1 August 2017 is a very important date for all the cryptocurrency community, because it was on this date that there was the most anticipated Bitcoin hard-fork. There were many disagreements about its launch, but a vast number of Bitcoin users claimed that they wanted it. Why? BCH was aimed to solve scalability problems.
Bitcoin Cash became the most successful Bitcoin fork. Moreover, some services and groups even quit the Bitcoin blockchain and turned to BCH. Why is Bitcoin Cash so popular? What is the difference between these two cryptocurrencies?
Bitcoin VS Bitcoin Cash
People began using cryptocurrencies more often in 2016. At the time, Bitcoin was very popular, whereas other cryptocurrencies were almost unknown for newbies of this market. That is why everyone who was using crypto for the first time usually bought Bitcoin. This led to initial issues with transaction speed, so Bitcoin needed an upgrade.
The development team made a soft fork called SegWit, but almost nothing changed. Some groups thus proposed increasing the block size of Bitcoin. This step could solve the problem, but the development team refused the proposition. They claimed that such changes could lead to security issues.
That is why many miners, developers and others members of the Bitcoin community wanted to quit it and make a hard-fork. Seeing as there wasn’t any other solutions, the Bitcoin development team gave a grant to these groups.
Some groups, brands and even exchanges recognized BCH before its launch. CoinEx was the first exchange that made BCH the main asset. Futhermore, in January, 2018, Block Explorer deleted Bitcoin and only began supporting BCH.
The hard-fork almost divided the cryptocurrency community into 2 groups. The first supports BCH and believes that this asset can replace BTC. The second doesn’t recognize BCH and say that it is ‘money from nothing’.
Bitcoin Cash was very successful in the market from its first few days. On just the second day after launching, its price rose by 100%. Within 3 weeks, its value was about $1,000. For a long time, it was the second most expensive asset after Bitcoin (until Maker launched). Nevertheless, it wasn’t even worth 50% of Bitcoin.
If we check historical data, Bitcoin was at least 5 times more expensive than Bitcoin Cash. Today, BTC value is about $9,000-11,000, while BCH is about $350-400. During the greatest pump at the end of 2017, the BTC price was about $20,000 per coin, while BCH was $4,000.
Table 1. The closing price for BTC and BCH at the end of the last 3 years.
There is only one reason for this: Bitcoin is “the father of cryptocurrency”. It was the first digital asset ever, so it had more time to get supporters. Everyone from teenagers to the elderly know about Bitcoin, but not everyone knows about Bitcoin Cash. This is why BCH hasn’t been able to replace BTC so far.
Bitcoin will always be the most expensive cryptocurrency
Bitcoin is the first digital asset that opened the world of cryptocurrency. It was launched on 3 January 2009. For several years, it was almost unknown because its technology was incomprehensible for many people. Nevertheless, within years it became the most popular crypto in the world.
Bitcoin Cash was launched on 1 August 2017, when almost all the world knew about cryptocurrency. There is an 8-year difference between these two cryptocurrencies. That is why BCH has some advantages over the BTC system. However, the BTC community is still bigger than the BCH one.
This was the main reason for creating BCH. As previously mentioned, BTC transactions became slower and more expensive. There were too many transfers, and the Bitcoin blockchain couldn’t verify them all because the 1 MB block size provided low bandwidth.
The Bitcoin Development team didn’t agree to increase block size, but this was the only solution at the time. That is why group of miners and developers launched BCH with an 8 MB block size. Furthermore, they provided the possibility of increasing the block size if necessary.
Thus, in the end of 2017, the BCH block size was increased to 16 MB, and in 2018 – to 32 MB. If its blockchain has issues with transaction speed, the BCH team will upgrade BCH once more to 64 MB.
The Bitcoin block size can verify a maximum of 7 transactions per second. Today, that is a catastrophically small number, because BTC is used all over the world. There were many ideas to solve the scalability problem. The first was soft-fork SegWit, but, as we know, it was almost useless. The second is different hard-forks. However, how many hard forks can you create in one system without losing the reputation of cryptocurrency?
The last idea for today is the Lightning Network. With this protocol, one person opens a payment channel for several micro-transactions with another user. Each channel will have its balance, which will be determined by its user. When the balance is devastated, the Blockchain will verify one transaction for all micro-transactions. Cryptolovers have called this “sub-blockchain” on forums.
The Bitcoin Cash solution is far simpler: simply deciding to increase block size when it is necessary. In fact, Bitcoin Cash will never have problems with scalability. However, it may cause some security issues in future.
Initially, both Bitcoin and Bitcoin Cash was not designed to use smart contracts. Nonetheless, they are a very important part of today’s life, so now there are some smart contracts with limited functionality.
Bitcoin smart contracts:
- Testament – funds in the wallet are transferred to the heirs if the wallet is inactive;
- Escrow – a third-party is required to unlock funds on a smart contract;
- Safe – funds are frozen in a wallet until a certain date.
Bitcoin Cash allows all types of smart contracts. Moreover, they created two algorithms to improve smart contracts, based on BCH. The first one is CashScript, which allows the writing of functions and compiling them into code in order to add information to a block. The second one is Wormhole, which allows the creation of your own tokes on the BCH blockchain.
The algorithm and the safety protocol are the same, so miners have to use a lot of computing power to create new blocks and verify transactions. In addition, the reward for each block is the same – 12.5 coins. However, there is one important difference. The difficulty for BTC changes every 2016 blocks, while for BCH – every 6 blocks.
This smooth change is beloved by many miners because the mining equipment takes on new loads more easily. That is why BCH mining is better because the equipment can be used for a longer period.
Bitcoin VS Bitcoin Cash Price Prediction
At the very beginning of 2020, Bitcoin was $7,000, while Bitcoin Cash was $160. Many experts claimed that the first few months of 2020 would be very difficult for the market and cryptocurrencies wouldn’t break out most levels of resistance.
However, in February, BTC is near $9,300 and BCH is $370. January determined the development of each coin for the whole of 2020. As we can see, investors believe in cryptocurrencies. That is why both BTC and BCH have opportunities to hit new highest values.
Experts believe that BTC may rise to $20,000 at the end of 2020, while BCH could reach at least $500.
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