What is the Difference Between Bitcoin and Bitcoin Cash?
Most people nowadays have at least heard about Bitcoin (BTC), even if they are not really too sure what it is or how it works. But with the entry of thousands of different types of cryptocurrencies onto the marketplace, many may not be aware of the appearance of a rival cryptocurrency called Bitcoin Cash (BCH).
Bitcoin’s rival?
Various factions of the Bitcoin community have joined forces in the last few years to launch alternatives to Bitcoin including Bitcoin Cash and Bitcoin SV. Although it is also a cryptocurrency created in the same way as Bitcoin, Bitcoin Cash is not the same thing as Bitcoin, although they do share some common characteristics.
To get back to basics, the idea of Bitcoin itself came about in October 2008 with the publication of a white paper by a pseudonymous author known as Satoshi Nakamoto. Rumors abound about who Satoshi is or was — is it a man or a woman, a group of people who worked together or a lone genius? Nobody really knows.
However, with the publication of this seminal white paper, Satoshi formalized the idea of a peer-to-peer electronic cash system. The first bitcoin transaction took place the following year and thus the cryptocurrency revolution was launched. Early supporters — and some of today’s so-called ‘Bitcoin Maximalists’ who are unapologetic believers in Bitcoin taking over the world — believe that Bitcoin has no rivals due to the size of its network and continued dominance by market capitalization.
Trials and tribulations of taking cryptocurrency mainstream
Yet Bitcoin Cash was born out of frustrations with what some developers and entrepreneurs saw as Bitcoin’s limitations. These technical arguments led to a division — known in technical terms as a ‘fork’ of the original Bitcoin blockchain. The controversial row arose due to arguments about how fast Bitcoin could scale in terms of transaction speed. Some reasoned that Bitcoin was never designed for consumer payments; others that Bitcoin had no choice but to scale as it was so slow that it could never begin to compete with the likes of mainstream payment processors like PayPal or Visa.
A group of developers and supporters, including various bitcoin mining pools, then decided it was time to create an alternative version of Bitcoin called Bitcoin Cash. Bitcoin Cash works largely in the same way as Bitcoin but the size of the blocks (essentially bundled groups of transactions) in the blockchain is increased. This enables potentially much faster performance in terms of the number of transactions that can be processed.
A new form of digital cash for consumer payments
As implied by its name, Bitcoin Cash is intended as a new form of digital cash or for mainstream use by consumers rather than as an investment vehicle or store of value in the way that many people currently view Bitcoin. The downside of Bitcoin Cash is that it is more centralized than the original Bitcoin blockchain which critics say could potentially lead to governance and security issues in the future and which moves it away from the vision held dear by the Bitcoin community of a more decentralized future world.
A rival to the rival!
Just to complicate matters further, in 2018, a further schism over block size. occurred in the Bitcoin Cash community. Bitcoin Cash then subdivided into Bitcoin Cash and Bitcoin SV (which stands for ‘Satoshi’s Vision’). The main supporters of Bitcoin Cash were challenged by Craig Wright (who has controversially claimed to be Satoshi Nakamoto) and billionaire Calvin Ayre who wanted to create an even larger block size than that used by the Bitcoin Cash blockchain.
While pure lovers of Bitcoin often disparage any other types of cryptocurrency (known as altcoins), when the hard fork of the Bitcoin blockchain took place, holders of Bitcoin also received an equivalent number of units of Bitcoin Cash. This means that many holders of Bitcoin have now benefited financially from their rival altcoin as they also hold Bitcoin Cash by default. And, although the value of one BCH is much lower than the value of one BTC, given its close relationship to Bitcoin, BCH’s market performance tends to track Bitcoin’s so if the Bitcoin price goes up, Bitcoin Cash price is also usually up at the same time.
Who will win the Bitcoin payment wars?
Despite all the technical arguments, Bitcoin remains the most well-known and valuable cryptocurrency on the market, although Bitcoin Cash does have cheaper transfer fees and faster transfer times. BCH can handle more transactions per second because a block of Bitcoin Cash transactions is eight times bigger than a Bitcoin block. All these factors — and a cheaper price point to acquire the coins — are leading new users to experiment with what might be dubbed Bitcoin’s feisty younger brother.
With a number of major technical updates on the horizon for Bitcoin in 2020, whether the granddaddy of cryptocurrency eventually ends up ruling them all, still requires fortune tellers to gaze inside their crypto crystal balls.
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