Although most cryptocurrency derivatives platforms deal with Bitcoin, there is another similar asset known as Bitcoin Cash that may confuse some traders. This article will explain some of the reasons why Bitcoin Cash exists and how it is different from Bitcoin.
Despite all of its revolutionary advantages, Bitcoin still has certain issues and challenges. Perhaps the most glaring of these is the speed of its transactions. Currently, it can handle about 7 transactions per second, much slower when compared to traditional credit card companies (about 24,000 transactions per second). In order for the system to continue to grow and scale-up, many agreed that some changes had to be made.
The Birth of Bitcoin Cash
As the transaction speed issue became more relevant, a second group within the Bitcoin community grew. This group wanted a solution that would allow Bitcoin to scale, while the others insisted that Bitcoin was never meant to be used for constant transactions. The Bitcoin system was eventually split and Bitcoin Cash was born through a process called a Hard Fork. This new asset has a block size limit of 8 Mb (while Bitcoin only has 2 Mb) but uses the same code base as its predecessor. Bitcoin Cash allows for around 2 million transactions a day.
So now that we have these two options, what are the differences?
Because of the increase in block size, not only are more transactions processed per second when using Bitcoin Cash, but these are also cheaper. The new name also makes a difference. The addition of the word ‘cash’ denotes its capabilities as an actual form of currency that can be easily and universally used for common purchases as adoption increases in the future. However, one potential drawback is the risk associated with using Bitcoin Cash at this moment. Where Bitcoin has an incredibly large amount of mining pools (making it difficult to coordinate a 51% attack), Bitcoin Cash has 51% of its network controlled by three mining pools. Addressing the cryptocurrency’s reliance on these three major groups will be a significant challenge that Bitcoin Cash must overcome.
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