Cryptocurrency blew onto the scene and quickly became one of the most talked about and popular investment opportunities available. As the first form of blockchain-based cryptocurrency - Bitcoin is still the most trusted, making up 42% of cryptocurrency's market cap. But what is Bitcoin Cash? In this article we'll explore both of these popular forms of cryptocurrency as well as how Bitcoin Cash is similar to its predecessor and how it differs.
By creating blockchain technology and incorporating it into its coding, Bitcoin has certainly become the most popular and most successful cryptocurrency. Bitcoin was created in 2009 by the mysterious Satoshi Nakamoto as a way to trade currency without the need for a third party. The person or persons who go by the pseudonym Satoshi Nakamoto set the limit of Bitcoin's that can be mined at 21 million. This was done to limit inflation on the currency as well as to protect against potential mis-use.
Whilst Bitcoin Cash holds a number of similarities to the original, it's an entirely independent form of cryptocurrency which was 'forked' from Bitcoin. It was created in 2017 by a segment of the Bitcoin community who had the intention of leveraging the successful elements of Bitcoin whilst solving some of the drawbacks - such as limited scalability. Whilst Bitcoin Cash has seen some success and has become a formidable contender to other cryptocurrencies - it hasn't come close to matching the popularity of Bitcoin.
So what are the main differentiators between these two forms of cryptocurrency? Bitcoin was originally created with the intention of being a digital currency. However, as more and more people invested the slower the processing of transactions became. This is due, in part, to the size of the blocks being limited to just 1MB which allows very little room for scalability. Because of this - Bitcoin has become somewhat of a store of value as opposed to a way for people to easily make daily transactions.
Bitcoin Cash was created to amend these limitations and has somewhat achieved this by incorporating a maximum block size of 32MB. This allows for faster transactions and increases the amount of people that can use it at one time. So much so, the team behind Bitcoin Cash claim it's capable of 200 transactions per second while Bitcoin averages just 7. Because of this the cost per transaction of Bitcoin Cash has decreased and the ability to scale has increased.
It may seem logical to assume that if Bitcoin Cash is an improved version of the original Bitcoin then it would go on to become more successful - however the crypto market has not responded in this way.
Bitcoin Cash doesn't have the consumer trust that Bitcoin does and therefore doesn't have nearly as many investors. Because of this the ability to use Bitcoin Cash in a 'real-world' scenario is lessened. The reduced level of consumer endorsement is likely due, in part, to the diminished security of the transactions as a result of the increased block size. Additionally, unlike other cryptocurrencies, Bitcoin Cash doesn't appear to have any governance around voting protocols which leaves investors potentially exposed to decisions made by the Bitcoin Cash development team.