Bitcoin vs Bitcoin Cash – What’s In A Name?
Despite their similar names, Bitcoin Cash and Bitcoin are not the same thing – but they do have a shared history. Bitcoin Cash is a cryptocurrency fork from the main Bitcoin protocol. A number of miners agreed to change the consensus rules, and form a new blockchain of their own – one which was unacceptable to the crypto miners that stayed with Bitcoin. This split of Bitcoin vs Bitcoin Cash occurred as a consequence of the acrimonious argument which had come to be known as “the great scaling debate”.
Without going into too much detail, at the heart of the great scaling debate was a disagreement over what Bitcoin ought to be. Software often involves trade-offs, and members of the community couldn’t agree. Should Bitcoin be primarily an alternative form of payment – easy to send at very low cost? Or should it be more like “digital gold”, which would make it as secure as possible, even if that meant sacrificing speed and the lowest possible fees.
Basically, the advocates of Bitcoin Cash wanted to make it a form of payment with low fees. Those who stayed with Bitcoin advocated for it to be digital gold. With two such diametrically opposed views, eventually the Bitcoin Cash part of the community split away on 1 August 2017.
All holders of Bitcoin as of block 478,558 also became holders of the same amount of Bitcoin Cash. This is because in a hard fork, all of the history is inherited in both versions. The differences of Bitcoin vs Bitcoin Cash are outlined below.
1. Bitcoin Cash has a larger block size
When Bitcoin Cash split away, the block size limit was raised from 1 megabyte to 8 megabytes – thus immediately implementing something that had been argue about for many years. According to the Bitcoin Cash website, this means: “There is ample capacity for everyone’s transactions”.
Whether this represents an improvement or not depends on who you ask. The trade-off for a larger block size is that it increases the amount of data that miners need to store, which, the original Bitcoin people argue, makes it more difficult for smaller miners to join the mining pool.
2. Bitcoin Cash has lower transaction fees
Perhaps the main reason for increasing the block size was that Bitcoin’s transaction fees were getting out of hand. With more demand for transactions in a 10 minute block than there was capacity in the 1 megabyte that Bitcoin had on offer, users were needing to increase their transaction fee in order to get to the front of the queue.
With an 8 megabyte block limit in Bitcoin Cash, there is enough space for all users without needing to institute high fees. If Bitcoin Cash continues to grow, there is capacity to again adjust the block limit. According to the Bitcoin Cash website, “research is underway to allow massive future increases.”
3. Bitcoin has a much larger network
Though the split in Bitcoin vs Bitcoin Cash was significant, a lot more miners still decided to stick with the original Bitcoin, possibly because of the greater uncertainty over whether Bitcoin Cash would find its feet.
You can see the total network hashrate of Bitcoin Cash here, and the total network hashrate of Bitcoin here. As of writing, Bitcoin’s hash rate was about 10 times that of Bitcoin Cash (making the mining difficulty 10 times higher for Bitcoin), but this is somewhat offset that Bitcoin Cash is about 1/10th of the USD price (again, at the time of writing).
4. Bitcoin is more widely accepted
As the largest network, more infrastructure has been built up around Bitcoin, than Bitcoin Cash. More merchants will accept Bitcoin, more hardware wallets store Bitcoin, and more exchanges offer Bitcoin for sale.
When the hard fork first happened, splitting Bitcoin vs Bitcoin Cash, there were a lot of question marks over whether Bitcoin Cash would survive – but now, support is growing. For example, Coinbase (one of the largest crypto exchanges) now allows trading in Bitcoin Cash. Still, realize that Bitcoin has a big head-start over Bitcoin Cash.
5. Both coins have a lot else in common
With both systems, transactions are kept on the public blockchain ledger. There is a target of 10 minutes between blocks. They both use the SHA-256 hashing algorithm. Miners need to participate in a proof of work system in order to mint freshly created coins. Both are a decentralized network, existing on computers all over the world.
But Bitcoin Cash is not Bitcoin. They are not fungible with each other – one Bitcoin Cash is not worth the same one Bitcoin. Mistakenly sending Bitcoin to a Bitcoin Cash address (or vice-versa) might result in those funds being lost. Although their names sound alike, from a software standpoint, they are as different from each other as Bitcoin is to Ethereum.
You need a separate cryptocurrency wallet to store Bitcoin vs Bitcoin Cash. So far, the two seem to be co-existing on their new, separate paths – Bitcoin is the #1 cryptocurrency by market capitalization, while Bitcoin Cash is also firmly ensconced in the top 5.