How is Bitcoin compared to Bitcoin Cash? “What should I choose?” Is BTC better than ETH?
When we think of cryptocurrencies, the first one to come to mind is Bitcoin. There is a good reason for that too. Bitcoin is the most popular cryptocurrency out there. But it has some inherent disadvantages, and many other players are entering the playing field. One such coin is Bitcoin Cash which is a rip-off of bitcoin but is improved in many ways. There are a number of differences in the way these two currencies function.
Bitcoin (BTC) Vs. Bitcoin Cash (BCH)
Let us see what the core differences between Bitcoin and Bitcoin Cash.
Bitcoin is a digital currency that works on top of a ledger recording technology known as blockchain. This means all transactions and information is verified and processed by a majority voting system and not by any single individual or organisation. It also means this data is not stored in a single location but on all computers that are on this network.
● Use of blockchain ensures that it is very difficult to hack this and to get sensitive information.
● It also ensures that no one entity can cause a block in the chain or to hoard coins. This makes it very enticing for users and investors.
All this additional processing makes the technology very slow and not efficiently scalable compared to more traditional financial systems like banks and credit/debit cards. Major players in the fiat currency industry like Visa processes way over 100 million transactions a day and Bitcoin can only manage around a few thousands. This is despite it being a relatively smaller network, and with time things will only get worse.
Users have been debating about this for a very long time, and two possible solutions have been proposed.
1. To increase the block size to process more information at one time
2. To decrease the block size to increase speed.
To mitigate these drawbacks, it was suggested to incorporate the use of the segregated witness technology named SegWit2x. This reduces the amount of data that needs to be verified by removing the signature data from the block. It then attaches this data to an extended block. It is not a small change because signature data takes up more than 65% of the total block size. There are also talks and plans on increasing the size limit of each block to 2MB to increase the number of data stored per block.
In Spite of the improvements these technologies can introduce to the platform there is increasing amount of backlash against the developers for their lackluster attitude towards further development. Also, the community that was once the strength of the platform is slowly turning to a greedy group of miners looking to get rich easily.
Bitcoin Cash, on the other hand, is a different story. Bitcoin is not particularly scalable and can create a significant bottleneck in the future when the number of transactions increases and the network grows. There were concerns about the viability and effectiveness of the SegWit method. This led to the development of Bitcoin Cash which improves upon Bitcoin in several ways.
1. The first significant difference is the block size, which has been increased to 8MB from Bitcoin’s 2 MB. This makes the verification process significantly faster.
2. Other is the use of an adjustable difficulty level which allows you to control the verification speed.
When a block is created, the block is processed and then hashed. If the hash is below the set difficulty, then it is valid and if it is not then it is rehashed. Adjusting the difficulty speeds up the verification process. There is a failsafe mechanism in place to prevent network freeze called the Emergency Difficulty adjustment which drops the difficulty by 20% if fewer than six blocks are mined in the space of 12 hours.
There are several impacts Bitcoin Cash can have on the Bitcoin ecosystem.
1. Due to the adjustable difficulty rate, more users may hop onto Bitcoin Cash thereby increasing the transaction fees and verification times of Bitcoin.
2. The can also be a double-edged sword as more and more people start mining BCH; the difficulty should go down further to keep the rewards in balance with that of Bitcoin. This then starts a chain reaction that can lead to potential security risks and the eventual collapse of the network.
Future of Bitcoin and Cryptocurrency
● Unless developers behind BCH finds a way to stop this from happening or the value of Bitcoin Cash goes up significantly in a short period, Bitcoin Cash can be a short-lived vacation for Bitcoin miners.
● On the other hand, Bitcoin needs to improve its speed significantly if it has to make good on its promise of replacing traditional fiat currency.
Final Thoughts On BTC vs BCH
If cryptocurrency wants to make itself a viable transaction medium, developers should start considering it as one and should take the necessary steps to make it a fast and more secure medium than traditional ones.