Bitcoin

What is the difference between Bitcoin and Bitcoin cash ?

Bitcoin

Difference Between Bitcoin and Bitcoin Cash

Some years back, Bitcoin was invented by a mysterious person or group of people. At first, there were only a few supporters delighted about the new cryptocurrency, but very soon people began to recognize the potential. So, the number of miners and individuals who buy bitcoins and conduct transactions with it started to grow exponentially.

Overall, it is an exceptional thing, except for one obvious problem: The transaction speeds of Bitcoin are very slow at about 7 transactions every second. As a contrast, Visa processes about 24,000 transactions per second. It became apparent in 2017 that there are already too many transactions to control and some improvement is required in order to improve the scalability of Bitcoin.

Then, why can’t the volume of transactions simply be increased?

Originally, the Blocksize limit of Bitcoin was 1MB (It is now 2MB). So, why they can’t make it a more substantial number, for instance, 820,100MB?

We can describe the answer to this using a heavy traffic metaphor. For instance, say we are experiencing a heavy traffic problem, so we decide to adjust the speed limit to 200 miles per hour.

What will follow? First of all, a safety issue will arise because at speed this high, there is an increment in possibilities of crashing and injuries. However, a potentially greater dilemma is that now old and small vehicles will not be able to use the highways, because they can’t run fast enough.  So big people with big strong cars will take control of the highways, and a regular driver will have to stay at home or get to where they want to be via slow roads.

This is what will happen precisely with raising the limit. More blocks mean there will be more data to process for every transaction. So decentralization becomes inevitable as small nodes will not be able to process this increased data.

But more transactions still need to be processed – what is the solution?

The Bitcoin community has been divided into two groups by this transaction issue. One group insists that Bitcoin was never created to be a “cup of coffee” payment method, the other maintains that it has to scale. As neither group was willing to give up, in August 2017 Bitcoin was split employing a process called “Hard Fork,” which formed a new version of Bitcoin named Bitcoin Cash.

Bitcoin and Bitcoin Cash use an identical codebase, but Bitcoin Cash has its Blocksize limit increased to 8Mb. This raised limit makes possible to process about two million transactions per day.

Bitcoin and Bitcoin Cash in your wallet

What happened to users who held Bitcoins before the fork happened? The simplest way to resolve the problem was to clone the bitcoin wallets. Before the fork, the last mined block was 478558. So, if you held any Bitcoins before that block, you will end up having the equivalent amount in Bitcoin Cash after the fork.

Simply put, after the split each person has the same bitcoin with the same Private key in two different wallets.

This implies that once you conduct a transaction, people can use the private key for a transaction in a different currency. Instead of paying from just one wallet, the same amount will be subtracted from the second wallet as well.

So, does that mean everyone now owns twice more? Sounds great!

No, not really, nobody has actually become richer from the fork itself, because once the amount has increased, it automatically decreases the overall value of the currency.

Another common question: are the Bitcoin and Bitcoin Cash interchangeable? The short answer is: no. They are totally separate now and can operate separately from each other.

What’s the Difference Between Bitcoin and Bitcoin cash?

So as if it wasn’t confusing enough when we had to choose from Bitcoin, Ripple, Ethereum and the likes—now we need to select from two types of Bitcoin.

Which one is better? What are the advantages of bitcoin cash over bitcoin? In fact, they are just mixed, with each version having its advantages and disadvantages. Here are some of the differences:

  1. New Name

Of course the name on its own. The word cash in it is not coincidental – the creators intend that the future of the cryptocurrency is to become a modern form of cash.

  1. Advantage/Disadvantage

+  8MB Blocksize limit. Because of this, more transactions can be processed for at an inexpensive fee.

–   Bitcoin has many mining pools, so no one is powerful enough, and a circumstance where just one miner has a majority of 51% to control them all is pretty impossible.

On the other hand, Bitcoin Cash is highly centralized. Currently, we already have three mining pools that make over 51% together. This can be a terrible circumstance because the future of the currency will rely too much on these three.

  1. Technical difference

Bitcoin Cash knows about its own vulnerabilities and added protection improvements to close these gaps and make the new currency safer for everyone to use.

FeatureDescription
Replay and Wipeout ProtectionThe hash algorithm of Bitcoin Cash is different from that of Bitcoin. So, the replay between the two chains is no longer possible.
On-chain scalabilityBitcoin Cash’s technology permits an increase in the number of blocks. Right now it is 8MB, and further improvements are possible.
New transaction signaturesTo verify its distinction from Bitcoin, Bitcoin Cash has a different transaction signature.
Emergency Difficulty Adjustment (EDA)A new algorithm which guarantees normal chain work in case of dramatic changes of the number of miners. This provides extra stability to the cryptocurrency as a whole.

What factors affect the Price of BCH and why did it spike in November?

Bitcoin Cash was introduced in August 2017. But on November the same year, the rocket jump happened. On the 12th of November, the price increased twice in one day, and Bitcoin Cash officially took second place, following Bitcoin.

So, what was the cause of this spike?

  1. Bitcoin had a terrible weekend. As a result of reduced hashing power, about 10000 transactions were waiting for confirmation on the network. Thus, buyers went ahead to buy Bitcoin Cash.
  2. Bitcoin Cash came as a solution to the well-known speed problems that Bitcoin was facing and presented a better solution than the SegWit2X protocol of Bitcoin. Today it is the only technology that offers a scaling solution – which is a killer feature.
  3. Another feature that original Bitcoin doesn’t have is the EDA algorithm – which makes the network more stable during high price periods.
Jacob Lucas

Jacob Lucas

Jacob has been active in the cryptocurrency markets since 2010, specializing in Bitcoin. He received education as Certified public accountant, specializing in taxes and cost management. Looking for alternative sources of income due to some personal struggles Jacob discovered Bitcoin 2010, showing some commitment and first to learn and get all the basics. Jacob made his fists investment in bitcoin in 2011 and has been successful in the field. Writing in the field is part of Jacob’s commitment to share knowledge with others.

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