What is the Difference Between Bitcoin and Bitcoin Cash?

Bitcoin was the first cryptocurrency ever created. The aim was to have a digital peer-to-peer cash that you can be used to make payment that is faster, cheaper and more efficient than fiat money.

The plan went quite well for a few years, but there was a problem. As the Bitcoin blockchain became more congested, the speed of transactions began to slow, and the cost began to go up. Miners prioritized transactions with higher fees, so those who paid higher fees got their transactions verified faster.

This raised many questions on Bitcoin’s ability to serve as digital cash, because such cash should be fast for payment, and affordable. There was therefore a contention among Bitcoin developers, some of which said Bitcoin had failed in its function as digital cash.

Splitting the Chain

As a result of the contention, there was a split among Bitcoin developers. This led to the splitting of the blockchain into two, also known as a hard fork. Some developers stuck with the main Bitcoin chain while the others supported the new chain, also known as Bitcoin Cash.

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It was named so because they wanted to create a form of Bitcoin that actually served as digital cash. Since then in 2017, Bitcoin Cash has been in existence. The idea behind Bitcoin Cash was to increase the block size to accommodate more transactions, but those in support of the main Bitcoin blockchain insisted on maintaining the 1 MB block size and then scaling the network using a layer 2 solution.

While those in support of Bitcoin Cash see the small block size as a problem, the main Bitcoin developers say it is a feature and not a bug. In fact, it has been touted as one of the reasons for Bitcoin’s unmatched security till date.

How Does Bitcoin DIffer from Bitcoin Cash?

While Bitcoin and Bitcoin Cash may have similarities such as the use of the same proof-of-work consensus mechanism, there are fundamental differences between the two that you should note. Below are the major differences.

Block Size

As stated earlier, Bitcoin Cash supporters advocated for a bigger block size. This led to increasing the Bitcoin Cash Block size from Bitcoin’s 1 MB to 32 MB. This increases the capacity of the network to be able to handle 200 transactions per second at the cost of less than a penny.

Bitcoin on the other hand still processes only seven transactions per second, since it maintained its 1 MB block size. This means Bitcoin transactions also cost so much more.

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Difficulty Adjustment

Another feature that was added to the Bitcoin Cash Network was difficulty adjustment. This is a feature that makes the network adjust its difficulty either higher or lower depending on the situation. It lowers the difficulty when the network lags behind and increases it when the network is ahead.

Bitcoin on the other hand allows forces such as miners’ interest in the network to regulate the difficulty instead.

Support for Smart Contracts and DeFi

The Bitcoin Cash network also supports smart contracts and decentralized finance (DeFi). These are features supported on the networks such as Ethereum and Solana. Bitcoin however does not support any of that, making it different.

Work is ongoing to bring DeFi to Bitcoin, but it is still at the idea level. Bitcoin Cash however has developed tools such as CashSuffle and CashFusion, meant to improve privacy on the network.

Token Issuance

Both Bitcoin and Bitcoin Cash support token issuance. However, they use different methods to do it. To issue tokens on Bitcoin, you have to use the Omni layer platform. On Bitcoin Cash however, you’ll use the Simple Ledger Protocol (SLP), which allows developers to issue tokens on top of BCH,

Replace by Fee

Replace by Fee is a Bitcoin feature that allows users to replace hanging transactions due to low fees with transactions with higher fees in order to push it through. Bitcoin Cash removed this feature, making unconfirmed transactions final and irreversible.