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What Is the Difference Between Bitcoin and Bitcoin Cash?

Bitcoin is the original cryptocurrency, and more than 9 years after its introduction, it’s still the most visible and popular form of digital money.

It’s maintained supremacy in spite of the thousands of imitators inspired by its success, including everything from heavy hitters like Ethereum to jokey tokens like DogeCoin.

But somewhere in the fracas, Bitcoin spawned its own child, a new coin called Bitcoin Cash. 

Why is there a need for two kinds of Bitcoin? 

What’s the origin of Bitcoin Cash? And is there a significant difference between the two?

The Problem with Bitcoin

Although Bitcoin has proven that cryptocurrency is a feasible concept, and made many people extremely wealthy along the way, it’s not perfect. The Bitcoin network can process seven transactions per second. That might seem like a lot, but compare that to Visa, the world’s largest credit card company. Visa processes an average of 1,700 transactions every second, more than 150 million a day—and it has to, since it boasts over 300 million users.

As Bitcoin grows, this limitation becomes more and more constricting. Not only can the network only process seven transactions per second, they can take ten minutes to process, and these wait times are likely to get longer and longer as the user base grows.

This limitation is intrinsic to the blockchain that Bitcoin operates on.
The solution? Either reduce the amount of data in each block, so that they can be processed quicker or make the blocks bigger, so that more data can be processed at once.

The Split

The decentralized nature of Bitcoin makes progress difficult, as there are so many stakeholders to corral into cooperating with changes. But in mid-2017, the majority of Bitcoin’s base voted to incorporate a segregated witness technology that would reduce the amount of data for verification in each block, by removing roughly 65% of the data and attaching it in an extended block.

However, a significant portion of Bitcoin miners and developers were not satisfied with the segregated witness technology, believing it didn’t solve scalability issues long term. So on August 1st, they implemented a hard fork, creating Bitcoin Cash.

Bitcoin Cash Pros and Cons

Bitcoin Cash has a block size of 8mb, compared to Bitcoin’s 1mb, making its verification process much quicker, as it can pack more transaction data into each block. It also has a variable difficulty level, meaning it can be adjusted depending on the number of miners who get behind it.

This makes it a more flexible currency, with more potential for scalability, and boosters say it should have transactions processing in as little as two minutes.

Bitcoin Cash has lower fees when both networks are processing a ton of transactions, as well.  But skeptics are concerned that Bitcoin Cash is more vulnerable to hackers. It’s less distributed than Bitcoin, which has almost 5 times as many nodes as Bitcoin Cash. Essentially, Bitcoin Cash is quicker and cheaper to execute transactions with but may be less secure.

It’s also important to recognize that the two currencies are completely separate—you cannot send BTC to a BCH address or vice versa.

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