Bitcoin (BTC) and Bitcoin Cash (BCH) are some of the top digital currencies. As a beginner in the crypto world, it can be confusing to understand the difference between the two. For the basics, BTC is the leading crypto that was the first in the market. It has become an economic force that is used as an asset and leverage against inflation. BCH on the other hand is a digital currency that looks to make for easy and cheap transactions.
While Bitcoin was created by Satoshi Nakamoto, an anonymous user or group, Bitcoin Cash came about as a hard fork of Bitcoin following a lack of consensus among the Bitcoin users. Read the beginner’s guide to bitcoin cash.
Understanding the Bitcoin fork
A fork in the cryptocurrency world is when there is a radical upgrade to the open-source software behind the crypto. The upgrades come with a permanent divergence where a new version of the blockchain operates differently from the original version. Each of the new sides comes with a set of rules different from the other.
It is this hard fork that happened to Bitcoin in August 2017. The fork came about following a dispute among the Bitcoin community. Even though Bitcoin was meeting all expectations by then, there were concerns about its scalability. Compared to other payment methods, Bitcoin transactions are slow. It processes around 7 transactions per second. This is incomparable to the other options like Visa that process around 1500 transactions per second.
To improve Bitcoin’s scalability one team recommended the increase of the block size on the network to handle more transactions. There was also a suggestion to remove the digital signatures from the transaction information to allow for more space. However, another team felt Bitcoin was better off as it was. They were after limiting Bitcoin’s misuse.
By failing to reach a consensus, Bitcoin had to undergo a hard fork leading to the creation of the more scalable Bitcoin Cash.
The difference between Bitcoin and Bitcoin Cash
Even though operating on a common code base there are differences between BTC and BCH. These differences have widened over time such that both coins operate independently without seeming anything similar. Some of the differences include;
Block size differences
In seeking to improve Bitcoin’s scalability, the other team was looking to increase its block size. The BCH team achieved this by having it come with a 32MB block size. Bitcoin however retained the 1MB block size. The difference in block size means transactions in BCH are way cheaper and faster.
The difficulty adjustment algorithm added to the BCH remains another big difference. Even though both cryptos use the SHA-256 hashing scheme, the BCH mining is more adjustable. The more miners in the Bitcoin network the more difficult it becomes to mine. At such a point, Bitcoin miners can move to the Bitcoin Cash network.
Smart contracts and Defi
One of the places where Bitcoin finds criticism the most is its lack of support for smart contracts and decentralized finances. Bitcoin Cash however supports smart contracts languages like Cashscript.
Which one is better?
Even though Bitcoin Cash comes with faster transaction speeds and lower transaction costs, Bitcoin reigns supreme. It has a wider market supply and the biggest market cap in the crypto world. Bitcoin has multiple use cases and is widely accepted by individual users, merchants, and institutional investors.