Bitcoin Cash is a hard fork of Bitcoin that launched in August, 2017. A hard fork is the division of a blockchain into two: the original and a new one. The new blockchain is completely separate and its software is incompatible to the previous one. In this case, Bitcoin Cash separated from Bitcoin Core. Bitcoin Cash was born from multiple differences between miners and developers of the Bitcoin network. Among them is the size of the blocks in the blockchain and the fees that miners charge for verifying transactions. Proponents of Bitcoin Cash argued that larger block sizes were necessary to increase the number of transactions and reduce fees. Today, Bitcoin Cash is valuable because it’s efficient, cheaper, and has overall higher market acceptance.
Bitcoin Cash enjoys numerous advantages over Bitcoin. For starters, it is faster thanks to the increase in size of its blocks. The size of a block in a blockchain represents its data storage capacity. Bitcoin uses one MB size blocks which carry a smaller amount of information and it requires a lot more of them. More blocks create congestion and a backlog in the network.
In contrast, Bitcoin Cash uses 8 MB size blocks which can carry more information and require less of them. This speeds up the time a transaction takes to validate significantly. In addition, Bitcoin Cash is potentially scalable while On Chain; meaning, it can make use of unoptimized resources such as excess computing power and block compression. This could increase the number of transactions close to 600 transactions per second (tps). When compared to Bitcoin’s 3 to 4 tps, the advantage is clear. And lastly, Bitcoin Cash also has the ability to withstand Replay attacks or (double spending) by changing its transaction signature hashing algorithm.
As Bitcoin grew in popularity so did its demand and the volume of transactions. However, Bitcoin’s design limitations led to higher wait times, in some cases up to four days to validate a single transaction. The only solution was the ‘Replace-by-Fee’ mining option where higher fees decide the order transactions are confirmed. However, this runs contrary to the principles of Bitcoin’s designers for public affordability. High costs make Bitcoin accessible only to those who can expedite their transactions by paying higher fees. On the other hand, the efficiency of Bitcoin Cash makes it 99.56% cheaper to use than Bitcoin. Bitcoin Cash’s larger blocks carry more data faster reducing the fees required to mine it. On average a Bitcoin transaction cost approximately $6 but a Bitcoin Cash transaction is only $.20
Bitcoin has undergone several attempts to increase its efficiency through the use of SegWit, SegWit2x, Graphene, and the Lighting Network. However, as of yet, Bitcoin fails to deliver the scalability necessary for mass adoption. On the other hand, the ability to complete transactions faster and cheaper makes Bitcoin Cash suitable for market adoption. In addition, Bitcoin Cash enjoys brand equity inherited in its name. This gives it an advantage over other faster coins like Litecoin.
Bitcoin Cash is valuable because unlike Bitcoin, it has real world uses as a crypto currency. Where Bitcoin becomes ever closer to a store of value, Bitcoin Cash is capable of becoming a true global digital currency. In addition, Bitcoin Cash enjoys from support and continuous development. In fact, in a recent announcement, a new hard fork is coming on May 15th, 2018, in which the block size will increase to 32 MB. This will open a world of opportunities for further development; in particular the re-enabling of disabled operating codes. These codes which were originally embedded in Bitcoin’s core, intend to make Bitcoin Cash a developer’s platform. This would allow for a lot more functionalities and coins running on Bitcoin Cash. For the moment, Bitcoin reigns supreme as the number coin for the foreseeable future, but Bitcoin Cash is gaining ground and may one day surpass it.