Despite their similar names Bitcoin and Bitcoin Cash are very different cryptocurrencies in many ways. Bitcoin Cash contrary to popular belief is not a low-cost alternative to Bitcoin. So what distinguishes Bitcoin from Bitcoin Cash?

Before investing in either of these similar-sounding cryptocurrencies it's critical that you understand their distinct characteristics. Bitcoin is one of the most well-known cryptocurrencies. It is well-known has the largest cryptocurrency market cap and is also the most widely used and accepted. However Bitcoin is not the only cryptocurrency that employs this technology. Bitcoin Cash was created as a fork from the main Bitcoin blockchain a few years ago. Here's a comparison of Bitcoin and Bitcoin Cash.

What are Bitcoin and Bitcoin Cash?

Bitcoin (BTC) launched in January 2009 as a peer-to-peer electronic cash system. It challenges banks and the financial ecosystem as we know it but its potential pitfalls quickly emerged.

Scalability was one of the most significant drawbacks of Bitcoin. Because block sizes are limited to 1MB the Bitcoin blockchain can only handle up to seven transactions per second. This was a major source of concern for cryptocurrency supporters. However there was considerable disagreement about the nature of these improvements prompting a group of miners and developers to initiate a hard fork in August 2017. This is when Bitcoin Cash (BCH) was created.

Bitcoin Cash was created as a result of community efforts to find an alternative to Bitcoin which was quickly becoming an unsuitable choice for mass transactions. Bitcoin Cash is a fork (a copy of the source code) of the original Bitcoin project. The community aimed to improve Bitcoin's transaction speeds and scalability. Finally they gave birth to an entirely new and distinct cryptocurrency. Bitcoin Cash was split into two Blockchains in 2018 Bitcoin Cash ABC and Bitcoin SV.

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How are they different?

The number of differences between Bitcoin and Bitcoin Cash grew over time as developers on each network pursued different goals. The disparity between the two cryptocurrencies has grown so great that they are now regarded as completely distinct assets in the community.

1. Blocksize:

Miners compete to solve the equations first and gain the right to add a new block to the blockchain. In exchange they receive a block reward in the form of BTC or BCH for assisting in the validation of new transactions and the security of the network.

The primary difference is related to the block size of each network. While Bitcoin holds its 1 MB block size Bitcoin Cash has increased block sizes to 32 MB. This means that BCH transactions are now less than a penny and it can transact up to 200 transactions per second.

To summarize Bitcoin (BTC) prefers small blocks. Bitcoin Cash (BCH) prefers large blocks. BTC wishes to scale off-chain using layer 2 technologies whereas BCH wishes to scale on-chain by increasing the size of each block.

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1. Token Issuance

To issue tokens on the Bitcoin blockchain projects must use Omni a platform for creating and trading digital assets and currencies. Although Omni transactions are Bitcoin transactions with "next-generation features" the layer's adoption has primarily focused on stablecoins.

On the other hand Bitcoin Cash has developed the Simple Ledger Protocol (SLP). The protocol enables developers to create tokens on top of BCH in the same way that tokens are created for the Ethereum blockchain.

Some assets have been issued as Omni layer tokens as well as SLP tokens. The fact that it exists on multiple blockchains makes it easier for users to select the network they prefer. However both solutions have received a lukewarm reception.

1. Transaction speed

Because BCH blocks can hold more transactions at once transactions are more likely to fit into a block without having to wait for the next one.

However because BCH is not used nearly as much as BTC it has not been tested to the same extent in terms of network traffic. In any case BCH has a higher block height than BTC indicating that BCH is mining blocks and confirming transactions faster. Because it is more difficult for security systems to detect anomalies in networks that handle multiple transactions at the same time hackers prefer to target them. They argued that by handling more transactions the network would appear more appealing to potential hackers.

1. Price

Another important point to consider when comparing Bitcoin and Bitcoin Cash is price. At the end of the day no one wants to use a crypto asset that is worthless. As a result many people are making BCH price predictions right now. However when it comes to price Bitcoin is difficult to beat. Traditional financial markets collapsed just before the 2010s when the global economy experienced a major economic downturn.

Nonetheless Bitcoin was in a class of its own helping the broader crypto asset class become the best-performing asset class of the decade. Bitcoin's price increased more than 12 million percent between March 2010 when 1 BTC was around $0.05 and December 2019. That wasn't a mistake! Such profits are unheard of in the investment world.

Unfortunately BCH's performance has been less impressive as it has lost approximately 65 percent of its value since its inception in August 2017.

Which is better?

Many people believe that Bitcoin Cash VS Bitcoin is a battle and that one should be superior to the other. For practical purposes Bitcoin Cash is a faster and less expensive asset to use for blockchain transactions.

Bitcoin the original cryptocurrency is the most adopted and most valuable in the crypto market. This leads us to believe that both of these coins will remain industry mainstays as the industry evolves and matures.

As more users adopt BCH it has the potential to become the primary tool for transactions and money transfers. BTC can continue to be used as a store of value and is regarded as the digital currency's gold. Both will grow in value and adoption over time making them good investments.

Cryptocurrencies are susceptible to value fluctuations and thus carry risk. Bitcoin and Bitcoin Cash are available on most major exchanges but the high price of Bitcoin may be a deterrent for some investors. Bitcoin Cash may be a good option if you want to start small with an investment similar to Bitcoin in many ways.

However the two coins' differing philosophies should also be considered. Bitcoin may be a better option for investors seeking a longer-term store of value whereas Bitcoin Cash is better suited for those looking to use cryptocurrency as a medium of exchange for day-to-day purchases.

To summarize Bitcoin Cash provides significantly more functions than Bitcoin. Bitcoin Cash on the other hand is a newer currency that is still trying to find its place in the market. Its price and scalability advantages are obvious. For the time being it lacks the same level of confidence and support from Bitcoin investors. Furthermore because miners make less money mining Bitcoin Cash they are less interested in mining these blocks.

Bitcoin benefits from being the dominant force in the cryptocurrency market. Overall other cryptocurrencies are more likely to follow suit if Bitcoin is performing well and vice versa. Bitcoin accounts for 44.5% of total crypto capital making it the dominant player in this space.

Now that you understand the distinctions between these two coins you can better decide how to invest in and use them. Read our latest blog on "How to bag your first Crypto coin?"