Bitcoin vs. Bitcoin Cash
Curious about the difference between Bitcoin and Bitcoin Cash? You’re not alone. These two crypto assets share many similarities apart from just their names.
In fact, Bitcoin Cash (BCH) was created through what’s called a “hard fork” of Bitcoin (BTC), meaning the two assets share a common code base, design scheme and transaction history.
Stepping back, know that most cryptocurrencies are based on open-source code, meaning any developer can propose changes to the software users run. This includes the ability to copy the code base, change a few features and start an entirely new project.
BITCOIN
Bitcoin sees its goal as offering an alternative to government monies and central bank control of their issuance. So, its developers de-prioritize changes that might weaken this value proposition, such as altering the amount of time it takes to create new blocks.
So, while they may have started from the same code base and user group, know that Bitcoin and Bitcoin Cash (BTC vs. BCH) are quite different today, particularly in their approach to overall design philosophy. Learn more about Bitcoin vs. Bitcoin Cash below.
The difference between Bitcoin and Bitcoin Cash
DATE FOUNDED
Bitcoin
The Bitcoin white paper was published on October 31, 2008 on the cryptography mailing list. The software later went live on January 9, 2009.
Bitcoin Cash
Bitcoin Cash was founded August 1, 2017
CREATOR
Bitcoin
Bitcoin was created by a pseudonymous individual or group under the name Satoshi Nakamoto. To this day, Bitcoin’s creator remains unknown.
Bitcoin Cash
A group of businesses and developers who, growing tired with in-fighting over a Bitcoin network rule, decided to author and publish code that altered it.
TICKER
Bitcoin
BTC (Note: You may see BTC appear as XBT on other platforms)
Bitcoin Cash
BCH
VISION
Bitcoin
Bitcoin is an open-source software that allows its global user base to manage a digital money supply outside the control of any government or central bank.
It was created in response to the 2008 global economic crisis as a means to combat inflation. In fact, the first mined block contained the message: “The Times 03/Jan/2009 Chancellor on brink of second bailout for banks,” a message many believe signifies the project’s revolutionary intent.
The Bitcoin software enables the computers running it to manage a ledger (the blockchain) that accounts for all transactions made using its currency (BTC) by enforcing a variety of rules.
The Bitcoin blockchain is a full record of the network’s transaction history validated by nodes, or individuals running its software. This ensures that each BTC cannot be copied or modified, and that bitcoins cannot be created or used in a way that is against its rules.
Bitcoins are scarce, divisible and transferable, making them a valuable alternative money.
Bitcoin Cash
Bitcoin Cash shares many of the same goals as Bitcoin. Where it differs is in how it makes design decisions to realize those goals.
For instance, supporters of Bitcoin Cash believe that Bitcoin’s value was closely tied to its utility as a means of payment, and that Bitcoin needed to make changes to preserve these properties.
At the time, Bitcoin was seeing widespread use, and the fees required to settle transactions on the blockchain were rising, sometimes into the hundreds of dollars.
To lower Bitcoin’s fees, Bitcoin Cash supporters wanted to increase Bitcoin’s block size to 8 MB, up from 1 MB, increasing the number of transactions that could be included in each block.
Bitcoin supporters generally rejected the idea, believing that it could have dire consequences for the economics of the network. The counter argument was that many successful internet startups subsidized consumer activity, and that this approach might make sense for Bitcoin early on.
As a result, Bitcoin Cash supporters created a new blockchain to test the theory.
LAUNCH & ISSUANCE
Bitcoin
Bitcoin’s white paper, titled “Bitcoin: A Peer-to-Peer Electronic Cash System,” was released by Satoshi Nakamoto in 2008.
The first 50 bitcoins were mined upon the release of the software, enabling a decentralized network of computers to run a digital economy that is still thriving today.
Satoshi famously left the project in 2011 and hasn’t been heard of since, though you can find out more about his (or her) attitudes toward the technology in various emails and forum posts.
Since then, hundreds of developers have contributed to improving Bitcoin’s code, whether it is routine bug fixes or great, efficiency driven, improvements.
Bitcoin Cash
The first Bitcoin Cash block was mined in August 2017 at block 478,558.
By accepting a block with a different rule set, the network split into two incompatible currencies with two separate transaction histories.
As a result, anyone who owned Bitcoin at the time received an equal allocation of Bitcoin Cash.
Since that time, the Bitcoin Cash blockchain continues to follow the same rules as Bitcoin, rewarding new Bitcoin Cash to miners every time a block is found.
NETWORK DESIGN
Bitcoin
Central to Bitcoin’s design is the ability for two users to send each other BTC from anywhere around the world, without the need for an intermediary.
In order to keep its network secure and decentralized, while regulating the supply of new money that gets released into its economy, Bitcoin uses a process called “mining."
In this system, called Proof of Work (PoW), miners race to complete cryptographic puzzles to propose blocks that make up the Bitcoin blockchain.
When a block is discovered by a miner, it is announced to the network, and, when it’s verified by every node, the miner gets compensated in newly minted BTC.
Bitcoin Cash
Wanting to create an alternative to payment systems like Visa and PayPal, Bitcoin Cash has prioritized design choices aimed to make its transactions cheaper and faster.
In practice, developers have sought to achieve this by changing the Bitcoin Cash block size, or the hard-coded limit on how many transactions can be included in each block.
Bitcoin Cash blocks were originally set to a maximum of 8 MB, but they are capable of containing up to 32 MB worth of transactions. It’s worth noting, however, that this increase in block space hasn’t necessarily led to an increase in transactions.
In practice, Bitcoin Cash blocks often contain fewer transactions than those on Bitcoin.
Elsewhere, developers have created a token standard aimed at allowing new currencies to be created on top of Bitcoin Cash.
MONETARY POLICY
Bitcoin
One of the biggest value propositions of Bitcoin is its monetary policy – only 21 million BTC will ever be introduced into the network’s economy.
When the first block was mined in 2009, 50 BTC were released, a block reward that is cut in half roughly every four years. This event is known as the halving, or halvening.
Through this process, more than 18 million BTC have been made available as of 2020. The last bitcoin is projected to be mined in 2140.
Bitcoin Cash
Bitcoin Cash offers the same monetary policy as Bitcoin, with 21 million BCH ever being introduced into the network’s economy.
While Bitcoin Cash and Bitcoin share the same first 478,558 blocks, the first independent Bitcoin Cash block was mined in 2017 and offered a 12.5 BCH block reward.
The block reward is also cut in half every 210,000 blocks which is roughly every four years. The last bitcoin cash coin is projected to be mined in 2140.
Useful resources
If you are interested in learning more about BTC and BCH, please visit Kraken’s “What is Bitcoin?” and “What is Bitcoin Cash?” pages.
Want more in depth information on specific cryptocurrencies and blockchain projects? If so, visit our Learn Center to further your education on this ever-growing space.