Bitcoin and Bitcoin Cash are from the same blockchain but are two different coins. A hard fork occurred on the bitcoin blockchain in 2017. Bitcoin Cash is the result of the hard fork. A blockchain splits when there is a radical change in the blockchain. This phenomenon is known as a hard fork.
In this article, we will discuss the reasons for this hard fork. We will also study the similarities and differences between Bitcoin Cash and Bitcoin.
The Hard Fork of the Bitcoin Blockchain
Since 2009, Bitcoin has witnessed a meteoric rise. The coin is the market leader of cryptos and is synonymous with cryptocurrency. Energy consumption and user volume grew with its rising popularity. But on the other hand, the transaction speed of the network was reduced due to growing user volume.
This is why we did not witness Bitcoin’s implementation for everyday transactions. The time it takes for your transaction to be processed depends on the existing traffic on the network. You have to pay a fee to get your transaction processed sooner.
The Bitcoin Blockchain comprises units known as blocks, and every Bitcoin transaction is captured on the Bitcoin Blockchain. Each block in the Bitcoin Blockchain has a maximum storage of 1 MB and can record seven transactions per second. In comparison, 1700 transactions per second are processed by Visa.
The Bitcoin Blockchain’s ability to process fewer transactions restricted its reach to last-mile applications despite having features like immutability and decentralization. The block size of the Bitcoin blockchain had to increase from the current size of 1 MB to make it scalable.
Some members of the Bitcoin community opposed increasing the block size because it would make hosting a node more expensive. There is also a possibility that only a few can afford to maintain a node with higher capital costs. Also, this could lead to the network getting centralized.
Whereas others preferred to trade off the chances of centralization of the network and have a faster network. The Hard Fork of the Bitcoin Blockchain occurred due to this difference in opinion and subsequently led to the creation of Bitcoin Cash.
Bitcoin had a block size of 1 MB at the time of the hard fork and continues to be the same even today. Bitcoin Cash started with a block size of 1 MB and has ballooned its block size to 32 MB since then.
Bitcoin and Bitcoin Cash similarities
Mining Infrastructure:
Both Bitcoin and Bitcoin Cash widely use Bitmain products for mining.
Consensus Mechanism:
A Proof-of-Work mechanism is used for both Bitcoin and Bitcoin Cash. Proof-of-Work is a consensus mechanism that requires solving a mathematical puzzle to create new blocks in the blockchain.
Finite Supply:
Bitcoin and Bitcoin Cash have a finite supply of 21 million coins.
Block Interval:
The rate at which blocks add to the blockchain is called Block interval. The block interval for both Bitcoin and Bitcoin Cash is 10 minutes.
Differences between bitcoin and bitcoin cash
Transaction Speed:
The transaction speed of Bitcoin Cash is faster as the block size is larger. More transactions can happen simultaneously in a larger block. Thus resulting in a faster speed of the network. 110 transactions per second can be processed in the Bitcoin Cash Blockchain. On the other hand, the Bitcoin Blockchain can only process seven transactions per second.
Transaction Fee:
Bitcoin has a higher transaction fee when compared to Bitcoin Cash. Although there is a difference in transaction fees, it is not fair to compare both as there is much more volume in the Bitcoin Blockchain.
Mining difficulties and computational power:
Bitcoin is the clear winner on both these metrics. An increase in active nodes on the network results in higher computational power and increased mining difficulty. Bitcoin wins this point as it has a larger network.
Usage:
Bitcoin Cash loses here as well when compared to Bitcoin. Bitcoin’s adoption is scaled through several significant solutions. Bitcoin Cash has less adoption compared to Bitcoin as it is a newer Crypto.
Market Capitalization:
Bitcoin has a market cap of $413 billion, making it the largest crypto asset in the world. On the other hand, Bitcoin Cash has a market cap of about $2.4 billion.
Final Verdict
Bitcoin is regarded as the gold-standard asset of the crypto ecosystem and has survived many crypto winters. The Bitcoin Blockchain is formidable because of features like immutability and decentralization. There has never been a hack on the Bitcoin Blockchain when compared to other major blockchains. Bitcoin Cash only wins if we consider the standalone speed of the blockchain.
