Bitcoin Cash is a cryptocurrency made from one of Bitcoin’s forks. A fork, in cryptocurrency, essentially refers to a split that happens in a blockchain network.
How is Bitcoin Cash different from Bitcoin? If you look at the prices to compare, they are nearly $50,000 apart. Each cryptocurrency has a story behind them, and here’s a look at what their differences are.
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In the stock market, sometimes companies will split off their businesses into separate and unique stand-along enterprises. During those circumstances, shareholders of the parent company would typically get a share of the “new” company or some monetary compensation.
In cryptocurrencies, that would be called a fork. Bitcoin Cash came to life in August 2017 after forking off from Bitcoin. Anyone who had owned Bitcoin at that time was given a similar amount of Bitcoin Cash.
The fork resulted from differences in views on improvement between the network operators. They were split on which protocols they should implement and did not come to an agreement, thus splitting Bitcoin into two. Some developers saw Bitcoin as solely a store of value, while others believed in its potential to become a widely adopted currency. Bitcoin Cash is exactly for those who have faith that it can become a legitimate currency someday.
Bitcoin Cash was designed to accommodate and handle more transactions into a single block in the chain. This accommodation for transactions will allow the cryptocurrency to handle scaling up and growing as a currency. It had an initial value of $240, and anyone who had money in Bitcoin at the time of its release was entitled to an equal amount of Bitcoin Cash. People who bought Bitcoin after the split did not have such rights, though.
The origin of Bitcoin was from a concept in a white paper from 2008 written by an anonymous person under the pseudonym Satoshi Nakamoto. Their identity is still unknown, but the first recorded Bitcoin transactions happened in early 2009.
Bitcoin is unique in which it is a digital currency that is not owned or controlled by a specific person or network of operators. It is a distributed system made up of nodes run by people all over the world. The idea behind Bitcoin was to establish a decentralised digital currency that eliminated the need to rely on intermediary financial institutions. Instead, people from all over the network can use their computing resources to perform tasks like verifying transactions and mediating disputes.
Another factor that contributed to Bitcoin’s innovativeness was the limit imposed on the number of Bitcoins that could ever be in circulation. There are currently 18.6 million Bitcoins in existence at the moment, but there will only ever be 21 million in circulation.
A lot had changed since the very first transaction back in 2009. Back then, Bitcoin was worth next to nothing, but in the present day, cryptocurrencies have become an asset class of their own. Bitcoin has experienced a lot of volatility but was able to reach prices of more than $60,000.
The Differences Between Bitcoin and Bitcoin Cash
The key difference between the two cryptocurrencies lies in the philosophical differences between the developer communities that created the fork in the first place.
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Because the core developers saw Bitcoin as a store of value similar to gold, they did no work to increase the transaction capacity. Those who believed in Bitcoin Cash worked to increase the number of transactions that can be handled by the blockchain because they believe that it should be used as a medium of exchange.
Quite ironically, though, the efforts made to scale up and handle more transactions haven’t led Bitcoin Cash to be more widely accepted compared to Bitcoin itself.
Even if Bitcoin has limitations, it has not deterred companies like Paypal to accept it as a payment method. Even huge mainstream companies like Mastercard are looking to bring cryptocurrency to their network this year. Even institutional investors prefer Bitcoin over Bitcoin Cash, signalling its growing acceptance as an asset class among the investment community.