Bitcoin Cash was born from a hard fork of Bitcoin in August 2017. The Bitcoin community essentially split in two as there was disagreement over how Bitcoin should be scaled. The Question of scaling mattered as the bitcoin community saw the need for the bitcoin network to process more transactions per second due to its increasing popularity. After all, a currency that takes days or weeks to complete a transaction and charges high fees is pretty much useless.
The Bitcoin community favored an off-chain scaling solution, while Bitcoin Cash supporters favored an on-chain solution. Today Bitcoin has a block size limit of 2MB and Bitcoin Cash one of 8MB, with further increases possible. The Bitcoin community believes that processing some off-chain transactions is and has the best solution created the Lightning Network. This Lightning Network processes transactions from the mainchain and thus prevents the mainchain from being overloaded.
This disagreement creates a confusing situation where we have more than one bitcoin. The differences are not only technically ideological, as the two groups have different visions of the future. But Bitcoin and Bitcoin Cash are two independent of each other crypto currencies. Therefore, do not confuse one coin with the other, even if the names are very similar.
The two Bitcoin communities have deep differences. Supporters of both cryptocurrencies usually comment negatively about the other coin. Just take what you read about Bitcoin and Bitcoin Cash with a pinch of salt and make sure you make your own decision when it comes to investing in either cryptocurrency.
Technical differences between Bitcoin & Bitcoin Cash
Bitcoin supporters argue that Bitcoin was never intended for micropayments like buying a McDonald's. Instead, Bitcoin is of greater value to a store and transfer, similar to the role of gold. The community's Bitcoin Cash side disagreed, arguing that Bitcoin should be used like cash. Hence the name Bitcoin Cash.
Increasing the block size to 8 MB means that Bitcoin Cash can process 2 million transactions per day. This volume can be further increased by increasing the block size. Increasing the block size may sound like a good idea, but it comes with complications. Increased block size essentially increases the speed of the network, and larger blocks mean more data to process for each transaction. This means that smaller miners cannot process the transactions, only larger ones.
The result is that the larger actors take increasing control of the network and it becomes more centralized. However, no miner on the Bitcoin network is big enough to control 51% of the network, and the number of mines is exceptionally high. With Bitcoin Cash, on the other hand, there are only 3 mining pools and together these actors control more than 51% of the network.
Bitcoin Cash is therefore much more centralized than Bitcoin. Centralization in and of itself does not necessarily have to be negative, it depends on whether the community trusts these few actors to act correctly.
What other differences are there?
Although Bitcoin Cash uses the same code base as Bitcoin, there are a few other changes besides increasing the block size.
Different hash algorithm: Bitcoin Cash uses a different process than Bitcoin. This means that the two blockchains cannot communicate with each other. In practice, this means that you have to be very careful when sending Bitcoin or Bitcoin Cash to a wallet. If you don't have the correct address and instead send Bitcoin Cash to a Bitcoin wallet address, for example, you will most likely lose your BCH.
The difficulty of mining can be changed: The difficulty of mining Bitcoin Cash can be changed based on the number of miners to ensure the stability of the crypto. With Bitcoin it is fixed.
Transaction signatures are different: These are different for Bitcoin and Bitcoin Cash.
Bitcoin & Bitcoin Cash: The Difference In Visions
The reason the Bitcoin and Bitcoin cash communities don't like each other is political. Bitcoin Cash supporters even go so far as to say that BCH is the "real Bitcoin" and the cryptocurrency that most closely matches Satoshi Nakamoto's whitepaper (Satoshi was the inventor of Bitcoin).
Also, they argue that the block size should be increased so that Bitcoin can be used like cash: from large transactions for buying companies to micropayments for chewing gum. The Lightning Network is not popular among BCH fans because they see it as a form of financial institution.
It is said that this will lead to the very corruption and greed that Bitcoin wanted to eradicate in the first place. Some BCH supporters believe that Bitcoin developers purposely clogged the Bitcoin chain in order to monetize off-chain solutions like the Lightning Network.