Today one Bitcoin is worth thousands of dollars, which to be honest costs a fortune for most people. Some people see Bitcoin Cash as some kind of cheap analogue. Unfortunately, it is not. Despite the fact that the coins share the “Bitcoin” moniker, they are significantly different. Learn about the difference between BTC and BCH in this article.
What is Bitcoin?
We don’t know if there’s a person around who still doesn’t know what Bitcoin is. But nonetheless, here’s a small introduction (just in case).
Bitcoin was the very first cryptocurrency created in 2008. Bitcoin is based on blockchain technology which does not allow outside parties to hack the coin and “print” or steal it from the system. It does not belong to any single person or group of people and is not controlled by anyone. Today, Bitcoin remains the most valuable cryptocurrency on the market. Other cryptocurrencies are trying to overtake Bitcoin, but no one has even come close to this goal.
What is Bitcoin Cash?
Bitcoin has had several forks, but none of them have been as successful as Bitcoin Cash. Bitcoin Cash is a cryptocurrency with its own blockchain. This fork took place in August 2017, which makes BCH much younger than Bitcoin.
The fork happened because Bitcoin developers wanted to make some important changes to the coin. Developers in the Bitcoin community were not able to agree on some details and, as a result, a small group of these developers created (or rather forked) their own version of Bitcoin code with certain modifications. Subsequently, the new coin managed to split into two different cryptocurrencies one more time. The team couldn’t agree on the future of BCH and in November 2018, BCH was divided into BSV (BCHSV) and BCH (BCHABC).
Why did the fork happen?
One of the main problems of BTC which a lot of altcoins are trying to solve is scalability. In the beginning, Bitcoin managed to process transactions easy and fast. Today, the network has to process hundreds of thousands of transactions each day – which negatively affects transaction speed and commission rates.
When the transaction volume is high a user has to wait to get their transactions processed or pay a higher fee so that miners prioritize your money transfer. So, basically, Bitcoin was not suitable as a payment system for mass usage as it was initially designed.
How did they solve the scalability issue
Dialogues about Bitcoin’s poor scalability have been going on for years. One way to improve the scalability of the blockchain is to change its block size. One block of BTC contains about 1 MB of information. So, on August 1st 2017 a group of enthusiasts initiated a hard fork increasing the blocksize from 1 MB to 8 MB. This split divided the network into Bitcoin and Bitcoin Cash blockchains.
The 8 MB block size lets the block store more transactions but fewer people can become node operators. The larger blocks need more space on a hard drive and cost more money for node hosts. This leads to centralization of the network and increased vulnerability to 51% attacks – which has become a main point of criticism for Bitcoin Cash.
On the other hand, Bitcoin found an off-chain solution and uses SegWit and the Lightning Network to increase speed and reduce transaction fees. The main drawback is that not every wallet/exchange/platform supports these technologies.
The main differences between coins
- Bitcoin Cash has lower fees (about $ 0.2 per transaction), so performing transactions in BCH is more profitable than using BTC. A BTC transaction costs about $1, and at its peak reached $25.
- Bitcoin Cash can process more transactions per second. This means that more people can use BCH than BTC in any given time frame.
- All this is due to the fact that a Bitcoin Cash block (on the blockchain) is 8 times bigger than a Bitcoin block. This makes BCH faster, cheaper, and more scalable than Bitcoin. For the same reasons, Bitcoin Cash is gaining momentum and attracting supporters.
- The original Bitcoin has a bigger hashrate than BCH by 50 times! The rate of BTC is 100 exahashes while BCH has only 2 exahashes. Why is hashrate so important? Because Bitcoin Cash is less stable and can be exploited via 51% attacks – when one party can take over 51% or more of a blockchain’s hash rate and thereby total control of the network.
BTC vs BCH prices
BTC and BCH are some of the biggest cryptocurrencies. Both are in the top 5 coins based on market capitalisation. But when it comes to their price, there’s a huge gap between them. Currently, Bitcoin costs over $8000, while BCH is about $300.
Bitcoin started in 2009 and grew immensely over the following 10 years. It has underwent four major price cycles which has seen it outperforming its previous bests by significant percentage rates each time. There are not many coins out there that can beat BTC in terms of price, so it’s no wonder why it’s got the top spot on CMC and is still regarded as the main cryptocurrency.
As for BCH, its performance has been different from that of Bitcoin. Since the time of its creation in August 2017, the coin has gained 79% vs the over 6000% gained by BTC. On the other hand, BCH is a very young coin at just 2.5 years old and in the future, it may be worth much more.
Which one to choose?
Today, if you don’t want to suffer from high fees and slow transactions, BCH could be a good choice. But if you see crypto as a store of value you’re probably better off sticking with the original Bitcoin. It has a better price performance and is still the gold standard in terms of cryptocurrency.
Of course, both cryptocurrencies are at different points of development and BCH has the potential to develop into something really big and powerful. However, if the adoption of BCH increases it may face the same problems that stand in front of its digital gold predecessor.
In any case, you probably shouldn’t just focus on one coin as both cryptocurrencies play an important part in the market and can be worthwhile assets for your portfolio.
Store BTC and BCH on Freewallet
You can store both coins on Freewallet: Crypto Wallet on your iOS, Android device or desktop via the web app.
- Manage 150+ other cryptocurrencies in one wallet.
- Buy Bitcoin and Bitcoin Cash with your bank card right in the app.
- Seamlessly exchange coins with other cryptocurrencies in the wallet.
- Make free transfers with other Freewallet users.
- Monitor the exchange rate of digital currencies in the wallet
- Protect your money with advanced security protection including 2FA, multisig, and transaction limits. The majority of assets are kept in cold storage, ensuring that your coins won’t be lost or stolen.
Feel free to sign-up with your Facebook, Gmail, email, or mobile number and give Freewallet a try.