But, let’s dive deeper into what it is exactly, and how it compares to the original Bitcoin.
As Bitcoin grew over the years, the network faced bigger and bigger problems regarding the number of transactions it can handle at a time and the speed to complete each transaction. As the number of users continues to grow, it’s expected that these problems will get worse.
As a result, a group of Bitcoin miners and developers decided to implement changes on the network that will provide better solutions to the above problem. Since the Bitcoin network is immutable, the only way this could be done was to create a new cryptocurrency with a fork of the original one, and thus, this is how Bitcoin Cash was born.
Basically, the two are almost exactly the same regarding their features and specifications. Both Bitcoin and Bitcoin Cash have the same maximum number of coins that will ever be produced (21 million), both use the same sha-256 cryptographic hash algorithm and both use mining as the primary way to obtain new coins (except that Bitcoin Cash coins were granted to every Bitcoin owner at its inception).
How is Bitcoin Cash different from Bitcoin?
The main difference between the two is the limit of the block size. Bitcoin Cash has an 8 MB limit while for the original Bitcoin it is 1 MB.
This allows for more transactions to be processed on the Bitcoin Cash network compared to the original one. For instance, Bitcoin Cash can handle up to 61 transactions per second while Bitcoin can only handle 7 transactions per second.
Aside from reducing waiting time for payments to be completed, this also reduces the fees on Bitcoin Cash transactions.
Another advantage of the newer cryptocurrency is the EDA difficulty algorithm which is an improved version of the original Bitcoin difficulty algorithm designed to make the network more stable.
However, being less than a year old, many questions come up when considering whether to invest in Bitcoin Cash.
For starters, decentralization is the key advantage of cryptocurrencies which can be a problem with Bitcoin Cash. It is estimated that more than 50% of the transactions completed on the network are verified by only 3 mining pools. This can cause centralization issues in the future as 3 mining pools control a large part of the network and the new coins that are issued.
In contrast, the original Bitcoin network doesn’t have this problem as there are many mining pools, none of which are big enough to control a large part of the network.
Essentially, Bitcoin and Bitcoin Cash are the same digital currency with only small changes introduced in the younger of them – Bitcoin Cash. It remains to be seen whether it succeeds to overtake Bitcoin on the number 1 spot in the cryptocurrencies rankings.
Nevertheless, decentralization and the security of the blockchain are some areas where Bitcoin Cash will need more time to prove whether it can succeed or not.
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