Back in 2017, the Bitcoin community was divided about how to keep growing. The transaction speed and the fees in the network had become almost unbearable. A solution was needed, but not everybody agreed on which path to take. That’s why the first cryptocurrency split in Bitcoin (BTC) and Bitcoin Cash (BCH) that year.
At first sight, now, they might appear like the same thing, but they aren’t. Of course, they’re similar, and that’s because BCH is basically a clone of BTC. However, there are important differences that go beyond the technical issues. Let’s spot them.
Ticker and logo
The ticker is the official abbreviation to identify a cryptocurrency, and, unlike the names, it’s unique to every coin. Bitcoin is identified with the ticker “BTC”, while Bitcoin Cash has the ticker “BCH”. No big deal there.
Now, the logo can be confusing if you’re not used to it. The classic circular and orange logo with the white “B” symbol belongs to BTC. That symbol is usually inclined to the right. Meanwhile, you can identify BCH with two logos. The first one is very similar to the classic BTC logo but is surrounded by two right-angled figures -like it was a bill. And the “B” symbol is inclined to the left, opposite to BTC.
The second one is simpler. It’s only a green circle with the “B” symbol inclined to the left. And that’s it.
Speed and fees
We can say that some developers copied and pasted the Bitcoin code to create a new blockchain (Bitcoin Cash). Then, they applied some technical changes to make the coin faster and cheaper, and especially an important change: a bigger block size. As we’ve explained before in the blog, a blockchain (the system on which cryptocurrencies run) is built by “blocks” of data. These data are mostly transactions.
So, the bigger the block size, the more transactions that come with it. That increases the speed and reduces the fees in a blockchain network. And that’s the raison d’être of Bitcoin Cash (BCH).
For now, Bitcoin (BTC) has a block size limit of 2 MB. A transaction can be fully verified between 10 and 30 minutes. Bitcoin Cash has a block size limit of 32 MB and takes around the same time as BTC to confirm transactions. However, some merchants and exchanges would require a higher number of confirmations (and, therefore, more time) to consider a BCH transaction valid.
As for the fees, they strongly vary over time and according to the current conditions of each network. The more traffic, the slower (and more expensive) the network can get. Up-to-date, the average transaction fee in Bitcoin is around $20, while in Bitcoin Cash is around $0.0028 [ BitInfoCharts].
About the stuff that you can’t really perceive -besides the block size-, the most important thing to say is probably that Bitcoin and Bitcoin Cash share the same whitepaper and the same transaction history till 1 August 2017. That’s when BCH split directly from the original chain and started its own history, with bigger block size and different transactions.
The BTC and BCH mining is very similar, though. They use the same SHA-256 Proof-of-Work (PoW) algorithm to verify transactions. Nevertheless, the algorithm to adjust the difficulty for the miners, the transaction signatures, and the replay protection are different too. Otherwise, they have the same limited supply (21m) and they both incorporated Schnorr signatures to increase the privacy and further smart functions.
Lightning Network and SegWit are two important features to improve scalability, speed, and fees in BTC. They’re not available in BCH. However, because of it, BCH has a SegWit recovery function to recover funds that have been sent to SegWit wallet addresses by accident. That’s because the wallet addresses for BTC and BCH are still very format-similar.
Security and decentralization
You must know there’s a reason behind the Bitcoin Core (BTC) developers’ decision not to increase the block size in the first place. That reason comes down to security and centralization concerns. As the Bitcoin Wiki described:
“Larger blocks make full nodes more expensive to operate. Therefore, larger blocks lead to less hashers [miners] running full nodes, which leads to centralized entities having more power, which makes Bitcoin require more trust, which weakens Bitcoins value proposition.”
They weren’t so far from the truth. Currently, two mining pools (BTC.com and HathorMM) have 48.6% of the total hash rate of BCH. If we add the ViaBTC pool as well, the percentage increases to 64.5% [ CoinDance]. That’s risky because they can run a 51% attack, which means they can control the entire network and modify transactions.
It already happened, indeed. Back in 2019, the pools BTC.com and BTC.top joined forces to reverse a malicious transaction. The intention, in that case, was good, but that power implies a level of centralization (control by intermediaries) that BTC doesn’t have.
Besides, according to the analytics firm CryptoEQ, “Bugs have been discovered in the BCH codebase, including a “critical vulnerability” discovered by a BTC developer who benevolently alerted the core BCH developers”. BTC had some initial bugs too, but they’re all patched in both cases. That’s why the Bitcoin Core team is very conservative about the changes in the code.
People behind Bitcoin and Bitcoin Cash
Bitcoin was originally developed by Satoshi Nakamoto. Both BTC and BCH’s teams have tried their best to reach the goals of the whitepaper -with different approximations, though. In the first place, the Bitcoin Core client is the most popular implementation, with over 98% of the nodes using this software [CoinDance].
Behind its maintenance, there are over 770 developers from all around the world. Most of them are volunteers. However, a few of them are paid by firms like BitMEX, Chaincode Labs, Lightning Labs, Blockstream, and the MIT Digital Currency Initiative (MIT DCI).
As for Bitcoin Cash, over 130 developers are contributing to it on GitHub. Their leader is Amaury “Deadal Nix” Sachet. Known sponsors are Roger Ver (Bitcoin.com), Jihan Wu (Bitmain), the exchange ViaBTC and, formerly, Craig Wright. This Australian businessman, auto-proclaimed Satoshi Nakamoto, partnered with the billionaire Calvin Ayre to promote Bitcoin SV (BSV), forked from BCH in 2018.
What’s better? Bitcoin or Bitcoin Cash?
What do you need to do? That’s the actual question. Maybe you wanna make cheaper transactions, so, the election (for now) could be BCH. If you’re planning to try a Lightning game, BTC is the election. If you want to hodl and invest, both of them could do. But we’ll leave it to your own conclusions.
Originally published at https://blog.alfa.cash on March 13, 2021.