Bitcoin Vs Bitcoin Cash: All You Need To Know
What is Bitcoin?
Bitcoin is the first decentralized blockchain network that issued a currency of eponymous name. Bitcoin has been termed as digital gold or gold 2.0. Bitcoin’s main utility is a store of value and hedge against inflation. Bitcoin has laid the foundation of decentralized finance or DeFi that resulted in the production of various blockchain networks and decentralized protocols.
Bitcoin is traded online using centralized and decentralized exchanges and also available on secondary markets. Recently, TradeFi integrated Bitcoin by issuing several spot Bitcoin ETFs with shares listed on traditional stock exchanges.
What is Bitcoin Cash?
Bitcoin Cash is also a cryptocurrency but its main utility is a mode of payment. Bitcoin Cash design ensures that the transactions on the platform are economic and fast. Bitcoin Cash was created after the hard fork of the Bitcoin blockchain.
Bitcoin blockchain is immutable while Bitcoin Cash has added new features. However, older transaction records and code base of these currencies are similar.
It is important to note that hard fork is a type of upgrade on open-source software. When a considerable amount of community members intend to take a different path going forward in comparison to the rest of the users.
It means that the community that votes in favor of a new update results in a new separate portion of the blockchain. This process is called hard fork because it forks the chain in a new chain. The new chain follows a new set of rules while the old one stuck with the existing community laws.
Creation of Bitcoin Cash
One of the main factors for the creation of Bitcoin Cash was a debate around scaling. Scalability is the feature of a program that allows it to add new users and host more data.
The design of the Bitcoin blockchain makes it decentralized and makes it censorship-resistant. However, the robust security of the blockchain had slowed down the per second transaction time.
Digital payment channels such as VISA can process 1700 transactions per second while Bitcoin processes 7 transactions per second. This transaction speed results in creating a lag leading to higher fees. The Bitcoin community presented two solutions to solve the scalability problem.
The first one was to increase the block size to fit more transaction data on one block. The second idea was to use a layer-2 solution for as alternative transaction routes.
The community was unable to reach a consensus regarding one solution. On this account, miners and business owners holding a 85% stake in the network held a meeting and decided to implement the SegWit2x upgrade.
SegWit2x was designed to segregate some data out of the block space and readjust the block size to 2 MB. This upgrade was implemented via hard fork. The proposal received criticism from the main community of Bitcoin who retained that it would make the blockchain more centralized.
Differences Between Bitcoin and Bitcoin Cash
Here are some of the main differences between Bitcoin and Bitcoin Cash:
Adjustment Difficulty
The difference of algorithm adjustment between Bitcoin and Bitcoin Cash is visible. The algorithm adjustment difficulty ensures that new blocks are created at a stable rate of 10 minutes. Therefore, based on market fluctuations computing power behind networks can differ wildly.
Block Capacity
The block size on Bitcoin is 1 MB while Bitcoin Cash has increased the block size to 32 MB. It means that transactions on Bitcoin Cash have become extremely economical and ability to process 200 transactions per second. In the same manner, Bitcoin SV or BSV a hard fork of Bitcoin Cash is working on increasing the block size to 1 TB to increase transaction speed exponentially higher.
Smart Contracts
Bitcoin does not have smart contracts but contributors such as Square CEO Jack Dorsey are working on infrastructure to product DeFi protocols. On the other hand, Bitcoin Cash is using smart contract building languages such as Cashscript, CashSuffle, and CashFusion to enable complex functionalities.
Token Issuance
Bitcoin network deploys new tokens via Omni Layer with an emphasis on stablecoins. Bitcoin Cash uses a Simple Ledger Protocol (SPL) for customized digital assets. SLP protocol also hosts NFTs. It is important to note that some tokens are compatible with both Omni and SLP.
Fee Replacement
A Replace-by-Fee or RBF is a feature that allows users to confirm a transaction before its completion. RBF replaces an unverified transaction with a different version of it at a higher transaction fee. Bitcoin Cash had discarded RBF and therefore unconfirmed transactions have become irreversible on BCH.
Conclusion
Bitcoin has continued to operate as an immutable network while Bitcoin Cash has plans to morph into peer-to-peer network. It ensures low transaction fees and faster transaction speeds. There are some social media platforms on Bitcoin Cash that are unfeasible on Bitcoin.
