To anyone new in the world of cryptocurrencies if there’re two things that seem most confusing then they’re Bitcoin and Bitcoin Cash. People, especially new cryptocurrency adopters, often get confused between the two and often think that both are same (thanks to the names). But now when you’ve come to this page, it won’t happen with you as here we’ll explain you the difference between both these cryptocurrencies. Let’s get started.
Background: The Need for Bitcoin Cash
Ever since Bitcoin was born, there has been a debate on its scalability. Bitcoin (or any other cryptocurrency) relies heavily on mining in order to work. The mining process is what validates the transactions on Bitcoin network, and new coins are also created through this process only. However, this process is highly time consuming, energy consuming and sslllloooooowww!!!! It’s significantly slower than the process of credit card companies and banks. While Visa approves 1,700 transactions per second (with capability of approving up to 24,000 transactions per second), Bitcoin network validates only 7 transactions per second. It takes a long wait of 10-20 minutes before a transaction is fully processed on the Bitcoin network. And this wait is getting longer and longer as more people adopt Bitcoin.
Clearly, something was needed to be done if Bitcoin (and cryptocurrencies in general) had to have a meaningful future. And there could be two solutions only:
- One was to increase the maximum block size so more transactions can be packed into each block and processed at the same time;
- Another was to reduce the amount of data needed to be verified in each block, so more blocks can be processed in same amount of time thus making transactions faster and cheaper.
Bitcoin Cash came as a result of the first approach.
What is Bitcoin Cash?
On August 1, 2017 Bitcoin network experienced a fork, which led to the creation of a new cryptocurrency called Bitcoin Cash. The fork thing here means that anyone who had some Bitcoins in their wallets also received equal amount of new Bitcoin Cash coins. However, this forked version of Bitcoin had a few significant differences in comparison to Bitcoin.
Differences between Bitcoin and Bitcoin Cash
From a user perspective there’s no difference in how you use Bitcoin Cash and Bitcoin. You use both the same way, and often you can store both in the same wallet. The only visible difference is that of token – while Bitcoin is BTC, Bitcoin Cash is BCH.
However, the processing time of Bitcoin Cash transactions will be faster than the time of Bitcoin transactions. That is because the maximum block size of Bitcoin Cash is 8mb, while for Bitcoin it is 1mb. So every block of Bitcoin Cash processes 8x more data (transactions) than every block of Bitcoin at the same time. While Bitcoin can process a maximum of 250,000 transactions per day, Bitcoin Cash network can handle as many as 2 million transactions every day!
Another difference are low transaction fees. Since Bitcoin Cash transactions are processed more easily than Bitcoin transactions, the transaction fees are also significantly lower. This benefit is derived from faster transaction processing itself.
Finally, there’s the difference of price. While BCH is priced around $1,000 (920.66 USD to be precise), BTC is priced around $8,000 ($8,213) at the time of writing this article.
So to conclude, the difference is just the block size which is 1mb for BTC and 8mb for BCH which results in faster transaction speeds and lower processing fees.
Rest is more or less the same. And now you know it. Share your thoughts on this article in the comments and also let us know why would you prefer either of these coins for your transactions.