The similarities between Bitcoin (BTC) and Bitcoin Cash (BCH) go beyond their names. Bitcoin is the first ever digital currency and is often referred to as digital gold or "Gold 2.0". This cryptocurrency is known as a store of value and protection against inflation. In this article, we will compare Bitcoin and Bitcoin Cash from today's currency.
On the other hand, Bitcoin Cash is a cryptocurrency that acts as digital cash, and its proponents are trying to ensure that it is cheap and easy to use. Bitcoin Cash was created with a hard fork of the Bitcoin blockchain, meaning that both cryptocurrencies share a common transaction history.
Bitcoin Cash, the result of the hard fork of Bitcoin!
A hard fork is a major update to the open-source software behind the blockchain of a cryptocurrency like Bitcoin. A hard fork occurs when there is a permanent divergence from the latest version of the blockchain and some of the computers running the network can no longer reach consensus. This leads to a fork in the blockchain, where one group of nodes continues to follow the old rules, but another group follows a new set of rules.
This is what happened to the Bitcoin blockchain in August 2017. To understand why some users decided to change the blockchain in some way, it is better to take a step back and look at the problem of Bitcoin scalability.
(Bitcoin Cash) with the abbreviated symbol BCH, is a branch of Bitcoin that has higher speed and lower fees. In the network of this coin, the block size is larger and therefore it supports more transactions. Bitcoin Cash is currently the most valuable Bitcoin fork. The number of units in circulation is currently 18.74 million and the total number of units will be 21 million. The structure of this digital currency is peer-to-peer and decentralized.
How was Bitcoin Cash created?
The purpose of creation was to fix some of the bugs of Bitcoin. The low speed of transactions in Bitcoin leads to an increase in transaction fees compared to other cryptocurrencies. Due to the fact that blockchain-based protocols cannot be changed, soft fork or hard fork can be used for updating.
A soft fork is an update to the blockchain that can be run on older versions. Since there were many opponents in using a soft fork to fix Bitcoin's flaws, the hard fork method was chosen as a final solution.
In a hard fork, fundamental changes are made to the digital currency blockchain network, which are not compatible with older versions. As a result, to participate in the network, users must upgrade their version. Also, create a new currency in the same network that can support the new changes.
The Bitcoin hard fork also led to the creation of a new currency called Bitcoin Cash. This currency uses the Bitcoin blockchain network, but the speed of its transactions has increased between 30 and 60 transactions per second.
In 2017, due to the limitation of 1 MB in the size of Bitcoin network blocks, the cost of transactions had increased significantly, and on the other hand, the speed of transactions had also decreased. The only practical way to solve this problem was to create a hard fork. In August 2017, the hard fork of Bitcoin Cash was created by Roger Ware, CEO of Bitcoin, and the block size increased to 8 MB.
What is the main purpose of Bitcoin Cash?
The main purpose of Bitcoin Cash is to be used as a daily payment system. In simpler words, people can easily send and receive their digital assets like Bitcoin but with higher speed and lower cost.
How does Bitcoin Cash work?
Bitcoin Cash has its own blockchain and its security is guaranteed through the proof-of-work algorithm or mining. The time required to calculate and create a new block in this network depends on the difficulty of mining. With the increase in the computing power of miners, the difficulty of mining will also increase so that the time to create a block is kept constant.
At first, new blocks were mined in Bitcoin Cash every 10 minutes. But the developers, after conducting the necessary investigations, concluded that they need to change this process in order to motivate miners more. For this reason, they used the emergency difficulty adjustment algorithm (EDA) to reduce the difficulty of extraction. In this way, if the extraction time of 6 blocks exceeds 12 hours, the proposed algorithm reduces the extraction difficulty by 20%.
But the EDA settings caused disturbances in the difficulty of mining and caused the Bitcoin Cash blockchain to move thousands of blocks ahead of Bitcoin. Bitcoin Cash developers decided to make changes in the EDA algorithm to solve this problem. The result of these changes was that the algorithm adjusted the extraction difficulty after each block.
This currency is mined on a decentralized network. Decentralization means that the network is not controlled by any individual or organization. To create a decentralized system to verify and validate transactions, computers called nodes are needed.
Miners use powerful computing hardware to solve difficult math problems on the blockchain. When a computational problem is solved by a node, a transaction on the block is confirmed. Node receives Bitcoin Cash as a reward.
Individual mining is difficult and expensive due to the intense competitive environment that exists. For this reason, some people prefer to use another method for mining, which is called a mining pool.
In a mining pool, a group of miners share their computing power with each other to increase the chance of successfully mining blocks. After solving the problems and producing a new block in the pool, the mining reward is divided equally among the people in the mining pool. It is important to note that Bitcoin Cash mining is not always profitable and requires research and investment before starting.
Like Bitcoin, Bitcoin Cash has many uses, the three main uses of which are:
1. Send and receive without intermediaries
Bitcoin Cash has made it possible for its users to receive this digital currency directly from someone or send it to another person with a very low transaction fee. In fact, there is no need to trust a third party such as a bank or intermediary to send and receive. This issue becomes more important especially for us Iranians when we want to send an amount to a country on the other side of the world despite the restrictions.
2. Payment Method
One of the most important uses of Bitcoin Cash is that it can be used as a payment method just like Bitcoin. Of course, since Bitcoin Cash is a newer currency than Bitcoin, it has not yet been accepted enough and is not considered a common payment method.
The price of this currency, like other digital currencies, always fluctuates a lot. Traders looking to profit from small price changes in digital currencies can use this opportunity to invest.
The main advantage of Bitcoin Cash is the larger block size of up to 8 megabytes (MB) and faster transactions. Other advantages of Bitcoin Cash are:
- The cost of transactions is low and the transfer time is shorter.
- It is decentralized and does not depend on banks or other government institutions.
- Due to the use of encryption in transactions, it has a secure structure.
- It is accepted in most of the top cryptocurrency exchanges.
Although Bitcoin Cash has many advantages, this digital currency also has some disadvantages like other currencies. What you need to know about the disadvantages of Bitcoin Cash is as follows:
The number of Bitcoin Cash pools is limited. This issue becomes important because the future of Bitcoin Cash will depend on these few pools.
Bitcoin Cash has a lower acceptance rate and this has caused Bitcoin Cash to have fewer trading pairs when trading.
Due to the fact that this currency has not been around for a long time, fewer commercial companies support it compared to Bitcoin. But with the passage of time and with increasing demand, new companies use it as their payment method. These websites sell goods such as housing, music, perfume and cologne, sports equipment, clothing, etc. Users can make their purchases with Bitcoin Cash.
Bitcoin Cash was forked on November 12, 2018, and as a result, a new currency called Bitcoin SV was created. Two important features of hard forks are instant verification and scalability. Currently, Bitcoin Cash has a maximum block size increase of up to 32 MB. This is despite the fact that the Bitcoin cryptocurrency has only one megabyte of block size.
Every four years (after the production of 210,000 blocks in the Bitcoin blockchain), the reward for mining Bitcoin is halved, or in other words, the reward given to miners is reduced by 50%. Halving was put into the code of this network by Satoshi Nakamoto with the aim of controlling Bitcoin inflation.
Given that the supply rate of new bitcoins will be halved at the halving, this event will have a significant impact on the price of bitcoin. It also causes the value of Bitcoin to increase over time. Like Bitcoin, the mining reward of Bitcoin Cash is halved approximately once every 4 years due to the halving event.
Solutions for secure storage
Choosing the right wallet is essential for safe storage. Different options should be checked before choosing or buying a wallet. For example, if the user's assets are not large, there is no need to purchase a hardware wallet. But if the user intends to store large amounts of Bitcoin Cash, it is better to use hardware wallets that have higher security.
Unfortunately, some people are not aware of the security features of their wallets and this issue can cause them problems. For safe storage of Bitcoin Cash, it is recommended to use all the security features of the wallet. Updating the antivirus system is another thing that should not be neglected. Any problem in the antivirus will bring with it very serious losses. Finally, always back up your wallet.
The price of Bitcoin Cash when it first entered the market was equivalent to $360. But only after five months, its price increased to $4,000. The highest price of Bitcoin Cash on December 29, 2016 (December 20, 2017) was equal to $3,923.07.
In 2018, which is known as the "winter of digital currencies", Bitcoin Cash, like other digital currencies, experienced a price drop. At the time of writing this article, the price of Bitcoin Cash is 72.93% lower than that time.
The relationship between the price of Bitcoin Cash and the price of Bitcoin
The price of Bitcoin Cash is independent of the price of Bitcoin. But we should not neglect to pay attention to the fact that Bitcoin is known as the first and most important cryptocurrency in the world, for this reason, the increase or decrease in the price of Bitcoin can affect the price of other cryptocurrencies. Therefore, there is a possibility that this currency will follow the price trend of Bitcoin.
Current status of Bitcoin Cash
Although many people believed that users who received Bitcoin Cash for free would sell it in the early days, this did not happen. Since the launch of Bitcoin Cash until today, we have seen the extraordinary performance of this digital currency; So that it is considered one of the top twenty digital currencies in the world.
On the other hand, the name of this digital currency is in the transaction list of reputable exchanges such as Binance and Coinbase. Bitcoin Cash is accepted by almost all reputable cryptocurrency exchanges. Users are also provided with the possibility of buying and selling it in Valx.
Currently, Bitcoin Cash is ranked 12th in the cryptocurrency market and has a share of 0.72% of the total market.
Buy and Sell
Bitcoin Cash transactions are no different from buying and selling Bitcoin. Users should consult, analyze and have a smart look at the market to make transactions. One of the most common methods of buying and selling is using an online digital currency exchange where users trade digital currency.
In online exchanges, digital currencies such as Bitcoin Cash are traded. People who want to invest in this digital currency can buy or sell it after registering on the Valex website and taking the necessary steps.
In Valx, each user has a unique wallet for the desired cryptocurrency. In each wallet, an address is assigned to the user for each digital currency. The digital assets of users are stored on the Valx website in the form of hardware. Since users' assets are kept offline with the highest security, there is no possibility of theft or loss of assets. Therefore, users can use the Valex wallet to receive, send and store as well, and there is no need to purchase a separate wallet.
The difference between Bitcoin Cash and Bitcoin
Over time, the differences between Bitcoin and Bitcoin Cash also increased, and the developers of these two networks had different goals in mind. The difference between the two cryptocurrencies became so great that they are now considered completely different assets in the community.
Network difficulty setting
One of the main differences between Bitcoin and Bitcoin Cash is the network difficulty adjustment algorithm added to BCH. Since both networks use the same SHA-256 hashing algorithm, Bitcoin miners can switch to this network when mining on Bitcoin Cash becomes more profitable for them.
This means that the computing power behind this network can vary greatly due to the fluctuations in the market. The difficulty adjustment algorithm ensures that blocks are generated at a constant rate, once every 10 minutes, by halving or doubling the network's difficulty.
Block size difference
The main difference between these two cryptocurrencies is related to the block size of each network. While the block size in Bitcoin is 1 MB, in Bitcoin Cash, the block size has increased to 32 MB. This means transactions on Bitcoin Cash now cost less than a penny and can process up to 200 transactions per second.
Because Bitcoin Cash did not process enough transactions to fill its excess block space, the size of the blockchain did not grow as expected. Bitcoin SV (BSV) (a cryptocurrency created through a fork of Bitcoin Cash) is looking to increase its block size to 1 TB, and its blockchain size is already much larger than Bitcoin.
Smart contracts and decentralized financial system
According to Jack Dorsey, CEO of Square and Twitter, Bitcoin does not support smart contracts, although work is being done to help run decentralized financial services (DeFi) on it. Meanwhile, Bitcoin Cash is starting to use smart contract languages like Cashscript to enable more sophisticated functionality on it.
Cashscript plans to bring DeFi to Bitcoin Cash to help it compete with Bitcoin and Ethereum (ETH). Currently, tools such as CashSuffle and CashFusion have been developed in this network, whose purpose is to improve the privacy of the network.
To issue tokens on the Bitcoin blockchain, projects must use the Omni layer, a platform used "to build and trade custom digital assets and currencies." Omni transactions are transactions with "next generation capabilities", but this layer is mostly used in stablecoins.
On the other hand, Bitcoin Cash has created the Simple Ledger Protocol (SLP). This protocol enables developers to issue their own tokens on the BCH network. Some tokens are issued both on the Omni layer and as SLP tokens. Having a token on different blockchains makes it easier for users to choose the desired network.
The SLP protocol also supports non-fungible tokens (NFTs) that are distinct from each other. However, the usage of these tokens on BCH has been limited compared to Ethereum or other blockchains.
The network first validates the second transaction and invalidates the first transaction. Most versions of RBF require that the transaction contains all the same outputs to avoid this. Additionally, if the recipient waits until multiple confirmations are seen, RBF becomes impossible because the transaction has already been confirmed.
So, comparing Bitcoin and Bitcoin Cash, RBF is one of the most important differences. However, Bitcoin Cash abandons this feature and makes unconfirmed transactions irreversible on its network. Due to the higher throughput of this network, the double-spending problem becomes much harder with RBF because transactions are confirmed faster.
Different views, same monetary policy
Bitcoin Cash was created with a block size of 8 MB at the time of the hard fork and has quadrupled in size since then. The network welcomes new hard forks and takes steps to increase its usability as cash.
Bitcoin, on the other hand, is more conservative in implementing updates and is considered more of an inflation hedge and store of value. Bitcoin's scaling plans have included the implementation of SegWit and the launch of the Lightning Network.
The Lightning Network essentially creates an additional layer on the blockchain of this cryptocurrency, where transactions are fast and fees are small. This layer includes payment channels created by users. It has been estimated that the Lightning Network can process up to 15 million transactions per second, but adoption of the network has been relatively slow so far.
Bitcoin also seeks to preserve user anonymity through updates such as Taproot, which converts complex transactions containing timelocks or multi-signature data into simple transactions. In Teprot, a simple transaction cannot be distinguished from other transactions.
Bitcoin Cash and Bitcoin price war
In the article Bitcoin Cash, we discussed a topic called supply and demand. The summary of what we said in Bitcoin is that; Digital currencies such as Bitcoin and Bitcoin Cash, their value is determined based on the amount of use and the amount of user demand.
There is another type of analysis called return on investment or ROI. According to this; Both Bitcoins have value, but because Bitcoin is still the most popular digital currency, Bitcoin Cash is trying to quickly attract Bitcoin users.
Bitcoin is still very new and is still gaining its true place in the digital currency market. According to some people, Bitcoin Cash will take the place of Bitcoin in the near future by gaining more market share. And this will be if the designers of Bitcoin do not think about fixing their problems. Otherwise, in the war between Bitcoin and Bitcoin Cash, Bitcoin will definitely lose ground. And Bitcoin Cash will be the first digital currency for people to make transactions.
Finally, when comparing Bitcoin and Bitcoin Cash, it should be said that the monetary policy of both networks is the same. Only 21 million coins are created on each blockchain, and the issuance of new coins is halved every 210,000 blocks, or roughly every four years. The last BTC and BCH are expected to be mined in 2140. Both cryptocurrencies are designed to protect against confiscation, censorship, and devaluation through higher-than-expected inflation. Both blockchains are transparent and publicly available and cannot be edited by a single entity.