Bitcoin vs Bitcoin cash
Overview
Satoshi Nakamoto envisioned Bitcoin to be a peer-to-peer electronic cash system that would be used for daily transactions. Ironically, this became a challenge as Bitcoin gained mainstream attention over the years.
As a result, Bitcoin began to experience scalability issues as more and more people began using it. This means that when a lot of people send Bitcoin, transactions get stuck in a very long queue as they wait to get confirmed.
Essentially, Bitcoin transactions are bundled into blocks with a storage size of 1MB per block. It is estimated that a single block is added to the Bitcoin blockchain every 10 minutes.
Every transaction added to the block requires storage, which averaged at 3.7KB per transaction; thus, every block approximately stores 2,700 transactions.
Keeping in mind that it takes around 10 minutes to process a single block, this means that the Bitcoin network takes 4.7 seconds to handle one transaction. That’s all well and good until you compare it to Visa, for example, which processes 1700 transactions per second.
As the scalability issue of Bitcoin became more prominent, this divided the Bitcoin community into two factions – one wished to keep the existing block size while introducing improvements in the form of Segregated Witness (SegWit) and the lighting network.
The other group, led by China-based cryptocurrency mining company Bitmain and Bitcoin early adopter Roger Ver, supported increasing the block size to 8MB to address the scalability issue.
The scalability issue of Bitcoin reached a decisive point on August 1, 2017, when it underwent a hard fork that resulted in the Bitcoin that we know today, and Bitcoin Cash – the chain that supported the increased block size.
Bitcoin vs Bitcoin Cash at a Glance
| Bitcoin (BTC) | Bitcoin Cash (BCH) | |
|---|---|---|
| Date Launched | January 2009 | August 2017 |
| Max Supply | 21,000,000 BTC | 21,000,000 BCH |
| Block Size | 1MB | 8MB (as of August 2017) 32MB (as of May 2018) |
| All-Time High | $64,894.72 (April 14, 2021) | $3,785.82 (December 20, 2017) |
| All-Time Low | $67.81 (July 6, 2013) | $76.93 (December 16, 2018) |
| Market Cap | $1.1 trillion | $11.2 million |
Similarities and Differences Between Bitcoin and Bitcoin Cash
Since Bitcoin Cash is a hard fork, it is understandable that it shares similarities with Bitcoin, including using Proof of Work (PoW) as its consensus mechanism to mine new coins and having a 21 million max coin supply.
For its other notable differences in addition to the block size, Bitcoin Cash does not integrate Segregated Witness (SegWit). This is the other proposed solution to address the scalability issue of Bitcoin and includes removing signature data from Bitcoin transactions to free up space on the block. As a result, each block will be able to handle more transactions.
Conclusion
While Bitcoin Cash presented on its website that they are “the best money in the world” by fulfilling the promise of Bitcoin as peer-to-peer electronic cash, some were not completely on board with its stance to increase the block size.
As Nate Martin, in his Youtube explainer on Bitcoin Cash, pointed out, the most obvious solution may not always be the best solution. Case in point – you can’t keep on increasing storage capacity to address scalability issues.
In the case of Bitcoin, while increasing its block size may provide a temporary solution, in the long run, wouldn’t it be better to invest in improvements that would compress transactions instead so that current block capacity could handle more?
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