Bitcoin vs Bitcoin Cash: What is a Hard Fork?

If you’re a newbie to the crypto world, you might get perplexed between the concept of Bitcoin vs Bitcoin Cash as these might look like two similar things on the surface in the way these systems work but are actually two completely separate cryptocurrencies in the market.

Summary

  • BTC is an open-source P2P decentralized technology launched by Satoshi Nakamoto in 2009. 
  • Bitcoin Cash is a P2P permissionless electronic cash payment system that is a result of a hard-fork of the Bitcoin network.
  • BCH has increased capacity and now supports up to 32 MB block size and thus, allowing bigger & faster transactions with minimal charges in comparison to BTC.
  • However, BTC is a more popular and preferred crypto token in the market  because of its reliable and secured network.

Also Read: A Candid Explanation of Bitcoin

Bitcoin vs Bitcoin Cash: Bitcoin (BTC)

After the 2008 financial crisis happened, Bitcoin was launched in 2009 (BTC) by its creator Satoshi Nakamoto, an anonymous party, which is believed to be the first-ever digital cryptocurrency to be introduced in the global payment market. Relying on peer-to-peer networking, immutable records & cryptography, it’s decentralized in the sense that it’s not backed by any government or other legal authority & is partially anonymous as the identity is not revealed. Bitcoins are not legal and aren’t redeemable for either cash or gold because of the high fluctuations in their real-world value.

Bitcoin
Bitcoin

In the history of cryptocurrencies, till date bitcoin stands as the largest and most valued decentralized currency. Bitcoin is capped at 21 million out of which 18 million bitcoins (approx.) have already been mined by August 2021.

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What is a Fork?

Usually, the validators or miners continue building blocks on top of the longest-running chain in the bitcoin network. However, at times, some miners get diverted and build new blocks on a different sidechain, leading to a fork. Often these chains aren’t very long and are disregarded after one, two, or three blocks.

In minor cases, the miners are not able to reach a proper consensus about the longest chain and get divided while building blocks on top of a side-chain. Now, this is what a hard-fork is.

Bitcoin vs Bitcoin Cash: Bitcoin Cash (BCH)

Bitcoin Cash (BCH), introduced by a libertarian, Roger Ver from Big Blockers, is a cryptocurrency or ‘peer-peer electronic cash’ which is actually the hard fork & slightly altered version of the original bitcoin that emerged when the network size of Bitcoin users boomed in December 2017. BCH is a payment network having its own blockchain and specifications.

As a result, bitcoin’s scalability was almost doomed by the slow technology network systems & limited block size which led to longer waiting times, BCH was created with an increased block size of 8MB to quicken & increase the number of transactions per block holds. Bitcoin Cash’s block size initially capped at 8 MB later underwent another update in 2018 where the limit of the block was increased to 32 MB which is almost 4 times thus accelerating the processing speed for verification of transactions, reducing the process time and fees. 

Bitcoin Vs Bitcoin Cash
Bitcoin vs Bitcoin Cash

Also Read: Bitcoin and Gold – Is it the right comparison?

Is Bitcoin Cash the same as Bitcoin?

Almost similar but with few exceptions, Bitcoin Cash is different from Bitcoin. To the core problems of the scaling, block size, and transaction verification process faced by Bitcoin, the developers and cryptocurrencies miners came up with two major solutions.

On August 1st, 2017, small blockers activated Segwit based on the original Bitcoin protocol thus making the transactions faster and cheaper, while Big blockers created Bitcoin Cash opposing the inclusion of Segwit technology  & Lightning Network technology thus making the blocks of data bigger so that more information can be processed at one time. 

Is Bitcoin Cash The Same As Bitcoin?
Is Bitcoin Cash the same as Bitcoin?

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Major differences between BTC and BCH

1. Hard Fork

Bitcoin is the original crypto coin whereas Bitcoin Cash is a separate cryptocurrency that was developed as a hard fork by the miners and developers in August 2017. BCH follows its own blockchain system & specifications that distinguish it from BTC.

2. Transaction Speed and Fees

Since Bitcoin is entirely built on a blockchain system where a ledger keeps the records of all the authorized & verified transactions done online, it’s a time-consuming process that takes an average of about 10 minutes to confirm & add a transaction to the block. Besides this, a maximum of 1MB storage is required for adding bitcoin to a block making it quite pricey. A bitcoin network can only process up to 7 transactions per second whereas Bitcoin cash ensures a faster verification procedure and lower transaction fees in comparison.

3. Price

Bitcoin captures the world’s largest share in the crypto market and commands a high valuation of $1.15 trillion. It’s a popular cryptocurrency & has gained trust from more of the crypto users around the globe, unlike Bitcoin Cash. Bitcoin’s price growth has shot up by more than 12 million%  as compared to Bitcoin Cash that underperformed & its value has declined by 75% over the years. 

Bitcoin vs Bitcoin Cash: Conclusion

Known as digital gold, Bitcoin has a store of value. However, the main problem with the bitcoin network is that it’s slow (as of now) in comparison to the banks that deal in credit card transactions and charge high transaction fees. Bitcoin Cash, on the other hand, was started by bitcoin miners and developers to solve this scalability issue with the help of its affordable & faster speed in recording the day-to-day transactions but its larger block size may cause some vulnerabilities when it comes to decentralization & security.

Frequently Asked Questions

Why was Bitcoin started?

The period of the Great financial crisis created a panic situation among the global financial markets. For their financial recoveries, they had to rely on the intermediaries such as banks but there were doubts regarding the breach of trust in such a case as the banks had to be involved at every transaction. Satoshi had this idea of introducing bitcoin that can work on a peer-to-peer payment method so that the third-party involvement can be avoided by removing the central control and decentralizing the process using blockchain technology.

How does a bitcoin ATM work?

A person can purchase Bitcoin and other cryptocurrencies using cash or debit card on a Bitcoin ATM. These are different from the traditional ATMs in the way that they aren’t connected to a bank account but directly to the user’s Bitcoin wallet or exchange over the internet simply via the scanning of a QR Code. Before the completion of the transaction, the verification is done and a service fee is also charged.

How to get Bitcoin Cash from a paper wallet?

You can choose a suitable wallet app from a number of wallet apps available on the market with different features for iOS & Android and install it on your device. The next step is to create a new wallet and enter the recovery phrase of 12 words to confirm. It is advisable to backup this recovery phrase and safely stores it and write it down for future access. Now you have to set a strong password & select the token that you wish to use with your wallet. By scanning the private key, you can collect your bitcoin cash. You can also switch from your existing wallet apps.

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Mansee Manral