So you’re interested in either Bitcoin or Bitcoin Cash (or both), but can’t tell the difference between them? Which one is legitimate, and why there are two?
The simple answer is: they are both Bitcoin and they are both real. Don’t fret over it as today we will give you a brief history of Bitcoin and Bitcoin Cash, and how the two evolved.
Table of Contents
Bitcoin: The Peer to Peer Digital Currency
Bitcoin was created by the online pseudonym, Satoshi Nakamoto. To date, no one knows who he is or even if it was a single person.
A paper authored by the creator, titled Bitcoin: A Peer-to-Peer Electronic Cash System was published on a cryptography list where people gathered from all over the world to share their opinions on using cryptography.
Cryptography is the study of using different techniques to secure information and data, so no outsider can access or view the contents.
The paper outlined a decentralized ledger that would be maintained by nodes and miners, each one having the complete copy and miners would be able to note down transactions, approved by complex mathematical calculations.
Over time, Bitcoin’s innovative method of ensuring security, speed and efficiency gained popularity and the digital coin saw its first boom in 2017, reaching nearly $20,000 at its height, followed by the current rally that has seen the crypto go as far as $58,350.
Bitcoin vs Bitcoin Cash
Every transaction in a blockchain is stored in an individual collection of files, called blocks. When a block is filled, another is created, noting the incoming transactions. Each newly created block is linked to the previous one, thus forming a chain of blocks – or blockchain.
The number of transactions that can be noted down in a block limits the speed of the network. In July 2017, the core Bitcoin team were split on how to overcome this issue.
One side backed the Bitcoin Implementation Proposal 91, which supported the use of SegWit, a method which would take a partial load from the network off-chain to maintain speeds.
The other side of the developer team, led by Roger Ver, believed that the 1MB block size was too small, and unless it was increased, the slow transaction times would be a hindrance in BTC being used as a daily digital currency. He proposed increasing the block size to 8MB so that more transactions could be executed within the same blocks and therefore, increase possible transactions per second.
The rivalry grew bitter and the two groups were unable to reconcile, eventually leading to the Roger Ver led faction breaking away from the main, splitting the Bitcoin chain as they forked away.
They named their version of the blockchain Bitcoin Cash, to promote its use as digital cash, not wealth storage. The other chain kept the original Bitcoin.
Today, Bitcoin retains the BTC ticker, while Bitcoin Cash uses BCH.
BTC vs BCH: Twins or Not?
Essentially, BCH was created using BTC’s code. Up until the first block that split the original chain into two, both BTC and BCH have the same historical ledger data.
Bitcoin Cash backers switched over to their preferred chain and forked away, creating their own unique chain. This means that both blockchains have a lot in common and are technically the same until the first Bitcoin Cash block.
The key differences between the BTC and BCH’s chains today are:
Transaction Fees: Bitcoin Cash has a very low transaction fee. Typically around less than $0.25, while BTC is usually much higher at $23.
Transactions Per Second (TPS): With an initial 8MB block size, BCH could transact 8x more transactions. Nowadays, each BCH block is 32MB, which enables speeds that BTC can’t even begin to try and compete with. As a comparison, BCH averages 116 TPS, whereas BTC averages a mere 4.6 TPS!
Block Production: BCH’s high TPS means that more blocks are produced at a faster rate, which ensures a more secure blockchain.
Value: BTC remains the undisputed leader in cryptocurrencies, with BCH falling far behind in both price and market capitalization. Check our cryptocurrency prices page to see for yourself.
The Future Values of Bitcoin and Bitcoin Cash
BCH was a small faction and the relative tiny network meant that when the fork happened, most of users preferred to stick with BTC. The result was a fall in value of BCH. After the split in 2017, BTC was trading around $2,700, while BCH sharpy fell to less than 10% of its value of $240.
While both chains have repeatedly claimed to be the original version of what Satoshi Nakamoto wanted, Bitcoin Cash backers have never worried over its price, preferring to have the chain more efficient and daily use friendly.
Bitcoin, on the other hand, has always been about being a digital gold with a limited supply (and transactions) to keep the value high.
BCH’s concept was sound at its time, but hastily implemented protocols and another internal dispute war (resulting in some BCH developers creating Bitcoin SV) has shaken trust in BCH for many people.
Though Bitcoin Cash continues to grow, it might never be able to match the original Bitcoin. On top of that, only a few major exchanges offer BCH trading pairs, overshadowed by BTC, Ethereum and other larger coins.
So what’s the long term outlook? Unless BCH team gets together and implements sound upgrade protocols and stops the infighting, Bitcoin Cash might never outperform Bitcoin.
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