Whoever enters the trade with crypto currencies probably has Bitcoin (BTC) in mind. But you will quickly discover Bitcoin Cash (BCH) in the lists of the largest crypto currencies. What connects and what distinguishes BTC and BCH?
With Bitcoin (BTC), the new era of crypto currencies began in 2009. In addition to completely new projects such as Ethereum (ETH), Bitcoin has also repeatedly taken initiatives to improve the technology of BTC. In practice, they are accomplished by means of a hard fork, i.e. by changing the code of the block chain and thus decoupling it from the original block chain of Bitcoin. Most such attempts end in nothing within a short time, as no liquidity was accumulated in the alternative BTC tokens; there are more than 100 such examples. With Bitcoin Cash the story ended more successfully, today BCH has established itself among the ten most important crypto currencies according to market capitalization.
Short history of Bitcoin Cash
As early as 2017, it became clear that for all the ingenuity behind Bitcoin, blockchain was becoming a bottleneck. The block size of 1 MB specified for BTC allows a maximum of 7 transactions per second (TPS) to be accommodated there – far too little for the rapidly increasing demand. At times, transaction fees for Bitcoin rose to over 50 US dollars. This made it clear to some supporters that the block chain had to be renewed and the block size increased. 8 MB was offered by Bitcoin Cash (at that time still Bitcoin ABC) and thus more efficiency. Behind the hard fork in August 2017, sufficient network participants and liquidity gathered to quickly make BCH a constant in the crypto market. BCH was expected to become more practical, especially in its use as a means of payment through faster transaction processing.
Bitcoin and Bitcoin Cash – the differences
The most significant difference between BCH and BTC remains the block size. For Bitcoin Cash it was increased again in May 2018 and is now 32 MB. This allows the block chain of BCH to handle 100 TPS. Segwit also made improvements to Bitcoin, but even with Segwit at 14, BTC is no longer able to handle TPS. In practice this means: Transactions are processed much faster at BCH and at lower fees (BCH in August 2020: about USD 0.005; BTC about USD 2.05).
BCH has also integrated a number of functions that enable simple Smart Contracts. Such automated contracts are not directly possible with Bitcoin.
A critical difference, however, is the question of centralization. So much diversified computing capacity has gathered behind Bitcoin that a 51 percent attack seems impossible. With Bitcoin Cash, however, there are three large mining pools, which together control the network with over 50 percent. This market power was deployed around May 2019 and illustrates that an alliance of the large pools at BCH harbors dangers for investors, also demonstrated by the idea of a compulsory levy, which has since been rejected.
Price comparison between BTC and BCH
Comparing the price development of Bitcoin and Bitcoin Cash is not so easy. Which period of time do you choose? Which reference value? At the start, BCH was quoted at 67 US dollars. Today, at the end of August 2020, after the usual ups and downs, it is around 270 US dollars. In the same period Bitcoin increased from just under 3,000 US dollars to just under 11,500 US dollars. This means that the two crypto currencies are not giving each other much in return over long periods of time. In the last 12 months, however, BTC gained 20 percent and BCH lost 3 percent. There is much to suggest that this creeping price decline of BCH against Bitcoin will continue, as BTC is positioning itself more and more as a store of value. BCH does not really seem to be able to reflect its technological strengths in everyday use in its price development.
Conclusion: Bitcoin remains the original and Bitcoin Cash the copy
Do not be confused as an investor: For long-term investments Bitcoin is the first choice, here liquidity is secured and technological stability guaranteed. Bitcoin Cash has likewise many supporters, but the hoped-for overtaking to BTC did not take place and is also no longer to be expected. Concerns about 51 percent attacks at BCH are one reason for this, a little more convincing another hard fork at Bitcoin Cash in November 2018 another. With BSV (Bitcoin Satoshi Vision) a further crypto currency was created, which however likewise comes off badly in the price development, fired by its querulanten supporter Craig Wright. In short: Bitcoin (BTC) holds its promise to challenge the classical financial system and monetary policy as a nut/mother of all Kryptowährungen. Bitcoin Cash remains as a copy in an interesting niche position.
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