Bitcoin and Bitcoin Cash: comparative analysis and forecast.

On August 1, 2017, a new cryptocurrency, Bitcoin Cash / Bcash (BCH), separated from the Bitcoin (BTC) network. When a part of a large company becomes an independent organization, the responsibility for financial responsibility does not apply. We find out, this is the case with Bitcoin Cash, how it differs from its predecessor and what the future awaits it.

The main reason for the hard fork (switching to a new protocol incompatible with the previous version) The bitcoin network has become that development groups have proposed competing plans to improve the network protocol. They could not come to a consensus, and therefore the network was divided into two parts.

In other words, one group of nodes (controlling the blockchain to distinguish legitimate transactions from illegal ones) continued to use the old software, while the other switched to the new one. With the switch to the new version, the amount on bitcoin wallets was converted into Bitcoin Cash.

Reasons for separation

Philosophical differences. Some developers (bitcoin) considered the currency more as a means of saving, while another (Bcash) wanted to promote it as a transactional medium of exchange. For this reason, the word cash was added to the name of the new currency.

Bitcoin Cash supporters were also concerned about the network's scalability limitations as the currency continued to gain popularity. For this reason, BCH has increased the block size to process more transactions at the same time.

Initially, the BCH block size was 8 MB, while BTC used blocks of 1 MB each. But then, on May 15, 2018, BCH increased the block size to 32 MB in order to better prepare the coin for mass use.

At the end of 2017, due to the arrival of new money in the crypto ecosystem, bitcoin reached its first maximum — $ 20 thousand. Apparently, the BCH team foresaw this and assumed that the network in its current state would not cope with the number of transactions that would grow in the near future. Therefore, they were looking for an alternative more suitable for growth and scaling.

The mechanism of the nodes. This has become another factor of disagreement.

Bitcoin supporters wanted to keep the block size small so that nodes could work with fewer resources. This is probably more in line with the decentralization philosophy underlying cryptocurrencies.

The Bitcoin Cash team proposed to increase the size of blocks, as a result of which more powerful computers would be needed to run nodes. This, in turn, requires a more funded and centralized ecosystem.

Bitcoin supporters believe that second-layer protocols such as the Lightning Network are the best way to scale. At the same time, the Bitcoin Cash team is confident that larger blocks will eventually make the network more convenient for performing multiple transactions. They hoped that in the future BCH would become PayPal 2.0.

Differences between Bitcoin and Bitcoin Cash

First of all, currencies differ in transaction cost and commission.

Bitcoin checks 3-7 transactions per second worth $5-50 each.

Bitcoin Cash checks 100 transactions per second at a minimum cost of a few cents.

Bitcoin is often positioned as digital gold, and Bitcoin Cash supporters criticize this approach while promoting their currency. On their website, they cite the following arguments: the global cash currency market is estimated at $100 trillion, and the global gold market is estimated at $10 trillion. Since the cash market is 10 times larger than the gold market, Bitcoin Cash has not only a more reliable method of application, but also "greater growth potential".

"If BCH covers only 1% of global transactions, then 82 million transactions will be made on the network every day," says the Why Bitcoin Cash website.

Bcash enthusiasts also emphasize that of the 3 trillion annual global transactions, 75% are cash, only 13% are credit and debit cards, and 12% are "other". These figures, in their opinion, emphasize that due to low fees and accelerated processing time, BCH is more suitable for daily mass use.

Disadvantages of Bitcoin Cash and Forecasts

In addition to BCH, there were other branches in the bitcoin ecosystem. Only a few of these projects remain relevant.

At the end of 2017, Bitcoin Gold (BTG) appeared, which was based on changes in the mining algorithm.

At the end of 2018, there was a hard fork of the Bitcoin Cash blockchain, as a result of which a new Bitcoin Satoshi Vision/Bitcoin SV (BSV) cryptocurrency appeared, which supports a block size of up to 2 MB.

One thing is for sure: at the moment, all branches of bitcoin and Bitcoin Cash attract much less attention and investment compared to the original BTC, whose market capitalization is more than $ 1 trillion. According to Coin Market Cap, the three other closest competitors — Bitcoin Gold, Bitcoin SV and Wrapped Bitcoin (WBTC) — together cover only more than $17 billion.

The market capitalization of Bitcoin Cash itself only slightly exceeds $18 billion, which is 50 times less than that of bitcoin. At the same time, the capitalization of Dogecoin is almost four times larger than Bcash. Perhaps the "meme" cryptocurrency is actually quite a serious asset.

After all, BTC and BCH can coexist and be used for different purposes: BTC as digital gold (a means of saving), and BCH as PayPal 2.0 (a means of exchange). However, in order to realize this, the BCH ecosystem will need to grow significantly, which is not facilitated by numerous branches. In addition, the final goal of the project may be hindered by the fragmentation of the community and internal disagreements.

The good news is that the capitalization of the global cryptocurrency market continues to grow. This is partly due to the favorable mood in the industry, as well as the recent growth of bitcoin and Dogecoin.

Nevertheless, bitcoin, apparently, will retain its dominant position for a long time and will be able to solve the scaling problem in the future. And BCH will probably serve only as a temporary medium of exchange and will not be able to catch up with its predecessor, the world's first and most valuable cryptocurrency.

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