Bitcoin (BTC) vs. Bitcoin Cash (BCH)

Introduction

A lot of the time, developers disagree about where blockchain projects should go in the future. When these arguments get so heated that no one can agree on anything, the project splits in two. This is called a “hard fork.” The same thing happened with Bitcoin and Bitcoin Cash.

The first cryptocurrency, Bitcoin, made sending and receiving money without a bank possible. But Bitcoin Cash was made when the Bitcoin blockchain was hard forked. Splits happen when people don’t want to change or when users push for changes to the blockchain. In 2017, Bitcoin Cash split off from Bitcoin as developers and users argued about the future of Bitcoin.

In this blog, we will explore the differences between Bitcoin and Bitcoin Cash.

What is Bitcoin?

Bitcoin was the first cryptocurrency, but not many people knew about it for a long time. It works the same way as any other form of money. It lets you buy, sell, trade goods and more.

The blockchain technology cannot be owned, issued, or controlled. As an illustration, the US government produces and banks manage the US dollar. The government and the banks are the main players in this case. When you send money to a friend, you depend on the bank to authorise and carry out the transaction.

On the other hand, there isn’t a single organisation that creates or owns Bitcoin. It is possible for anyone to own the computers that run the blockchain; this is called “decentralisation.” These computers check the transactions on the blockchain.

Key features of Bitcoin

• Bitcoin is decentralised, so no government or bank controls your funds. This decentralisation keeps transactions peer-to-peer without intermediaries.
• Strong cryptographic hashing method SHA-256 secures Bitcoin. Transaction data is encrypted using this algorithm, making them secure and tamper-proof. Once on the blockchain, transactions cannot be changed, boosting security and trust.
• Bitcoin blockchain transactions are public. This transparency prevents fraud and scams because everyone can view the transaction history.
• Bitcoin defies inflation, unlike fiat currencies. Its 21 million coin production ensures scarcity and may increase in value as demand develops.
• Some compare Bitcoin to digital gold as a store of value.

What is Bitcoin Cash?

On August 1, 2017, a “hard fork” of the Bitcoin network created Bitcoin Cash (BCH). While Bitcoin Cash was becoming more popular, there were disagreements in the community about how to make the system bigger.

The blockchain block size restriction, which limits transaction processing, was discussed. Some community members believed block size would speed processing and cut transaction costs. Others worry about security and decentralisation.

Those who wanted a larger block size hard forked Bitcoin to establish Bitcoin Cash. Transactions increased to make Bitcoin a “peer-to-peer electronic cash” faster and cheaper.

Bitcoin Cash mimics Bitcoin but scales differently and has a different cryptocurrency purpose. Bitcoin Cash simplifies daily transactions with its larger block size.

Key features of Bitcoin Cash 

• Larger block sizes reduce transaction fees and network congestion in Bitcoin Cash. This invention scales networks, speeding transaction processing.
• Bitcoin Cash offers faster and cheaper transactions due to its improved network design and larger block size. It specialises in peer-to-peer transfers and fast, cheap retail purchases.
• Bitcoin Cash is decentralised and has a developer and enthusiast community. This community develops and improves the network, boosting security and resilience.
• Bitcoin Cash follows Satoshi Nakamoto’s principles. This goal encourages peer-to-peer electronic cash transactions to improve diversity, affordability, and accessibility.
• Bitcoin Cash shares Bitcoin’s 21 million coin supply cap to maintain value and scarcity. Bitcoin Cash is worth around $496.14 as of 2024, reflecting investor confidence and demand.

Bitcoin vs. Bitcoin Cash: Key differences

Bitcoin and Bitcoin Cash share a common origin but have key differences that set them apart. 

Let’s explore some of these differences:

1. Block Size and Scalability

Bitcoin Cash has a larger block size than Bitcoin. Bitcoin Cash can have 32 MB blocks, while Bitcoin can only have 1 MB. This increases Bitcoin Cash’s scalability by processing more transactions per second. To support nodes, higher block sizes require greater technical infrastructure.

2. Smart Contracts

Both Bitcoin and Bitcoin Cash allow smart contracts, albeit with different capabilities. Bitcoin smart contracts handle redirecting funds, multiple signatures, third-party unlocking, and freezing funds. However, Bitcoin Cash supports more smart contracts. Developers can use CashScript and Wormhole to write and compile functions into code and create BCH blockchain coins.

3. Profitability

Bitcoin Cash is not as profitable as Bitcoin. Bitcoin Cash was unable to outperform Bitcoin, despite a strong launch and a premium price. Given its market dominance, Bitcoin is currently far more expensive than Bitcoin Cash.

4. Transaction Costs and Fees

Bitcoin transactions are expensive, especially amid network congestion. Bitcoin Cash can handle more transactions at reduced prices due to its larger block size. It also created the Lightning Network to lower transaction fees.

6. Support for Smart Contracts

Smart contracts are not supported by Bitcoin; however, Bitcoin Cash developers can use Cash Script to do more complex functions.

Conclusion: BTC vs. BCH: Which is better?

Choosing between Bitcoin Cash (BCH) and Bitcoin (BTC) requires careful consideration. Bitcoin’s greater price may deter investors, even though both cryptocurrencies are on popular exchanges. Bitcoin Cash is an excellent cryptocurrency for beginners with a low initial commitment. But price isn’t everything. Two coin ideologies exist. Bitcoin is a long-term investment. Bitcoin Cash is for daily transactions. 

Before investing in cryptocurrencies, do your research and choose one that matches your values and ambitions.