The main difference between Bitcoin and Bitcoin Cash is the block size. Thanks to a larger block size of 32 MB (compared to Bitcoin’s 1 MB), Bitcoin Cash can process transactions faster and cheaper than Bitcoin. For comparison, Bitcoin can process just 7 transactions per second, whereas Bitcoin Cash can process 100.
Bitcoin Cash launched in 2017, about 8 years after the Bitcoin network first went live. The launch of Bitcoin Cash was a result of a general scaling limitation plaguing Bitcoin, which can process only a handful of transactions per second due to its low block size. Bitcoin Cash launched with a larger block size, aiming to alleviate network congestion and lower transaction fees.
In this article, we are going to examine the main differences between Bitcoin and Bitcoin Cash and provide a rough outline of their respective history and market performance.
Key takeaways:
- The primary difference between Bitcoin and Bitcoin Cash is the block size, with Bitcoin Cash having a significantly larger block size of 32 MB compared to Bitcoin’s 1 MB.
- A lower block size allows Bitcoin Cash to process transactions faster (up to 100 transactions per second compared to Bitcoin’s 7) and at a cheaper rate.
- Bitcoin Cash was launched in 2017 as a response to Bitcoin’s scaling limitations, which were a result of its smaller block size.
- Since their respective launches, Bitcoin and Bitcoin Cash have shown divergent market performances. Bitcoin, with its first-mover advantage, has outperformed Bitcoin Cash in terms of price and market capitalization.
- Both Bitcoin and Bitcoin Cash have a capped supply of 21 million coins and utilize the Proof of Work consensus algorithm. Over time, however, they have evolved independently with different updates and changes.
Bitcoin vs Bitcoin Cash: A side-by-side comparison
Before we continue, feel free to compare Bitcoin and Bitcoin Cash based on a variety of technical and market factors.
| Bitcoin (BTC) | Bitcoin Cash (BCH) | |
|---|---|---|
| Network Launch | 2009 | 2017 (via Bitcoin hard fork) |
| Transactions Per Second | 7 TPS | 100 TPS |
| Avg. Transaction Fee (Last 30D) | $18.1 | $0.022 |
| Avg. Transaction Confirmation Time (Last 30D) | 289 min | 10 min |
| Daily Transactions | 499,569 | 21,248 |
| Block Size | 1 MB transaction data, 3 MB signature data | 32 MB (initially 8 MB) |
| Block Time | 10 min 26 sec | 9 min 10 sec |
| Blockchain Size | 419.50 GB | 221.59 GB |
| Hashrate | 441.12 EH/s | 3.23 EH/s |
| Circulating Supply | 19.60 million BTC | 19.62 million BCH |
| Total Supply | 21 million BTC | 21 million BCH |
| Market Cap | $840.28 billion | $4.98 billion |
| Price (1-Year Change) | $42,890 (+106.31%) | $254 (+107.33%) |
*Data collected on January 16, 2024.
The origins of Bitcoin Cash
Bitcoin Cash was launched as a response to the heated debate in the Bitcoin community over scaling issues dating back to the mid-2010s. Some people advocated for Bitcoin code to remain faithful to Satoshi Nakamoto’s original design and continue using the 1 MB block size. Others argued for a block size increase, which would guarantee more transaction efficiency and better scalability.
The conflict (referred to by some as the “Block Wars”) in the community ultimately resulted in a split, both figuratively and literally. On August 1, 2017, the Bitcoin blockchain split into Bitcoin and Bitcoin Cash chains. Every Bitcoin holder received an equal amount of Bitcoin Cash at a 1:1 ratio.
The new Bitcoin Cash chain inherited all transaction data from the old chain. The only difference between the two was the block size – while Bitcoin continued using the 1 MB block size, Bitcoin Cash was upgraded to an 8 MB block size (later upgraded to 32 MB in May 2018).
Is Bitcoin Cash still Bitcoin?
While Bitcoin Cash originated from Bitcoin, they are now entirely separate entities with distinct characteristics, communities, and use cases. They share a common history but have diverged significantly since the fork in 2017.
What are the differences between Bitcoin and Bitcoin Cash?
There are several differences between Bitcoin and Bitcoin Cash. Here are the key ones:
Block size
The main difference between Bitcoin and Bitcoin Cash is in their block size, with the former using a 1 MB block size since launch and the latter using a 32 MB size (following an increase from 8 MB in 2018). All other differences between the two blockchains stem from the block size.
Understanding block size
The block size is the maximum amount of data that each block in the blockchain can hold. This size is a critical factor in the scalability and transaction speed of a blockchain network. For reference, a typical Bitcoin transaction amounts to about 0.0002 MB (or 200 bytes), which means that 500,000 transactions can be stored on a single block (assuming Bitcoin’s 1 MB block size). Meanwhile, a single block on Bitcoin Cash can store 16 million transactions.
It’s worth noting that Bitcoin can theoretically produce blocks up to 4 MB in size, with 1 MB allocated for transaction data and 3 MB allocated for signature data. This change was implemented in 2017 as a part of the Segregated Witness (SegWit) upgrade.
Transaction speed
Thanks to its larger block size, Bitcoin Cash can process up to 100 transactions per second, over 14 times as much as Bitcoin. This leads to lower network congestion, faster transaction times, and lower fees.
A typical transaction on the Bitcoin Cash network takes about 10 minutes to process. Meanwhile, a Bitcoin transaction will take anywhere from 30 to 60 minutes, and that’s if you are willing to pay relatively high fees. If not, your transaction might take hours.
Read More: How Many Bitcoin Confirmations Are Required For a Transaction?
Transaction cost
Transaction costs are inherently connected to the number of transactions on the network. When a blockchain can process all the transactions in a timely fashion, the costs remain low. However, if there’s a significant backlog of transactions, miners prioritize transactions with the highest fees (and higher miner rewards).
In extreme cases of network congestion, Bitcoin blockchain transactions have been known to skyrocket beyond $50, pricing out many users who are not willing to pay higher fees in order to get priority treatment from the Bitcoin miners.
Meanwhile, transactions on the Bitcoin Cash network rarely surpass 10 cents, with a typical transaction costing anywhere between $0.01 and $0.04.
What are the similarities between Bitcoin and Bitcoin Cash?
Apart from the differences listed above, the two digital currencies share a number of similarities, including:
Codebase
Bitcoin and Bitcoin Cash initially shared the same codebase since Bitcoin Cash originated from a fork of Bitcoin in August 2017. However, since the split, the two have evolved independently, with different updates and changes being implemented in their respective codebases. Still, the codebase used for both cryptocurrencies is very similar.
Tokenomics
After the 2017 fork, Bitcoin Cash adopted the same tokenomics model as Bitcoin. Both currencies have a capped supply of 21 million coins and a roughly similar circulating supply of 19.6 million coins. Both currencies follow a programmatically predetermined halving schedule, which means that mining rewards (new coins entering circulation) halve roughly every 4 years. Bot the next Bitcoin Cash halving and the next Bitcoin halving are expected to take place in April 2024.
Consensus algorithm
Both Bitcoin and Bitcoin Cash utilize the Proof of Work (PoW) consensus algorithm, which requires powerful mining equipment and a considerable amount of computing resources to solve algorithmic formulas that unlock new blocks. The miner that successful ly unlocks the new block receives the so-called mining reward (also called block reward).
Bitcoin vs Bitcoin Cash: Market Analysis
Bitcoin has significantly outperformed Bitcoin Cash in terms of market gains. BCH is currently trading at around $254 (first recorded trades in 2017 were executed at ~$240).
At the time of the Bitcoin Cash hard fork, Bitcoin traded at around $2,700, whereas the first BCH coins changed hands for roughly $240. Since then, Bitcoin has gone on to reach as high as $68,700 at its peak in 2021, and currently trades at around $42,000, up over +1,450% since the time of the fork.
Meanwhile, Bitcoin Cash saw meteoric growth in its first months, gaining +1,715% and reaching an all-time high of $4,350 in December 2017. Since then, BCH has been slowly losing value and currently sits at around the $250 mark, which is roughly equivalent to its price when it first started trading.
| Bitcoin | Bitcoin Cash | |
|---|---|---|
| Current Price | $42,890 | $254 |
| Price on Aug 1, 2017 | $2,700 | $240 |
| Price Change Since Aug 1, 2017 | +1,488% | +5.83% |
| All-Time High Price | $68,770 (Nov 10, 2021) | $4,358 (Dec 20, 2017) |
*Data collected on January 16, 2024.
Is Bitcoin Cash worth keeping?
Whether or not Bitcoin Cash is worth keeping as an investment depends on several factors, and it ultimately comes down to your individual financial goals, risk tolerance, and investment strategy.
Accounting for past market performance, it’s difficult not to recognize Bitcoin as a better investment. However, with greater adoption potentially fueled by lower transaction costs and higher speeds, Bitcoin Cash could greatly appreciate its value in the future.
If you want to learn more about potential market moves, check our Bitcoin Cash price prediction. If you are more interested in finding out about its older sibling, check out our price prediction for Bitcoin.
Which is better, Bitcoin or Bitcoin Cash?
There is no clear answer to which cryptocurrency is better. Bitcoin is the original cryptocurrency and will probably always enjoy its first-mover advantage. However, its scalability limitations will continue to hinder its success as a payment method, as long as Lithing Network and other scalability improvements don’t see greater adoption.
On the other hand, Bitcoin Cash is much faster, less expensive, and generally more suitable to handle a large amount of transactions. In this sense, it can be argued that the two currencies fulfill different use cases – Bitcoin serves as a long-term store of value, akin to gold, whereas Bitcoin Cash is better equipped for handling everyday transactions.
For more cryptocurrency comparisons, feel free to check out the following articles:
Source: https://coincodex.com/article/36709/bitcoin-vs-bitcoin-cash/