Table of Contents
- What Is Bitcoin Cash?
- How Are Bitcoin and Bitcoin Cash Different?
- What Is The Purpose of Bitcoin Cash?
- Why Bitcoin Cash Was Created
- Is Bitcoin Cash an Attractive Investment?
Bitcoin is one of the most popular cryptocurrencies available. It is well-known, has the greatest market capitalization among cryptocurrencies, and is the most extensively used and accepted cryptocurrency. However, Bitcoin is not the only cryptocurrency that employs a comparable technique. A few years ago, Bitcoin Cash was formed as a branch of the main Bitcoin network. Here are the key differences between Bitcoin and Bitcoin Cash.
What Is Bitcoin Cash?
Bitcoin Cash (BCH) is a hard fork of Bitcoin (BTC). Several engineers identified problems with the Bitcoin blockchain and how the underlying technology impacted transactions. They established Bitcoin Cash, a different blockchain and distinct currency.
How Are Bitcoin and Bitcoin Cash Different?
The size of blocks on each chain is the primary distinction between Bitcoin and Bitcoin Cash. Bitcoin Cash debuted with a block size restriction of 8 MB at a time when Bitcoin’s maximum was 1 MB. Today, Bitcoin Cash’s block size limit is 32 MB, whereas Bitcoin’s limit remains substantially lower.
The larger block size enables Bitcoin Cash to execute transactions much quicker than Bitcoin. Bitcoin Cash can execute around 116 transactions per second, compared to Bitcoin’s average of seven. In contrast, Visa handles 24,000 transactions per second.
BCH has a quicker transaction speed than BTC; however, it is not as widely recognized and is not as liquid. Bitcoin Cash is also the topic of its own discussion; a Bitcoin Cash hard fork known as Bitcoin SV exists.
What Is The Purpose of Bitcoin Cash?
Bitcoin Cash is a digital currency that, like Bitcoin, can be used to conduct transactions.
BCH can be used to purchase and sell products and services and as a means of exchange.
Due to the speed at which BCH transactions are executed, Bitcoin Cash could be utilized for daily transactions in a manner that BTC, which by today’s standards is deemed clunky, cannot.
Bitcoin is impractical for short transactions like paying for lunch. However, utilizing Bitcoin as a store of wealth or for significant purchases (cars, mansions) that do not need immediate processing can make sense. BCH fulfills this function and can be used for everyday expenditures.
Bitcoin is also utilized as a peer-to-peer payment mechanism. You could give Bitcoin Cash to a buddy, regardless of where they reside, and they could use it for transactions or convert it to their local currency.
Finally, for individuals interested in investing in cryptocurrencies, BCH can be a means to diversify a portfolio and perhaps contribute to growth.
Why Bitcoin Cash Was Created
Several years ago, concerns arose over the scalability of Bitcoin. As more individuals adopted Bitcoin, the processing time for transactions increased. Bitcoin was augmented with the Segregated Witness (SegWit) technology to alleviate some scalability difficulties. SegWit shifted signature verification to an extended block, allowing each block to be processed more quickly.
However, several BTC-affiliated engineers and miners did not believe SegWit to be the best solution. Instead, they designed their own protocol utilizing Bitcoin’s blockchain technology and raised the block size. This resulted in quicker and less expensive transaction processing. Developers disliked the lack of transparency involved in the implementation of SegWit technology and believed that a hard fork would result in more decentralization and democratization of the cryptocurrency.
Ultimately, the goal was to enhance scalability while adhering to the concept outlined by blockchain pioneer Satoshi Nakamoto, the enigmatic author of the whitepaper that ushered in the era of cryptocurrencies. Bitcoin’s future is still a point of contention. The hard fork of Bitcoin Cash, Bitcoin SV, is gaining momentum.
Is Bitcoin Cash an Attractive Investment?
Assessing your objectives and portfolio approach is prudent when deciding between BCH and BTC as an investment.
Bitcoin Cash is simpler to invest in since it is much cheaper than Bitcoin. BCH prices slightly more than $142.54, whereas BTC costs more than $24,000 (Bitcoin SV costs around $60). Bitcoin is more known than Bitcoin Cash, which is not generally recognized by the general public.
Whether Bitcoin Cash is a suitable investment also relies on your expectations for the future performance of the cryptocurrency. Bitcoin Cash might be considered a solid investment if you feel its scalability and speedier processing will lead to broad acceptance, even though it is primarily seen as a means of exchange. Or if you feel that BCH will profit from Bitcoin’s relationship.
On the other hand, cryptocurrencies are novel assets, and their mainstream adoption is unknown. Another innovation might supersede blockchain technology, and the value of cryptocurrencies could plummet substantially. This could result in portfolio losses.
In many instances, it is prudent to assess your portfolio strategy. Invest in BCH only if it makes sense as part of a diversified effort and if you have the risk tolerance to withstand any losses.
