Bitcoin and Bitcoin Cash are two different coins born from the same Blockchain. Bitcoin cash is the result of a Hard Fork that occurred on the Bitcoin Blockchain in 2017. A Hard fork occurs when there is a radical change in the Blockchain protocol, and the Blockchain is split due to this change.
In this article let us learn about why this Hard Fork has occurred. We will also learn about the differences and similarities between Bitcoin and Bitcoin Cash.
Hard fork of the Bitcoin Blockchain
Since 2009, Bitcoin has seen a meteoric rise. The coin is synonymous with the term Crypto itself. An increase in popularity led to the growth in user volume and energy consumption. But on the flip side growing user volume also reduced the transaction speed of the network.
This is the reason why we do not see Bitcoins being used for everyday transactions. The existing traffic on the network decides the time it takes for your transaction to be processed. And if you have to get your transaction processed sooner, you have to pay a dynamic fee.
Read about: Hard Fork And Soft Fork Explained
Every Bitcoin transaction is recorded on the Bitcoin Blockchain which is made of units known as Blocks. Each block in the Bitcoin Blockchain can record 7 transactions per second, and the Block has a maximum storage capacity of 1 MB. In comparison, a company like Visa can process close to 1700 transactions per second.
Though the Bitcoin Blockchain has the features of Immutability and Decentralisation, its ability to process fewer transactions limited its reach to last-mile applications. To make the Blockchain scalable the Block size had to be increased from the current size of 1 MB.
Some members of the Bitcoin community did not want the Block size to be increased because with an increase in Block size, hosting a node would get more expensive. And with higher capital costs, there are chances that only a few can afford to maintain a node. This could lead to the centralization of the network.
Read more: Centralised Vs Decentralised Networks
The others preferred to have a faster network and trade-off the chances of network centralization. This difference in opinion led to the Hard Fork of the Bitcoin Blockchain and Bitcoin Cash was born.
At the time of the hard fork, Bitcoin had a block size of 1 MB and it continues to do so even today. Bitcoin Cash on the other hand started with a block size of 8 MB and has quadrupled its Block size since then to 32 MB.
Similarities
Finite Supply:
Both the coins have a finite supply of 21 million
Consensus Mechanism:
Both Bitcoin and Bitcoin cash work on the Proof of Work Mechanism
Block Interval:
Block interval is the rate at which Blocks are added to the Blockchain network. The Block interval of both the Blockchains is 10 minutes
Mining Infrastructure:
Bitmain products are widely used to mine both Bitcoin and Bitcoin Cash
Read about: Proof of Work(POW) Vs Proof of Stake(POS)
Differences
Transaction Fee:
Bitcoin Cash has a lower transaction fee when compared to Bitcoin. Though this difference is mathematically true, it is not a fair comparison as Bitcoin Blockchain manages much larger traffic
Transaction Speed:
Bitcoin Cash transactions are much faster as the Block size is larger. Larger blocks enable more transactions to happen simultaneously thus increasing the speed of the network. The Bitcoin Cash Blockchain can process close to 110 transactions per second. The Bitcoin Blockchain on the other hand can process 7 transactions per second.
Usage:
Bitcoin wins here when contested against Bitcoin Cash. Several Lightning solutions help scale Bitcoin adoption. Bitcoin cash is a newer Crypto with lesser adoption compared to Bitcoin.
Read more: What are Lightning Networks
Market Capitalization:
Bitcoin is currently the largest Crypto asset in the world, with a total market cap of $ 413 billion. Bitcoin Cash has a market cap of roughly $ 2.4 billion.
Total Computational Power and Mining Difficulty:
On both these metrics, Bitcoin is the winner. The total computational power and mining difficulty increases with an increase in the active nodes on the network. Bitcoin being the larger network among the two takes this point.
Final Verdict
Bitcoin has survived many crypto winters and is regarded as the Gold-standard asset of the Crypto world. The immutability and decentralised nature of the Bitcoin Blockchain, makes it formidable. It is so good that there has never been a hack on the Bitcoin Blockchain. If we consider the standalone speed of the Blockchains without considering the lightning network features, then Bitcoin cash wins.
