Bitcoin (BTC), created by Satoshi Nakamoto in 2009, stands as the pioneering cryptocurrency with the highest market capitalization, the largest community, and the most robust economy. If you're considering investing in cryptocurrency, BTC remains the primary choice for many.
Bitcoin Cash (BCH), often referred to as "Bcash," emerged as a fork from Bitcoin in mid-2017. This fork meant that anyone holding BTC at the time received an equivalent amount of BCH for free.
While BCH shares many features with BTC, including much of its codebase, it also incorporates several unique characteristics that make it incompatible with Bitcoin. The primary distinction lies in BCH's larger block size, allowing it to process more transactions per block. However, this comes at the cost of slower network propagation times. Should you consider investing in Bitcoin Cash? There's no reason not to explore it! If you're seeking the original "Bitcoin," BTC is your go-to. But if you're looking to diversify into altcoins, BCH is worth considering.
The Origins of Bitcoin Cash
The block size debate was a long-standing and increasingly contentious issue within the Bitcoin community, ultimately leading to the fork that created BCH as a separate project.
When Bitcoin was first launched, it had no block size limit. A 1-megabyte limit was implemented in late 2010 to prevent spam transactions from being used for free data storage on the blockchain. This limit on the number of transactions per block introduced fee-based competition for inclusion, making spam prohibitively expensive.
As Bitcoin grew over the years, increasing demand for BTC led to fiercer competition for block space, driving up transaction fees. Since Bitcoin fees are fixed—meaning sending $1 million costs the same as sending $1—users making low-value transactions found fees consuming a larger portion of their total transaction value, effectively pricing some users out.
The fee situation peaked in 2017. As Bitcoin's price soared to all-time highs, demand surged, resulting in intense fee competition. Users paying low or standard fees often faced delays of days or even weeks for transaction confirmations.
Many altcoins, including BCH, positioned themselves as solutions to Bitcoin's delays and high costs. These altcoins increased their block size limits, allowing more transactions per block and alleviating fee pressure. This led many to wonder why Bitcoin didn't simply follow suit.
However, Bitcoin developers and the community had consensus on a different scaling approach: reducing transaction sizes rather than increasing block sizes. This method, known as Segregated Witness (SegWit), effectively allowed more transactions to fit into a block without requiring a hard fork (i.e., backward-incompatible code changes).
SegWit offered an elegant solution that prevented full nodes from being priced out of the network, as users wouldn't need to upgrade hardware or internet connections to handle larger, more resource-intensive blocks. This helped preserve the decentralization of the Bitcoin network.
Additionally, SegWit facilitated the implementation of the Lightning Network, enabling cheap, instant transactions for low-value payments, enhanced privacy, and other future benefits.
Yet, SegWit was new, complex, and met with resistance from some miners, notably Bitmain, then the dominant miner and ASIC manufacturer, due to economic reasons related to their mining advantages. Rolling out SegWit also took time, and during this period, low-value transactions remained unaffordable.
Thus, Bitcoin Cash emerged around the same time as the SegWit upgrade, offering a direct solution to the block size issue. With support from major miners, BCH gained traction among users frustrated by Bitcoin's perceived inability to scale effectively. In contrast, the Bitcoin community had to rally to adopt SegWit against the wishes of many miners, breaking years of deadlock.
Bitcoin and Bitcoin Cash represent different approaches to the same scaling problem. Time will tell which method ultimately succeeds. As the cryptocurrency market enters another bullish phase, increasing transaction volumes will likely provide a practical "scaling test" for both.
Key Differences Between BTC and BCH
1. Practical Differences
Beyond ideological differences, several practical aspects significantly impact everyday users. One of BCH's main selling points is its lower transaction fees, making it cheaper to send BCH compared to BTC for standard on-chain transactions. This makes BCH preferable for users conducting high volumes of low-value transactions under time constraints.
However, BCH lacks Bitcoin's Lightning Network, a second-layer solution enabling instant, near-zero-fee transactions. The Lightning Network is poised to become the industry standard for transaction speed and economy. That said, Lightning is still relatively new and, while growing rapidly, not yet widely supported by exchanges or merchants.
It's also worth noting that BCH is less widely adopted than Bitcoin. While most major exchanges and some payment services support BCH, options for spending it are more limited. Bitcoin's seven-year head start has allowed it to build a larger user base and economy.
👉 Explore real-time transaction tools
2. Security Differences
Another critical difference lies in the relative security of their blockchains. Both coins use the same mining algorithm (SHA-256), meaning the same ASIC hardware can mine either. However, Bitcoin has significantly more dedicated mining power. Estimates suggest that launching a 51% attack on Bitcoin would cost over $1 million per hour, compared to just $32,457 for BCH.
In other words, Bitcoin is far more secure against network attacks—potentially 50 times or more—making it a safer store of value. That said, BCH's hash rate, while lower than Bitcoin's, is still higher than most altcoins, reflecting its position around fourth or fifth in market capitalization. The shared mining algorithm means mining power could theoretically be shifted between the two chains, serving as a check against reckless behavior.
3. Price Differences
BTC and BCH also differ significantly in price. A rough rule of thumb is that BCH typically trades at around 5% of Bitcoin's price. At the time of writing, BCH was at approximately 4% of BTC's price, with a hash rate around 2.8%. Interestingly, Bitcoin SV (a fork of BCH) often trades at half the price of BCH, with about half its hash rate.
While no major technical or economic developments suggest BCH will "flip" Bitcoin, the possibility, however remote, remains if Bitcoin were to experience catastrophic failure.
4. Community Differences
Significant animosity persists between the BTC and BCH communities. To outsiders, this conflict may seem puzzling, given their shared principles. Yet, like religious schisms, minor differences often overshadow common ground. Despite this, developers from both camps have occasionally alerted each other to critical vulnerabilities, suggesting that the crypto world might be big enough for both.
Frequently Asked Questions
What is Bitcoin Cash (BCH)?
Bitcoin Cash is a cryptocurrency that forked from Bitcoin in 2017. It was created to address scalability issues by increasing the block size, allowing for more transactions per block and lower fees.
How does BCH differ from BTC?
The primary difference is block size: BCH has larger blocks, enabling higher transaction throughput but slower propagation times. BCH also lacks the Lightning Network and has lower security due to a smaller hash rate.
Is Bitcoin Cash more secure than Bitcoin?
No, Bitcoin has a significantly higher hash rate, making it more secure against attacks like 51% assaults. However, BCH still maintains reasonable security compared to most altcoins.
Why was Bitcoin Cash created?
BCH was created due to disagreements within the Bitcoin community over scaling solutions. Some proponents favored increasing block sizes, while Bitcoin adopted SegWit and the Lightning Network.
Can I use the same wallet for BTC and BCH?
No, because they are separate networks with different addresses and protocols. Using the wrong wallet could result in loss of funds, so always use compatible wallets.
Which one should I invest in, BTC or BCH?
BTC is generally considered a more stable store of value with greater adoption. BCH may appeal for lower transaction fees, but it carries higher risk due to lower security and adoption. Diversification could be a strategy, but conduct thorough research first.
👉 Get advanced investment strategies
In summary, while Bitcoin and Bitcoin Cash share a common origin, they have evolved into distinct projects with different priorities—Bitcoin emphasizing security and decentralization, and Bitcoin Cash focusing on scalability and lower fees. Understanding these differences is crucial for making informed decisions in the dynamic world of cryptocurrency.