In the beginning, there was Bitcoin, then there was Bitcoin Cash. But what’s the difference and which is better? Sounds like we need an exclusive Tokenleak Bitcoin vs Bitcoin Cash guide to settle the issue once and for all! Ready? Let’s go!
Before we get into all the gory detail, I need you to come on a journey with me, all the way back to 2008…
That’s right, it’s origin story time!
Bitcoin is the world’s first decentralized digital cash system which allows users to transfer units of value to each other without having to trust third party services like banks.
Bitcoin has no centralized servers or authorities, it’s run by a network of thousands of computers called nodes which are spread out all over the world. Anyone can operate a Bitcoin node simply by downloading some software and allowing their device to help maintain the network!
Whilst other systems like it had been attempted in the past, Bitcoin is widely acknowledged as the first successful example of what has come to be called a cryptocurrency.
Bitcoin was created by a mysterious figure known only as Satoshi Nakamoto. The first Bitcoin transaction was made on January 3rd 2009 and carried a message which read;
The Times 03/Jan/2009 Chancellor on brink of second bailout for banks
Whilst we’re not sure whether Nakamoto is a man, woman or group of people, it’s clear what they meant by these words. Bitcoin’s creator envisioned a future where the world economy wouldn’t be subject to the vagaries of banks that had become “too big to fail.”
Their concept was revolutionary in its simplicity; it’s time to cut out the middlemen and take care of business for ourselves!
Bitcoin wasn’t a success overnight and even now, after it’s value rose to unprecedented levels in 2017, its adoption rate is very slow. However, the wheels of change have been put in motion, a whole development/trading ecosystem has grown up around the cryptocurrency and it has become a household name. Even my Grandma has heard of Bitcoin!
As you can probably tell, Bitcoin is no ordinary payments system. It has no central leader, so all decisions regarding its development are decided by consensus. This means that when changes to Bitcoin’s protocol (ie. the code which governors how it functions) are proposed, the nodes in the network have to agree before they’re implemented.
Disagreements over the direction of Bitcoin’s development have happened occasionally in the past and they are usually referred to as one of two things; soft forks or hard forks…
May the forks be with you!
Soft forks are changes to a cryptocurrency’s protocol which are compatible with old transactions (they’re called backwards compatible for this reason) so nodes are free to adopt them if they agree or ignore them if they don’t.
Soft forks don’t cause too much upset to the network as a whole.
Hard forks, on the other hand, aren’t compatible with old transactions so all the nodes in the network need to agree to the proposed changes or a split in the network can happen between the nodes who agree with the changes and those who don’t.
This brings us nicely to the origin story of Bitcoin Cash (BCH)…
Bitcoin Cash Origins
Bitcoin Cash was formed in 2017 as a hard fork upgrade of the original Bitcoin protocol. It’s the most well-known and successful Bitcoin hard fork upgrade so far.
The disagreement which lead to the Bitcoin Cash upgrade was as much ideological as it was technical. In the lead up to a planned upgrade called BIP 91, some members of the Bitcoin community felt that measures needed to be included that allowed more transactions to be processed by the Bitcoin blockchain.
By 2017, the value of Bitcoin had risen exponentially and the Bitcoin rebels, lead by outspoken developer Roger Ver, felt that those who didn’t want to increase BTC transaction volumes were trying to protect their investment from dilution. This, they argued, was to the detriment of Satoshi Nakamoto’s intended vision.
Ver and co. thought that Bitcoin should be a transactional currency like the US dollar (USD) not a store of value like gold.
Neither side could agree on a satisfactory compromise and on 1 August Bitcoin Cash was launched as an alternative to its parent coin. Since then, the two coins have been fierce rivals, with Roger Ver’s appetite for controversy fanning the flames of an already heated Bitcoin vs Bitcoin Cash debate.
Even the Bitcoin Cash community itself has proved to be far from homogeneous, as was spectacularly demonstrated in late-2018 when the young coin was subject to its own internal hard fork!
An ill-tempered disagreement over transaction volume again proved decisive, except this time it was Ver who was accused by attempting limit the capacity of the network. Oh, the irony! The schism lead to Ver’s old friend (and now arch nemesis), Craig Wright, forking off to start his own cryptocurrency called Bitcoin SV (short for Satoshi’s Vision) whilst Ver and friends ploughed on with original BCH (now sometimes referred to as Bitcoin ABC).
Note: In the interest of clarity, this guide will only concern itself with a comparison between Bitcoin vs Bitcoin Cash/Bitcoin ABC as it remains the dominant incarnation of BCH.
Phew! That story is forking complicated! However, now you know where they came from, we can consider the Bitcoin vs Bitcoin Cash question in more detail. Let’s start by comparing the tech of Bitcoin vs Bitcoin Cash…
Bitcoin vs Bitcoin Cash: Tech
Okay, here comes the techie bit! What exactly separates the original Bitcoin protocol from its rebellious man-child Bitcoin Cash?
The answer is, in short, blocksize.
Transactions on a blockchain aren’t processed one-by-one but rather in groups called blocks. Each block of transaction information is verified and added permanently to the blockchain (or confirmed) in a process which is known as mining.
Bitcoin mining is carried out by special nodes (called miners) who are granted rewards in the form of new Bitcoins as payment for the important work they do. Each Bitcoin block contains 1 megabyte (mb) of transaction information. For every block mined, one lucky miner gets a reward of 12.5 Bitcoins as the result of a kind of mathematic lottery.
For more information about how cryptocurrency mining works, check out our What is Cryptocurrency Mining? Guide.
All blockchains face the problem of scalability, which is a network’s capacity to process increasing numbers of transactions without slowing down. At the moment, most blockchains process transactions very slowly when compared to payments systems like Mastercard and Visa. The Bitcoin network can process around 7 transactions per second (Tx/s) compared to Visa’s 24,000 Tx/s!
In July 2017, an planned soft-fork upgrade called SegWit was about to be implemented to the Bitcoin protocol which it was hoped would improve scalability by decreasing the amount of information stored in each block by about half. The Bitcoin Cash gang didn’t think these changes went far enough and proposed that the only way the scale Bitcoin successfully was to increase its blocksize.
So, whilst the rest of the Bitcoin network adopted SegWit, Roger Ver and his allies implemented their own upgrade which included increasing the Bitcoin blocksize to 8mb. With this fundamental difference of opinion, Bitcoin Cash was born!
Bitcoin Cash’s core protocol still closely resembles that of its parent coin, it issues the same block reward (12.5 BCH) and each new block is mined in the same amount of time (roughly 10 minutes). However, due to its increased block size Bitcoin Cash can process transactions around 8 times faster than Bitcoin (around 60 Tx/s).
Following the Bitcoin ABC hard fork of late last year, Bitcoin Cash’s blocksize increased again, this time to 32mb, leaving it with a transaction speed of roughly 100 Tx/s.
Now you know what’s under the bonnet, let’s see how Bitcoin vs Bitcoin Cash plays out on the open market!
Bitcoin vs Bitcoin Cash: Price
For the first few months of its humble existence the mighty Bitcoin was worth, well, nothing. It wasn’t until July 2010 that the coin was worth a measurable amount and even then 1 BTC would only set you back 8 cents! That didn’t last long though, by March 2011 Bitcoin had reached parity with the US dollar. After that, the only way was up!
By the time the cryptomania of 2017 had reached its zenith on 17 December, Bitcoin was worth a princely 19,475.80 USD with a astronomic market cap of 320,576,568,850 (that’s billion spelt with three commas)!
Note: A market cap (or capitalization) is the total monetary value of the entire supply of a coin or coins currently in circulation.
Twenty eighteen was a different story. A lasting bear market took hold and prices have yet to recover, with Bitcoin spending much of the year hovering between 6,000-9,000 USD. Whilst it still easily tops CoinMarketCap’s top 100 list, Old Man Crypto is far from its best and is presently only worth about 4,000 USD a coin.
Bitcoin Cash may have only been on the scene for a fraction of the time Bitcoin has but its price has still had more ups and downs than an elevator.
Bolstered by its association with the world’s biggest cryptocurrency, BCH hit the ground running and was worth more than 500 USD as soon as it was launched. By Christmas Eve 2017, BCH had peaked at 3,260.55 USD and was reporting a market cap in the region of 50 billion USD.
What goes up must come down though and, just under a year later (as the Bitcoin ABC/SV fork was occurring), the coin bottomed-out at a measly 77.37 USD. Since then, the green shoots of recovery have been showing through icy ground and Bitcoin Cash is now worth about 160 USD with a cap of around 2 billion USD.
There’s no hiding the fact that, when it comes to cold hard cash value, Bitcoin is still King. Its market cap still accounts for roughly half the value of all combined cryptocurrencies and its coin price is generally eye-wateringly high.
Bitcoin Cash has held its own over the past few years though, and it can even be argued that its modest monetary value makes it more useful as a unit of exchange and more accessible to a mass market.
Speaking of accessibility, how does Bitcoin vs Bitcoin Cash fare when it comes to utility? Let’s find out, shall we?
Bitcoin vs Bitcoin Cash: Utility
The most important asset any new technical innovation can have is being useful. You can have the coolest tech on the planet but if no one’s using it, then you’ve got nothing!
Fans of Bitcoin Cash have argued that it represents the truest version of what Satoshi Nakamoto intended Bitcoin to be, ie. a digital cash system. The clue’s in the title!
BCH has a much faster transaction time and could therefore be said to be more useful as way of paying for things than Bitcoin. Imagine trying to pay for a cup of coffee with Bitcoin and waiting 10 minutes for the transaction to be processed!
On the other hand, fans of Bitcoin not only think that it’s a better cash system than Bitcoin Cash but feel has a better variety of applications too. Bitcoin can be used to pay for goods and services in thousands of locations (both real and online) all over the world, a claim Bitcoin Cash is unable to replicate.
Bitcoin has also demonstrated that it can hold its value over time in a way that Bitcoin Cash hasn’t. Bitcoin often gets called digital gold for this reason. As a store of value, there isn’t a more useful cryptocurrency on the market, even if BCH fanboys accuse Bitcoin of being an investment and not currency.
Liquidity – the ease with which something can be bought or sold – is a big problem for all cryptocurrencies and these two are no different.
Some say that Bitcoin’s liquidity is higher, meaning that it’s easier to access than Bitcoin Cash. In the last 24-hours, nearly 5 billion USD worth of Bitcoin was bought and sold across hundreds of different exchanges whereas BCH’s trading volume was only about 160 million USD.
That said, Bitcoin Cash’s circulating supply is higher which means that, in theory, it has the potential to be a more liquid (and therefore useful) asset than Bitcoin. We’ll call this one a tie!
So, which coin is more useful? It’s close, but I’d have to say Bitcoin is more useful due to its popularity, lasting value and mainstream commercial adoption. There are very few people beyond Roger Ver and friends who could say that Bitcoin Cash is more useful than Bitcoin and keep a straight face while they’re doing it!
Don’t believe me? Well then, let’s have a look at what some industry experts have to offer to this Bitcoin vs Bitcoin Cash showdown…
Cryptocurrencies are, in general, a long way from reaching their full potential. This means that much of what is said about the subject is still theoretical. It’s therefore important to consider the viewpoints of as many industry experts as you can before making any firm judgements for yourself.
Here’s what the fans of Bitcoin Cash are saying;
Dan Nathan, founder Risk Reversal Advisors:
“I’ve been buying Bitcoin Cash and Ethereum. Those two seem like ones that have some room to go here, while Bitcoin seems to have some technical issues.”
Dr Garrick Hileman, historian at the University of Cambridge:
“beyond the financial gains Bitcoin holders may realise from the advent of Bitcoin Cash, there are also potential technical benefits, such as observing how BCH performs with 8MB blocks and what kind of use it attracts.”
Ken Shishido, tech guru:
“When BCH gets more adopted and people see that you can actually use it to buy goods and services, the price will go up.”
And now a few dissenting voices;
Adam Back, prominent cryptographer:
“Bitcoin has the edge over Bitcoin Сash regarding long-term scaling because Bitcoin cash lacks the infrastructure to support second layer scaling.”
Michael Graham, Canaccord analyst:
“While some have gone so far as to proclaim that Bitcoin Cash will ultimately overtake Bitcoin as ‘the bitcoin,’ the overall consensus appears to be that BTC is unlikely to give up its spot as the #1 crypto asset anytime soon.”
So, there you have it! All the whats, hows and whys you need to enter the Bitcoin vs Bitcoin Cash debate for yourself!
Before I let you go, a few final thoughts to take with you…
Now you know what BCH and BTC are, what similarities they share and what separates them you can choose your own winner in the Bitcoin vs Bitcoin Cash face off. It’s a close contest so here’s a little food for thought…
Bitcoin is the biggest and most popular cryptocurrency in the world. It’s proved its value time and time again over ten long years and so far none of its competitors have even come close.
Bitcoin Cash, on the other hand, is a Bitcoin upgrade. It can be argued that the creators of Bitcoin Cash took everything that was glorious about Satoshi Nakamoto’s Bitcoin protocol and improved it!
Both these coins have earned their place in the crypto royal family but only time will tell which will reign supreme and will prove to be a footnote in the history of this groundbreaking technological innovation.
If you have any questions, or have something to add to our Bitcoin vs Bitcoin Cash comparison, let us know! Here at Tokenleak, we’re always eager to hear what our readers think!