Cryptocurrencies can be confusing at first, not only do you need to learn how to buy them, trade them, store them and much more. You then discover Bitcoin, Bitcoin Cash, Bitcoin Gold, Bitcoin Private, etc. This can be confusing as you need to discover why their appears to be multiple Bitcoins and which ones you want to buy and the differences between them. This guide will give you a brief overview of the two biggest by market cap. Bitcoin v Bitcoin Cash
What is Bitcoin Cash?
Bitcoin Cash is a fork of the Bitcoin core blockchain and is defined as ‘Peer-to-Peer Electronic Cash’. The fork itself was decided as a result of a divide in the community between the ongoing scaling issue on the Bitcoin core blockchain. The Bitcoin Cash team state that Bitcoin Cash is in fact “fulfilling the original promise of Bitcoin”.
Why was Bitcoin Cash created?
Bitcoin Cash was created on 1st August, 2017 in an attempt to improve upon bitcoin as a peer-to-peer payment system. The team at Bitcoin Cash, deemed that the growing issue of slower transactions times and more expensive transactions would eventually lead users away from the Bitcoin network.
They decided to implement so changes to the Bitcoin protocol through a hard fork in order to address these issues.
Before the Bitcoin Cash hard fork, one of the major issues with the Bitcoin network was the slow transaction times and the increasing transaction fees. The way the blockchain (the underlying technology in Bitcoin) works is by processing a series of blocks to create a chain, hence blockchain. The blocks contain a number of transactions’, which are processed every 10 minutes in the Bitcoin network. The issues that had arisen with Bitcoin can simply be attributed to it’s popularity. As Bitcoin gained more users, more transactions began to occur, which slowed done the network and increased the network fees. So lets look in detail at Bitcoin v Bitcoin Cash
What is Different? Bitcoin v Bitcoin Cash
One of the key differences between Bitcoin Cash and Bitcoin is the difference in block sizes.
Because the blocks sizes are relatively small on the Bitcoin network at 1MB, this limits the amount of transactions per block. Not only does this cause the network to become congested by having a backlog of transactions. This also means some users will add additional fees in order for their transactions to be confirmed quicker, forcing the network fees up in the process.
The reason fees go up is because miners (whom secure the network and validate transactions) will verify transactions offering a higher fee, this forces other to increase fees.
Bitcoin Cash decided to increase the block sizes to 8MB in order to allow for a greater number of transactions to be processed in a shorter space of time with lower network fees.
Larger block size, good or bad?
A larger block size allows transactions to process much faster with much lower network fess as a result. However, it also means a full node takes up much more date through storage space.
A full node is required to mine on the blockchain. Each node will contain a copy of the entire transaction history for the whole blockchain. Therefore, larger block sizes mean more data to be stored.
Mining is the process used to validate/process transactions and secure the network in both Bitcoin and Bitcoin Cash Networks. In order to solve a block, a miner needs to spend processing power to solve a complex mathematical puzzle. Once the block is confirmed the transactions within the block are confirmed and the miner whom solves the block will receive the block reward. This is also how new bitcoins are minted.
Mining difficulty refers to how difficult the math problems are to solve. This is determined by the network hash rate (how many miners are currently mining that coin). If there is not many miners the difficulty will reduce meaning block are easier to mine, if there is a large number of miners then the difficulty will increase.
This means blocks can take more or less time to solve based on the difficult, however the average block time will always be whatever is set out originally. In the case of Bitcoin and Bitcoin Cash it is 10 minutes.
Is an easier mining difficulty beneficial?
Bitcoin Cash decided to make the mining difficulty easier, as they felt this would be required for faster transaction times. This does come with a rather unwanted issue of miners only mining BCH when it is profitable. This can cause the difficulty setting to vary on a huge scale. Meaning some blocks can take hours while other can take seconds.
By making the mining difficulty easier blocks can be mined faster, but this is only if it is profitable for miners. Miners are rewarded for processing new blocks, if the mining difficulty is too easy coins will be minted too quickly which could devalue the currency. This would cause miners to not mine anymore as it would no longer be profitable.
More key differences
The infographic below shows some more of the key differences between Bitcoin v Bitcoin Cash. It does not determine which is the best and we do not want to sway your opinion either way. Both Bitcoin and Bitcoin Cash have a number of reasons for and against being the more superior cryptocurrency.