Bitcoin vs Bitcoin Cash: Which One Should I Invest in 2021?

Bitcoin and bitcoin cash are based on the same open-source code, but they couldn’t be more different. Since bitcoin was launched, there’ve always been questions about its scaling ability and the speed at which transactions are verified.

Developers came up with 2 main solutions; increasing the size of the data blocks to enhance the amount of information being processed at the same time and reducing the data being verified in every block to facilitate cheaper and faster transactions. Thus, bitcoin cash was formed.

If you’re thinking of investing in one of the two, it’s important that you understand their distinct differences, main features, and the role they play in each other’s future. Here’s the ultimate guide to bitcoin vs bitcoin cash!

A Quick Overview of Bitcoin

Bitcoin logo

Bitcoin was the first digital currency in existence, and when Satoshi Nakamoto launched it, he made it so that there could only be 21 million BTC in circulation.

It was based on a decentralized structure with the aim of eliminating regulatory authorities. This also ensured that the value of bitcoin couldn’t be impacted by a central authority.

At the time of its launch in 2009, there were a lot of controversies around bitcoin, and few people invested in it. By 2013 its popularity had peaked, and BTC prices had soared. One of the main challenges that bitcoin faces are that it relies on outdated blockchain technology, which results in slower and more expensive transactions.

To deal with this problem, bitcoin has undergone a couple of hard forks to form Bitcoin Gold, Bitcoin Classic, Bitcoin Cash, and Bitcoin XT. Bitcoin Cash, however, remains its most successful hard fork.

A Quick Overview of Bitcoin Cash

Bitcoin Cash logo

Bitcoin and Bitcoin cash are like pancakes and waffles; they’re both made from batter but are very different. Bitcoin cash was launched in 2017 as a hard fork from Bitcoin.

For a long time, bitcoin developers and miners were worried about the scalability of bitcoin, and when its popularity surged in 2017, traders started experiencing higher fees and long approval times.

The bitcoin mining community couldn’t agree on how to solve these challenges, and some wanted to use SegWit2x, which is a scaling tool.

Other miners felt that expanding the block size would be more effective, and this disagreement resulted in a hard fork in the BTC blockchain.

What Is a Hard Fork?

A hard fork is a radical change in the blockchain network that splits it into 2 or more paths; one path uses the old protocols while the new path uses updated technology.

This is similar to when companies turn specific branches into stand-alone companies. These new enterprises are usually expected to be worth more on their own than when they’re part of a larger organization. The same is true of bitcoin cash.

After a hard fork, the old blockchain isn’t altered in any way, and the split-off has to create a new blockchain, creating a new cryptocurrency. When the hard fork occurred in August 2017, bitcoin owners also received 1 token of the new coin for every BTC they owned.

At the time of the launch, the value of bitcoin cash was a fraction of BTC’s value, and during the first week, traders experienced huge price swings, which brought the future of bitcoin into question.

Bitcoin vs Bitcoin Cash: What Are the Main Differences?

Bitcoin was founded by Satoshi Nakamoto in 2009, while Bitcoin Cash was launched by Bitcoin unlimited in 2017.

Bitcoin cash was a result of a philosophical split between the core bitcoin developers and the bitcoin community. The earlier developers believed that BTC was a store of value as opposed to a transactional commodity and was doing very little to increase the transaction speeds.

Ironically, even though Bitcoin cash has swift transactions and lower speeds, merchants are more accepting of Bitcoin, mostly because of its stability and high liquidity.

Other key differences between the 2 cryptos include;

When bitcoin cash was being launched, it had a block size of 8MB while that of BTC was 1MB. Over time, bitcoin cash has increased to 32MB, yet bitcoin’s block size limit hasn’t increased much.

A high block size increases the rate at which transactions can be processed. For instance, the bitcoin network only allows about 7 transactions per second to be processed, while Bitcoin cash allows an average of 116 transactions.

Bitcoin cash transactions are processed swiftly as it has faster data transfers compared to BTC transactions that can take even days. This makes it possible for many people to use BCH at the same time without overwhelming the network. It also has lower transaction costs.

Bitcoin only allows for about 250,000 transactions daily, while bitcoin cash can handle up to 2 million transactions.

Since its launch, the price of bitcoin has increased by 12 million times, which is very hard to beat. It was also the first digital coin and is highly liquid and stable.

The value of Bitcoin cash, on the other hand, has decreased since its launch, and while it’s more stable than other altcoins, it’s still not widely accepted as a mode of payment.

Bitcoin cash was created as a response to bitcoin’s scalability problem. Unfortunately, its demand is still very low, and investors prefer to trade in original bitcoin.

Merchants are also reluctant to accept bitcoin cash as payment, and its trading pairs are also low.

What Are the Similarities Between Bitcoin and Bitcoin Cash?

Since both cryptos were designed from the same source code, they have several similarities;

  • They are both mined through a proof of work mechanism. Miners have to solve complex mathematical equations to verify new blocks and are rewarded with unused coins, which they can either store or trade on exchange platforms.
  • They both have the same difficulty adjustment algorithm, which is the measure of the computing power required to mine each block. For Bitcoin, the DAA is adjusted after 2016 blocks which roughly translates to every 2 weeks, while for bitcoin cash, it’s done all the time.
  • They are both capped at a 21 million supply.

You can buy both cryptocurrencies on popular Australian exchange sites like Swyftx and Coinbase.

Swyftx even gives you $10 worth of free bitcoin when you sign up. Click here to sign up.

What Are the Main Advantages of Bitcoin Over Bitcoin Cash?

Bitcoin has been in circulation for more than a decade, and it still remains the gold standard for all cryptocurrencies.

Despite the high transaction fees and low verification rate, BTC has wide adoption, and a lot of merchants in Australia accept it as a mode of payment. Bitcoin is also very profitable, and most of its reality adopters have made a killer profit.

It often experiences wild fluctuations, but it’s very liquid and has a lot of trading pairs which is why investors find it desirable.

Currently, the popularity of bitcoin is highly pegged on its profitability, liquidity, and loyal community. It’s, however, likely that once all the bitcoins have been mined and the scalability problem still remains unsolved, bitcoin cash will start to gain dominance.

What Are the Pros and Cons of Bitcoin Cash?

Pros

  • Faster transactions
  • It’s cheaper to use
  • Its highly scalable
  • The development team implements solutions quickly.
  • It’s a solid investment asset, especially when traded against bitcoin.

Cons

  • The adoption rate is low.
  • It has fewer trading pairs.
Wazza

Hey! Warren here. If you want to start trading Bitcoin or Bitcoin Cash then Swyftx is one of the most trusted platforms to buy, sell, and trade crypto in Australia. If you’re new, I highly recommend signing up and practicing with the free $10 worth of BTC. (Grab it while you can)

Does the Existence of Bitcoin Cash Impact the Future of Bitcoin?

It’s hard to tell.

The hard fork that resulted in bitcoin cash is proof that the bitcoin community is not as united as they previously were and could be the start of bitcoin’s popularity drop. It will, however, take a long time for bitcoin to stop dominating the market as it’s one of the few cryptocurrencies that has managed to unlock its transactional benefits.

Currently, you can mainly use bitcoin cash as an investment commodity, while with bitcoin, you can even pay for services and products around Australia.

The value of both coins is highly determined by their rate of adoption, demand, and usage.

Bitcoin is still ahead, but it may not take long for bitcoin cash to catch up. BCH’s swift transactions and low processing fees ultimately make it the best transactional currency.

It’s likely that eventually, bitcoin will become the gold of the cryptocurrency world and will only be used as a store of value.

Should I Add Bitcoin or Bitcoin Cash to My Portfolio?

Both cryptocurrencies are great investments, and even though investors are under the impression that both coins are fighting against each other, it’s possible for them to co-exist.

As the earliest cryptocurrency, bitcoin’s popularity will still remain, but the practical benefits of Bitcoin cash could make it the most preferred crypto when it comes to transactions.

You should, however, look into the individual benefits of each coin before investing to identify the one that aligns with your long-term and short-term investment goals.

Disclaimer: This article is intended to be used and must be used for informational purposes only. It's important to understand that digital assets are risky, you should always do your own research and analysis before making any material decisions related to any of the products or services described. This article is not intended as, and shall not be construed as, financial advice.