Since Bitcoin introduced in 2008, a lot of people attracted to this new currency. In fact, a lot of miners joined the network and many people start to use it. As a result, the network traffic grew significantly. However, it was a fortune for Bitcoin to be accepted by many people, there was a problem. Here we are going to have a comparison between Bitcoin and BitcoinCash.
Bitcoin network can process only 7 transactions per second. In order to have a comparison Visa can perform 24000 transactions per second. Finally, in 2017 the developers realized that a reform in the network in required. The reason was that there were too many transactions to handle.
The question here is that why developers didn’t simply increase the network capabilities?
Bitcoin and BitcoinCash; Why developers didn’t increase Bitcoin capabilities?
At first, Bitcoin block size was limited to 1MB. However, it’s 2MB today, still it has the scalability issue. Perhaps you also ask why developers didn’t simply increase the block size to 800MB?
To understand the reason, we are going to give an example. Imagine there is a highway, which has a high traffic issue. As a solution, we change the speed limit to 200 kilometers per hour. First of all, we get safety issue. Secondly, the small and old vehicles would not be eligible to use the highway because they move slowly. As a result, the highway always would be full of strong cars and regular drivers. There would be no chance for an amateur driver and small cars to drive in the highway.
So, in the Bitcoin network also if we increase the block size, then there are more data to process. As a result, small nodes would not be able to process that high amount of data. So, the core feature of Bitcoin, which is decentralization would be under question.
What is the solution?
The scalability issue divided the Bitcoin community in to two groups. One group believe that Bitcoin is not the right currency in order to use as a medium of exchange for daily purchases. The other one believe that Bitcoin has to scale.
As a result, in August 2017, Bitcoin network split using a process called “Hard Fork”. By applying the “Hard Fork”, developers created a new version of Bitcoin, which called BitcoinCash. However, BitcoinCash uses the same base code, the block size limit increased to 8MB. Consequently, BitcoinCash network is able to process around two million transactions per day.
What happened to the wallets?
Now the question here is that what happened to the wallets? What should people do who own Bitcoin before the fork?
The answer is, they do not need to do anything. In fact, the fork happened at block number 478558. If anyone had any amount of Bitcoin before that block, finally they will receive the same amount in BitcoinCash.
Bitcoin and BitcoinCash; Differences
Before that there were few options such Bitcoin, Ethereum and Ripple to choose. But, now there is another question. We have two Bitcoins. Which one is better to choose?
To answer this question, we can say that Bitcoin and BitcoinCash are different. They both have their own pros and cons. Here, we are going to have a comparison between these two currency.
It’s obvious that the names are different. Developers used the word cash in order to show that it would be a suitable choice to replace cash. In fact, they believe BitcoinCash has the capability to use as a medium of exchange for daily purchases.
Bitcoin and BitcoinCash; Advantage/Disadvantage
BitcoinCash has larger block size, which is 8MB. Consequently, it can process more transactions with lower fee.
There are a lot of mining pools, which are active to mine Bitcoin. As a result, we can say that a 51% attack is impossible on the Bitcoin network.
On the other hand, BitcoinCash is more centralized. There are not many mining pools, which support BitcoinCash. As a result, it’s highly vulnerable to 51% attack.
BitcoinCash developers are aware of the weaknesses. For this reason, they added protection adjustments in order to make the new currency much safer.
- BitcoinCash uses a different hash algorithm compare to bitcoin. As a result, the replay between the two chains is not available anymore.
- BitcoinCash block size has the capability to increase over 8MB. So, it would possible in the future to increase the block size to over 8MB.
- Bitcoin has a feature called Emergency Difficulty Adjustment. This feature ensures that the network will keep working in case there be any dramatic changes of number of miners. In fact, it gives the currency extra stability.