can make protocol update suggestions on Bitcoincashresearch.org and other similar forums that help with development coordination.
Despite its decentralized development, the team behind Bitcoin Cash enjoys a reputation for being highly unified. They’re quick on implementing software updates that further increase BCH’s scalability — what some see as paving the way for BCH’s global adoption.
5. What is the future of Bitcoin vs. Bitcoin Cash?
The price of both Bitcoin and Bitcoin Cash is determined by demand, usage and overall adoption. Both coins are viewed by many as promising stores of value — Bitcoin being the dominant one, with Bitcoin Cash steadily rising in value.
Thanks to its solid network and increased transaction processing speed, BCH could become increasingly popular as a transactional currency, like cash, while BTC’s difficulty of everyday use would make it more like gold bars — or “digital gold” that could be a long-term store of value.
Today, Bitcoin is still the leading store of value in the entire cryptocurrency space, but some believe this could change.
Roger Ver, the executive chairman of Bitcoin.com, has traveled the world to promote Bitcoin Cash over the original BTC:
“As Bitcoin Cash becomes spendable as money all over the world, more and more people are going to start using that as their store of value rather than something like Bitcoin, where it costs you more in fees to use it than it does to pay for the thing that you’re actually paying for,” Ver said, in an interview with Forkast.News.
Will BCH’s versatility and lower transaction fees be enough to erode BTC’s market monopoly? No one has a crystal ball, but according to some analysts, the forecast for Bitcoin Cash is promising, as they predict BCH will reach even greater heights price-wise.
6. Bitcoin vs. Bitcoin Cash: the key takeaways
Bitcoin in summary:
- BTC is the first and most popular cryptocurrency, commonly perceived as a “digital gold” store of value.
- BTC is thought to be the gold standard of the crypto industry, with the most institutional trust and mainstream adoption.
- BTC has superior tradability due to higher liquidity and more trading pairs.
Bitcoin Cash in summary:
- BCH has a newer and improved network that enables cheaper transactions. BCH transaction fees currently average US$0.03, while BTC transactions cost about US$20.
- BCH has much faster transaction times due to its larger block size.
- BCH can handle more transactions at once. Meaning that more people can use BCH at any given time than BTC, which makes it a much more usable currency for everyday life and perhaps a more likely replacement for fiat money.