When designing a blockchain, you must choose the size of each block. On first glance it seems that a bigger block size allowing more transactions per second is the obvious choice. However, this has a compounding effect that will perpetually grow the total size of the blockchain until it can no longer be stored on regular computers.
The inability to store the entire blockchain on a typical computer will have drastic effects on the level of decentralization a network has. When it comes to blockchains, decentralization is effectively equivalent to security. The more centralized a chain is, the easier it may be to execute a 51% attack.
While Bitcoin’s block size is capped at 1 megabyte, Bitcoin Cash’s block size is capped at 32 megabytes. Transactions on Bitcoin Cash are drastically cheaper, but the growing block size may become a fatal flaw in the future. Bitcoin Cash needs data storage to become cheaper at a rate faster than its blockchain grows if it hopes to maintain its current level of decentralization.
Main Takeaways: Bitcoin vs. Ethereum
- Bitcoin Cash is a fork of the Bitcoin Blockchain with an altered block size.
- Bitcoin is a store of value; Bitcoin Cash is a transactional currency.
- Bitcoin transactions cost more; Bitcoin Cash transactions are less secure.
- Transactions take approximately 10 minutes to settle on both blockchains.
What is Bitcoin?
In January 2009, an unknown person dubbed Satoshi Nakamoto created the world's first peer-to-peer electronic cash system based on blockchain technology. Blockchain was used as a decentralized ledger – each node on the network holds a copy of this ledger and comes to agreement on the state of the ledger to verify transactions.
Bitcoin’s supply will never exceed 21 million coins, and new bitcoin will continue being issued for the next hundred years or so. All of this is hard-coded in Bitcoin's code, giving Bitcoin the most predictable inflation strategy of any asset.
While the Federal Reserve has been busy making the money printer hum, Bitcoin is finally being recognized by institutions scared straight by the possibility of hyperinflation.
What is Bitcoin Cash?
Bitcoin Cash began as a fork of the Bitcoin core for those who thought Bitcoin’s block size was too small to scale.
The Bitcoin Cash community split off from the Bitcoin community in favor of a more transactional digital currency. As previously mentioned, Bitcoin Cash’s block size allows for greater throughput and cheaper transactions at the cost of some level of centralization.
As of December 2021, Bitcoin Cash has a $9 billion market capitalization. This ranks BCH in the top 25 largest cryptocurrency projects, ahead of coins like The Sandbox (SAND) and Stellar (XLM).
Similarities Between Bitcoin and Bitcoin Cash
Both Bitcoin and Bitcoin Cash have a supply cap of 21 million and a block time of 10 minutes.
Bitcoin and Bitcoin Cash both use the proof-of-work consensus mechanism that many blockchain enthusiasts today believe is old technology. Proof of work is based on the idea of turning electricity into currency by solving hard mathematical problems. These problems must be hard to solve so the data is hard to falsify. Unfortunately, proof of work has a heavy environmental toll.
Most blockchains developed today use a new consensus mechanism called proof of stake. This system employs validators instead of miners. Validators must stake, or lock up, cryptocurrency for the right to verify blockchain transactions and earn the fees associated with them. Validators who attempt to falsify information can lose their stake, effectively achieving the same economic game theory as proof of work without all the energy consumption.
Differences Between Bitcoin and Bitcoin Cash
Bitcoin and Bitcoin Cash are the results of the block size debate. Bitcoin’s block size is 1 megabyte and therefore grows slowly, preserving decentralization over time.
Bitcoin Cash’s block size is 32 megabytes, which allows for cheaper transactions and higher throughput at the cost of making it more expensive to run a full node.
The harder it is to run a full node, the less decentralized the blockchain becomes. This may not be a problem for Bitcoin Cash now or ever, but it also might be.
Bitcoin Cash makes using crypto to buy a cup of coffee or slice of pizza possible, as users won't be required to pay more in fees than for the item of their desire. However, new cryptocurrencies like Ripple (XRP) and Stellar Lumens (XLM) have lower transaction costs and nearly instant confirmation times, which may make Bitcoin Cash obsolete as a payment cryptocurrency.
So What's Better: Bitcoin or Bitcoin Cash?
Bitcoin and Bitcoin Cash have both spent their fair share of time on the block (pun intended), and their reputations are certainly keeping them alive more than their technology. Both Bitcoin as digital gold and Bitcoin Cash as a payment crypto have faced strong competition by newer and more advanced blockchain technologies.
If you are thinking about making an investment in either of these cryptocurrencies, consider this: Bitcoin is the most decentralized cryptocurrency in existence. It’s also now a household name and not likely to be going anywhere anytime soon. While Bitcoin Cash may be useful, the competition it faces is much stronger than competitors to Bitcoin.
- Exclusive Crypto Airdrops
- Altcoin of the Week
- Insider Interviews
- News & Show Highlights
- Completely FREE