Many cryptocurrencies emerge as new projects, while others come as hard forks of an existing one. This was the case of Bitcoin Cash BCH, a hard fork of the original 2009 bitcoin blockchain.
On August 1, 2017, some developers hard-forked the original Bitcoin network to create Bitcoin Cash. They aimed to reduce high transaction costs by expanding the block size to accommodate more transactions.
While these two cryptocurrencies are similar in certain areas, such as using the proof-of-work consensus mechanism, they have their differences too. This article explores the differences and similarities in a bitcoin vs. bitcoin cash approach.
Understanding Bitcoin And How It Works
Bitcoin is the crypto that announced blockchain technology for developers. From its development by the pseudonymous Satoshi Nakamoto in 2008 to its launch in 2009, bitcoin has taken the lead always.
Let’s examine the bitcoin network and how it works below.
A brief analysis of the bitcoin network
Bitcoin emerged as a means of value transfer without government intervention. The network aimed to allow users to control their assets regarding buying, selling, holding, or even investing.
It eliminated the need for banks or other traditional financial institutions before executing transactions. All the users need is their private keys to prove ownership of funds and use them for transactions.
To achieve this goal, bitcoin developers built the network on the blockchain, a decentralized public immutable ledger. This ledger serves as the account book for the network, where participants can record all transaction data after verification.
As an immutable ledger, all the records on the blockchain remain unchangeable, ensuring the entire network's security.
The challenges of the bitcoin network
Just like every new system, bitcoin also had its issues as it kicked off. One of the issues that emerged in the bitcoin network was scalability. Even though many people would love to utilize the novel option, bitcoin transaction speed and volume was unimpressive.
The network could only process 7 TPS, making it difficult to accommodate the growing demand.
Payment services such as Visa then could process a whopping 1700 transactions per second, amounting to 150 million transactions in 24 hours.
Comparing both systems showed that Bitcoin had a long way to go in becoming an alternative financial system.
Core reason
Each transaction on the network comprises data that must be recorded on the blockchain after verification. Each Bitcoin block size limit is 1 MB, which could contain more than 2000 transactions.
But with the increasing recognition and demand for virtual transactions, this block space couldn't sustain the demands. At one point, there were more than 100,000 transactions pending, leading to a hike in fees on the bitcoin network.
The relationship between transaction fees and speed of confirmation is that miners will pick the transactions with higher fees attached than those with lower fees. This was one reason some bitcoin developers hard-forked the original network, creating Bitcoin Cash.
What is bitcoin
Bitcoin is a digital coin that facilitates virtual transactions through a peer-to-peer network. It is a chain of different digital signatures. Once a user transfers the electronic coin to another user, the transaction will be signed digitally using the hash of the initial transaction and the new owner's public key.
Users have both the public keys that others on the network can see and the private keys, a set of secret numbers. The user signs or authenticates every transaction with private keys and must keep it safe to protect his funds.
One good thing about transacting with bitcoin is the anonymity it offers. Users can make transactions without compromising their identities. All they need is their public and private keys and the receiver's public keys.
Notably, Bitcoin has a supply cap of 21 million coins. The reason is to curb inflation. After 2140, miners will no longer release new BTCs into the system.
Bitcoin price prediction: experts take
Bitcoin price as of October 28 stands at $20,168.58. The general crypto market trend is not looking good, with many altcoins trading in red today. But even with the prolonged crypto winter, there’s still hope for BTC.
Many experts predict that Bitcoin might reach $400K and even $1 million in some years. Some of them include venture capitalists and macroeconomists such as Max Keiser, Time Draper, and Michael Saylor, who predicted Bitcoin to hit $500K in ten years.
Another top player in the industry, Mike Novogratz, also predicted that Bitcoin would reach $500,000 in 5 years.
Predictions can change given the volatility of the crypto market and the ever-changing macroeconomic environment. But given the supply cap of bitcoin and its growing adoption and usage, the coin has a brighter future ahead.
Understanding Bitcoin Cash And How It Works?
Bitcoin cash emerged in 2017 following the hard fork of the original bitcoin core. The reason behind the split was the increasing delay in transaction verifications, leading to backlogs and high fees.
Let’s analyze the Bitcoin cash network below to discover its good and bad aspects.
A brief analysis of the BCH network
Bitcoin cash is another peer-to-peer network that facilitates virtual payments. It accommodates high transaction capacity due to its large block size of 32 MB as of March 2022. Holders of BCH can transfer it directly to another person, just like fiat currencies.
The network requires no central authority, since it's decentralized and permissionless. Most importantly, Bitcoin Cash is a popular Bitcoin alternative offering faster and cheaper transaction capacities.
The cost of completing Bitcoin cash transactions, such as transferring funds, is $0.01. Also, the network handles microtransactions, international trades, etc., and serves as a hedge against inflation.
Moreover, the Bitcoin cash network supports other technologies, such as popular smart contracts and some apps, including CashFusion, and CashShuffle. These apps offer diverse functionalities on the network.
For instance, with CashFusion, users’ asset paths become untraceable. But the commission to handle such transaction mixing may discourage users.
The challenges
Even though the Bitcoin cash network supports a larger block size, it requires more storage and auditing costs. Moreover, the larger block size could also cause security issues. Also, it’s not easy to download the blockchain due to the block size, which increased 4 times this year.
In May 2020, there were some issues regarding the network’s fundamentals. According to Yassine Elmandjra, an Ark Invest analyst, the halving on April 8 affected the network. Many BCH miners left the network before the halving, since the event reduced the rewards from 12.5 to 6.25.
Miners on the network were already losing revenue due to low economic throughput. As a result, only 0.05% of revenues reach the miners, leading to a drop in the number of transactions. Comparing it then to the 10% BTC miners earn shows a very wide gap.
As the number of miners on the network dropped, the Bitcoin Cash network hash rate fell, exposing the network to slow speed and security challenges.
This has been a major issue on the Bitcoin cash network.
Bitcoin cash explained
Bitcoin Cash is a digital coin that facilitates payments. It is permissionless and decentralized. Holders can make transactions with the coin without restrictions or control.
BCH is an alternative to BTC with faster transaction speed. It relies on miners using nodes and the proof of work consensus mechanism to verify the transaction. BCH also serves as an investment and hedging tool.
The coin supply cap is 21 million, the same as BTC, making it a potentially scarce asset. It also takes mining to issue new BCH coins into the system.
Bitcoin cash price prediction
Bitcoin Cash has always performed differently from BTC. It reached an all-time high of $4,355.62 on December 20, 2017.
Since then, it has lost 97%.43 as of October 28, 2022. The lowest BCH has ever reached is $75.08 on December 15, 2018, a year after launch. As of writing, BCH is trading at $112.44, showing a 49% increase from its all-time lows four years ago.
Some experts, including Wallet Investor analysts, predict that the coin could reach $1100 by 2026. TradingBeasts analysts forecast a drop in the coin by the end of 2022. However, from 2023 upwards to 2025, BCH might gain a 100% price increase.
These expert predictions are speculative and may not be the outcome given the ever-changing market trends.
Bitcoin Vs. Bitcoin Cash: Areas Of Similarities
Though Bitcoin and Bitcoin Cash are distinctive crypto assets, they still show some similarities, since the latter is a fork of the former.
Here are some similarities between Bitcoin and Bitcoin Cash.
Block production time
A block production for both Bitcoin and Bitcoin Cash occurs every 10 minutes. A block is a data structure contained in a blockchain that permanently records transaction information in the network. A block is closed once the miners complete the validation process for all data in it.
Secure hashing algorithm (SHA)
The Secure Hashing Algorithm (SHA) for both Bitcoin and Bitcoin Cash is the same. The two blockchains run on SHA-256 Hash, which produces a 256-bit signature for a text (representing 32 bytes). A cryptographic hash converts data structures to unique text springs. It serves as a signature for data files.
Blockchain technology
Though Bitcoin Cash is a hard fork of Bitcoin, it also has its blockchain. With their operation using blockchain technology, both crypto assets ensure decentralization.
Also, the networks are resistant to censorship. This means that all data and transactions on the blocks can never be altered or duplicated. It accounts for the security of the blockchains from bad actors.
Consensus mechanism
Both Bitcoin and Bitcoin Cash run a Proof-of-Work (PoW) consensus mechanism. This requires a mining process that involves solving some cryptographic mathematical puzzles. The first miner to successfully solve the puzzle creates a new block on the blockchain.
Maximum supply
The developers of Bitcoin gave the token an inflation hedge using a low maximum supply of just 21 million BTC tokens. Hence, Bitcoin is often referred to as digital gold and can serve as a store of value.
Bitcoin Cash inherited the property from the primary cryptocurrency. Also, the total supply of BCH will max out at 21 million tokens.
Bitcoin Vs. Bitcoin Cash: Major Differences
The main difference between bitcoin and bitcoin cash is that BTC is a store of value and a possible hedge against inflation. But BCH is a digital cash that facilitates faster and cheaper transactions.
Hash rate
Bitcoin vs. bitcoin cash hash rate shows that the former is the clear winner, with a higher figure proving its security level.
As of yesterday, October 27, 2022, Bitcoin's total hashrate was 247.20M. The average growth rate is 259%.9%. The rate keeps growing from the value of 156.73M in 2021 to what it is now.
On the other hand, the Bitcoin Cash hash rate as of October 28, 2022, stands at 1.38EH/s at block 764,123 with 198,914,267,606.81 difficulties.
The highest it has reached was 14.36 EH/s on February 15, 2020, at block 622,407
Network security
Another difference between bitcoin and bitcoin cash is that the BTC network is more secure than BCH. As more miners operate on a network, so does its security increase.
For instance, an estimated 200,000 miners are on Slushpool alone. If other mining pools boast the same or even higher, you may find up to 1000,000 bitcoin miners explaining the higher hash rate.
With the difference in hash rate between the two networks, it's clear that bitcoin cash is prone to security issues such as a 51% attack.
Adoption
Bitcoin is the oldest to have gained more recognition and application than Bitcoin cash. Many companies and countries are already adopting Bitcoin BTC for payments and as a legal tender.
Some countries using BTC as legal tender now include El Salvador and the Central African Republic. Other countries, such as France, Iceland, Denmark, Mexico, Spain, Japan, etc., have legalized the use of BTC.
Transaction fees
One main caveat of Bitcoin presently is its high transaction fee. In the meantime, the BTC transaction fee stands at $0.39.
Although Bitcoin Cash is not so much in use as Bitcoin, its transaction fee is relatively low, at $0.0019.
Transaction speed
Bitcoin processes only 5 to 7 transactions per second. Bitcoin Cash is quite faster when it comes to transaction speed. At the moment, Bitcoin Cash can process over 100 transactions per second.
Block size
Bitcoin's block size remains 1 MB, which can contain more than 2,000 transactions at once.
However, the block size of Bitcoin Cash is 32 MB. The size of its block is the main factor responsible for its low transaction fee and speed.
Price
One of the key differences between Bitcoin and Bitcoin Cash is their values. The price of BTC at the time of writing is $20,674. Meanwhile, Bitcoin Cash stands at $113.37 at the time of this piece.
BTC VS. BCH difference chart
Bottom Line
Bitcoin BTC and Bitcoin Cash are crypto assets that can earn impressive investment returns. BCH has shown growth potential and can be a good source of profits through trading.
While investors can use BTC to store value and hedge against inflation, they can also trade it and make profits on a reputable platform such as Margex. Traders can profit by buying BTC and BCH at low prices and selling when the price is high. The difference between prices will lead to a healthy profit return.
The Margex platform also offers a vast selection of trading indicators and tools that help traders take advantage of price movements.
FAQ-Common Questions And Answers On BTC VS. BCH.
If you’re divided between investing in BTC vs. BCH due to their similarities and differences, the answers below will be helpful.
Is buying bitcoin cash better than bitcoin?
Bitcoin stands as a good spot for long-term investments. Bitcoin Cash operates with a good transaction speed, as it also offers lesser transaction fees, making it good for everyday use. So, if you wish for a long-term investment, BTC remains the right option.
Is bitcoin and bitcoin cash the same?
Bitcoin and Bitcoin Cash are dissimilar in various ways, even though there are a few similarities. Although both communities operate on the same mining algorithm, their key difference is their block sizes.
While Bitcoin possesses about 1 MB of block size, Bitcoin Cash has about 32 MB of it. Moreover, their adjustable mining difficulty levels are quite different as well.
Is bitcoin cash profitable?
Crypto assets, in general, are a risky venture for any investor. However, it's vital to note that Bitcoin Cash has the edge over other digital currencies in low transaction fees, stability, and DeFi transactions. This fact makes the token a good spot for investments.
Is bitcoin cash speed better than bitcoin?
Bitcoin Cash is faster than Bitcoin for one major reason: its block size. The block size of Bitcoin Cash makes transactions on the system pretty fast and less expensive compared to Bitcoin.
On average, it takes a second to process about 116 transactions on the Bitcoin Cash Network. This fact makes the coin more reachable than Bitcoin to investors.
What is the future of bitcoin cash?
Experts’ price prediction for Bitcoin Cash shows that the crypto asset will maintain steady growth. Some experts forecast the coin to add before the end of 2022. Others believe that it will grow in 2025.
These predictions may not be exact, but one thing's sure – the Bitcoin Cash price will keep rising with time.
