Bitcoin vs. Bitcoin Cash: Understanding The Differences

Bitcoin and Bitcoin Cash are two terms that frequently come up in conversations about digital currency. Discover the disparities between Bitcoin and Bitcoin Cash and evaluate which one may be a better choice. Learn which one is better for you and buy it today! To learn more about how Bitcoin mining works, learn more with our guide here!

What Is Bitcoin (BTC)?

Bitcoin(BTC) is the pioneer of the cryptocurrency industry. A mysterious person known only as Satoshi Nakamoto created it in 2009. Bitcoin runs on a decentralized blockchain, which is a digital ledger that tracks all transactions across a network of computers. To learn more about Bitcoin's complexities, you can refer to Cryptocurrency Profile-BTC.

What Is Bitcoin Cash (BCH)?

Bitcoin Cash (BCH) arose from a hard fork of the original Bitcoin (BTC) blockchain. Certain developers had recognized difficulties with the Bitcoin network and their impact on transaction speed. Finally, they decided to establish a new blockchain and digital asset, giving birth to Bitcoin Cash. Because of its expanded transaction capabilities, many proponents say that Bitcoin Cash is a more effective peer-to-peer electronic cash system than Bitcoin.

Are BTC and BCH on the same blockchain?

These two blockchains are not on the same network. As previously mentioned, although they share a common origin, two distinct blockchains emerged following the 2017 hard fork. BCH and BTC share the same history up to the first 478,558 blocks, but they diverge starting from 478,559 blocks.

What's the difference between Bitcoin (BTC) and Bitcoin Cash (BCH)?

Bitcoin and Bitcoin Cash have similar origins and characteristics, such as the same algorithm( SHA-256) and limited total supply( 21 million). Nevertheless, there are significant technological distinctions between the two crypto assets.

Difference #1: Transaction Fees

Bitcoin transactions often come with higher fees due to its limited block size. The average fee per Bitcoin transaction is around 0.000091 BTC ($2.52), data from BitInfoCharts shows. For comparison, Bitcoin Cash transactions typically have lower costs, making it more cost-effective for everyday transactions, which rate so far this year is roughly 0.0000045 BCH ($0.001).

Difference #2: Block Size and Speed

Bitcoin initially had a 1 MB block size limit and saw a breakthrough in February 2019 when the average block size increased to 1.305 MB, later reaching 1.39 MB by January 31, 2022. Nevertheless, Bitcoin Cash has an 8 MB block size limit in splits, which was increased to 32MB in May 2018. This improves BCH's scalability, allowing it to handle up to 200 transactions per second.

Difference #3: Technique Support

The two cryptocurrencies have distinct technique supports. Despite current efforts to assist in the development of decentralized finance (DeFi) services for the cryptocurrency, Bitcoin does not now support smart contracts. Bitcoin Cash developers can employ smart contract languages like Cash Script to enable more intricate activities compared to the simple transactions made available by Bitcoin.

Difference #4: Future Vision

There are separate development teams with unique future visions for Bitcoin and Bitcoin Cash. BTC development focuses on security and value storage, whereas BCH development focuses on scalability and usability for everyday payments.

Which is Better: Bitcoin or Bitcoin Cash?

Cryptocurrencies are dangerous because their value might vary. The majority of large exchanges accept Bitcoin and Bitcoin Cash, albeit the high price of Bitcoin may dissuade some investors from getting started. If you want to start slowly with an investment that is similar to Bitcoin in many aspects, Bitcoin Cash could be a good choice. We can take some factors to consider below:

Pros and Cons of Bitcoin (BTC)

Pros:

Bitcoin, as the first and largest cryptocurrency, enjoys the highest level of adoption and recognition within the crypto industry. It's noteworthy that Bitcoin ATMs are prominently featured even in front of established retail giants like Walmart. Recent data reveals that Bitcoin's market capitalization is roughly $540 billion in the bear market, surpassing that of traditional corporate giants such as Walmart.

As we're probably aware, Bitcoin is generally regarded as a leading indicator for the cryptocurrency industry. Bitcoin is now accepted as a store of value by many sophisticated investors, earning the title of ‘digital gold’— a trait that’s especially important during inflationary times.

Bitcoin's massive mining community and robust blockchain network help to ensure its security. Its public key cryptography ensures that every transaction is genuine. Decentralization means that no centralized power can use it to its advantage.

Cons:

While Bitcoin boasts multiple advantages, it also harbors significant drawbacks when compared to many of the later cryptos that have emerged.

As previously stated, Bitcoin transactions are notoriously slow, with an average block processing time of 10 minutes, and transaction costs tend to be relatively high. It may end up costing as much as double the price of a cup of Starbucks coffee if you intend to employ Bitcoin for daily transactions!

Pros and Cons of Bitcoin Cash (BCH)

Pros:

Bitcoin Cash stands out with its faster transaction speeds and lower transaction fees. Typically, a Bitcoin Cash transaction costs less than a single cent. Should you wish to convert BCH into fiat currency, transaction merchants offer a cost-effective alternative, significantly cheaper than traditional credit card institutions. In contrast to Bitcoin, Bitcoin Cash proves exceptionally convenient and practical for daily shopping.

In addition, the upgrade introduced a significant development for Bitcoin Cash in May 2023—it has adopted the smart contract language, enabling more complicated functionality within the network.

Cons:

Bitcoin Cash has received far less recognition and popularity than Bitcoin. As per the latest data, Bitcoin Cash currently holds a market capitalization of $4.5 billion and occupies the 16th position in the rankings. While it offers a significant pro in terms of instant payments, it still has a considerable distance to cover before achieving widespread use for daily transactions.

Regarding mining, Bitcoin Cash doesn't provide significantly higher profitability than Bitcoin. In general, miners tend to favor Bitcoin due to its established reputation as a superior store of value. During the 2017-2018 period, Bitcoin Cash did attract substantial attention, with prominent figures endorsing it. However, as time passed, it became apparent that such endorsements decreasing, and the cryptocurrency's notable drawback remained its high volatility.

Should I Buy Bitcoin or Bitcoin Cash?

Are you in search of a reliable store of value, or do you require a crypto suited for daily transactions? If the former, Bitcoin may align with your goals, while Bitcoin Cash emerges as a good option for the latter purpose.

Some astute investors choose diversification, holding various crypto to reduce risk. A well-diversified portfolio can be an effective hedge. Investing in Bitcoin Cash may be more accessible to those with limited capital because its price is now hovering around $230, which is substantially lower than Bitcoin's price of $27,000.

It's significant to bear in mind that every investment carries inherent risk, and the crypto market operates 24/7, distinct from the traditional stock market. Therefore, staying informed about the latest market developments and news is paramount. Bitdeer stated that the information provided here is for educational purposes and not intended as investment advice.

Do I Need Two Separate Wallets to Hold Bitcoin and Bitcoin Cash?

No need. Many crypto wallets, including Matrixport, support both coins. Many people refer to these wallets as "multi-currency" or "multi-asset" wallets. Using a wallet like this can let you handle both BTC and BCH in one place, offering convenience and ease of access to your holdings. Notably, distinct addresses must be used to store, transfer, and receive Bitcoin/Bitcoin Cash payments.

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