Cryptocurrency is a digital currency that can be exchanged online for goods and services. It works on a decentralised technology called blockchain which allows users to directly transfer and receive the cryptocurrency without the help of third party. Cryptocurrency has gained huge popularity and people have earned millions investing in it! There exist over 6,500 cryptocurrencies, the most popular ones are Bitcoin (BTC), Ether (ETH), dogecoin (DOGE), litecoin (LTC), stellar (XLM) etc. However, it’s a highly volatile asset and people should not heavily speculate in it without considering the consequences.
1. What is Bitcoin?
Bitcoin (BTC) is the oldest and the most in demand cryptocurrency, having the largest market share and user base in the crypto world. It was created back in January 2009 by Satoshi Nakamoto. As it is a cryptocurrency, it doesn’t have a physical existence and it is also not backed by securities. The value of bitcoin depends upon the emotions of people. Bitcoin transactions are cost and time
efficient as compared to traditional payment system. However, Bitcoin also has several drawbacks, for e.g. ‘scalability’ is a major problem.
The process of adding new bitcoins to the existing network is called ‘Bitcoin mining’ which is performed by high powered supercomputers that solve extremely complicated mathematical problems to mine bitcoin. Whoever solves the problem first is given ‘bitcoin’ in reward, and a new block is added to the chain. These ‘Bitcoin mining farms’ use large amount of electricity for mining bitcoin. And thus, the cost of setting up a Bitcoin farm is also very high.
2. What is Bitcoin Cash?
Bitcoin Cash (BCH) was created in August, 2017 by a bitcoin miners. These bitcoin miners were concerned regarding the future of bitcoin, as scalability was a major issue. They wanted to increase the block size so that more transaction per second can be carried out. The Bitcoin was hard forked (split into a new currency) into ‘Bitcoin Cash’. Bitcoin cash solved the problem of scalability as it increased the number of transactions per second that can be processed by the network in oder to facilitate large volume transactions.
In November 2018, bitcoin cash also underwent a fork and split into Bitcoin Cash ABC and Bitcoin Cash SV (satoshi Vision). Bitcoin cash ABC is now referred as Bitcoin Cash.
3. Bitcoin VS Bitcoin Cash
SCALABILITY :
Bitcoin though the oldest and most popular coin, failed due to many limitations. The size of a bitcoin block is 1MB which caused substantial delay in transactions. Bitcoin cash increased the size of the block from 1MB to 8MB and then to even 32MB. This helped in carrying out large volume transactions on blockchain.
BLOCKCHAIN :
Bitcoin cash has it’s own blockchain and the transactions are carried out much faster and cheaper.
PRICE and POPULARITY :
Bitcoin is far more expensive than bitcoin cash.The current price of bitcoin as to this date is 62152.4O USD whereas the price of bitcoin cash is 617.94 USD i.e. 1 bitcoin = 101.24 bitcoin cash. Although large volume transactions can be carried out using bitcoin cash, people still hold their maximum investment in bitcoin as since its inception, bitcoin has gained maximum investments by people as compared to other cryptocurrencies. Also, major companies like Microsoft, PayPal, Etsy, Starbucks, Overstock and many more have started accepting bitcoin for payment.
Transaction Cost and Speed :
One of the major advantage of bitcoin cash over bitcoin is that transaction cost of using bitcoin cash is very less, whereas the transaction cost of bitcoin is quite high.
- Average transaction cost of bitcoin cash : 0.0072 USD/ TRANSACTION
- Average transaction cost of bitcoin : 203.86 USD/ TRANSACTION
Bitcoin cash also takes less time to process the transaction as its block size is larger.
- Bitcoin Cash : 6-7 transactions/second
- Bitcoin. : 116 transactions/ second
CONSENSUS MECHANISM :
Both of the cryptocurrencies uses Proof of Work (PoW) consensus mechanism to process transactions. In PoW consensus mechanism, transaction data is stored in the blocks, number of supercomputers try to solve a complicated mathematical problem, whoever decodes it first is rewarded with cryptocurrency and a new block is added to the blockchain network.