Bitcoin or Bitcoin Cash? There is confusion among the newbies or early adopters who venture into the cryptocurrency market when it comes to dealing with Bitcoin and Bitcoin Cash.
Bitcoin is the first cryptocurrency introduced to the world and is created by pseudo-entity Satoshi Nakamoto in 2009. From there, hundreds and thousands of coins and tokens have been released in the market which provides their take on the blockchain technology.
In today’s article, we will be exploring the key differences between Bitcoin and Bitcoin Cash. Before, we start with the comparison, let us learn more about both of them before learning about their differences.
Table of Contents
An Introduction to Bitcoin and Rise of Bitcoin Cash
As mentioned earlier, Bitcoin was created by Satoshi Nakamoto which uses blockchain technology under the hood. It shook the world, and now everyone is trying to make use of blockchain technology. It is the first generation cryptocurrency and hence comes with a lot of drawbacks.
One of the most significant drawbacks includes scalability. It is slow. It only does seven transactions per second whereas Visa is capable of doing 1,700 transactions per second. This prevents Bitcoin to become a currency that can be used in daily transactions.
So, what’s the solution? The solution is to ensure less data needs to be verified in a block size, making it small. This can be done by removing the unnecessary information from the block and only keep the information that is required to complete a transaction. On the contrary, the larger block size can also be a potential solution but doesn’t add as it can make some nodes unfunctional due to their inability to properly handle the block size and the information stored within it.
A potential solution was SegWit2x which aimed at simplifying the amount of data carried by each block. It removed the signature data from the block which in turn brought down the size of the block itself. Another fix was made to improve the scalability issue is to increase the block size from 1 MB to 2 MB. Overall, the change helped improve the bitcoin existence and adoption in the market.
The Rise of Bitcoin Cash
Even with slight improvements to Bitcoin, there was still a part of the community that didn’t like what Bitcoin has to offer. To make more advancement to what Bitcoin has to offer, they did a “hard fork” in August 2017. The new currency that came into existence at the very same day is known as Bitcoin Cash.
Bitcoin Cash made multiple improvements, starting from increasing the block size to 8 MB. The aim was to increase the number of transaction it can handle per second. However, it impacted its mining difficulty which in turn raised questions about its security.
The Key Differences Between Bitcoin and Bitcoin Cash
Now that we have understood the origin of Bitcoin and Bitcoin Cash, and also understood the philosophy behind each one of them, it is time to learn the key differences between them. Let’s go through the points one by one.
1. A new name
Technically, Bitcoin Cash is originated from the same blockchain branch of Bitcoin, but it is a completely different currency. If you are new, then you might get confused between the two. Hence, the first thing is that they are completely different and the only difference between their name is the word, “cash.”
2. Larger block size
Bitcoin Cash has a larger block size of 8 MB. This means that it can help process a large number of transactions and in a cost-effective manner. Bitcoin, on the other hand, has only 2 MB block size which means fewer transactions per second.
3. Bitcoin is more secure than Bitcoin Cash
The increase block size of 8 MB in Bitcoin Cash impacts its security. The increase block size means less block mining difficulty which makes it vulnerable to third-party malicious actors.
Another reason Bitcoin Cash is not secure is due to its centralized nature. Bitcoin is completely decentralized which means that it is not possible for any single node to take control over 51% of the network resources. This rules out the 51% attack.
Bitcoin Cash, on the other hand, is centralized and hence vulnerable to 51% attack. At the time of writing, only combining three mining pools will result in over 51% control.
4. Core technical differences
There are also a few core technical differences that differentiate Bitcoin and Bitcoin Cash. Bitcoin Cash knows that it lacks basic security and hence it has used some adjustments to make it less prone to attacks. The adjustments include the following.
- On-chain stability: This will give the Bitcoin Cash the ability to increase block size(if needed) without the need for any hard fork.
- Replay and wipeout protection: The hash algorithm is used by Bitcoin Cash to ensure that replay between the Bitcoin and Bitcoin Cash chains is not possible anymore.
- Emergency Difficulty Adjustment(EDA): The EDA algorithm brings stability to the currency by ensuring that it works like a normal chain even when the number of miners is drastically changed(in this case decreased).
- New transactions signatures: The signatures are kept different to ensure proper identification between Bitcoin and Bitcoin Cash transactions.
The debate Bitcoin vs Bitcoin Cash is an old one, which sparks effusive reactions from both sides. The community outlook on Bitcoin Cash is overall negative, and many despise it because of its centralized nature. According to many, the centralized nature completely drops the core idea of blockchain technology. In comparison, the reputation of Bitcoin as the main cryptocurrency is still there and Bitcoin Cash doesn’t come near it in terms of reputation, exposure or value. As a buyer, we recommend you to do proper research on each technology and reach your own conclusions. Bitcoin Cash might seem an option, but in our opinion, it lacks the core fundamental philosophy of a truly decentralized network, and for that reason, we consider it to be yet another altcoin that in very unlikely circumstances would ever take away the crown from the real Bitcoin.