The underlying blockchain technology is the genius behind Bitcoin. The capability to make ledgers impossible to manipulate because of various reasons makes it the go-to option as a financial instrument. In blockchain, a transaction is verified by majority rule and not by an individual. Additionally, it is a decentralized network that exists on different computers around the world.
When it comes to Bitcoin, the debate that plagues the cryptocurrency is the specification of block sizes that limit the number of transaction that can be processed per second. Bitcoin transactions are very slow, in fact, it is painfully slow, and it has become even more expensive compared to a few years ago.
When you compare Bitcoin transactions t transactions such as Visa or Paypal transactions, the Bitcoin network achieves a maximum of 4 transactions per second. In 2016, Etheruem’s transaction was at 20 transactions per second, Paypal’s transaction stood at 193 transactions per second, and Visa transactions are stood at 1,667 transactions per second.
Apart from its speed of transactions, Bitcoin’s major problem is in its scalability. To counter this problem Bitcoin engineers need to reduce the block size so that smaller amounts of data can be verified, or they should increase the block size to process more information at a time.
The difference between Bitcoin and Bitcoin Cash
In August 2017, a “hard fork” was performed on the Bitcoin blockchain; this means that there was an upgrade in the network protocol. This change in protocol led to differences in groups in how to continue the development of Bitcoin.
On one part, there was a group of Bitcoin miners, and the other part constituted the Bitcoin community of users and core developers of Bitcoin. These two groups disagreed on how Bitcoin’s protocol could scale. Bitcoin miners desired that Bitcoin should use bigger blocks for more transactions to be processed, while the other team wanted to implement what is called Segregated Witness (Segwit), which ideally is an upgrade to compress transactions in one block.
The goals of both groups were the same, but they all had different strategies of how to get to the end. This made Bitcoin fork into separate currencies, where Bitcoin Cash was supported by miners who desired the usage of large blocks, and the regular Bitcoin which was supported by core developers.
When the fork happened, each BTC address had an existing twin on the network. So, for instance, if a fork had 0,55 Bitcoin, its twin had 0.55 Bitcoin cash after forking.
In practice, there is very little difference between the two. However, you need to understand that Bitcoin which is referred as BTC and Bitcoin Cash (BTH) are separate currencies. If you happen to send BCH to a BTC address or the other way round, you will lose those funds. The difference is existence, just as Dogecoin is to Litecoin.
Even though Bitcoin Cash has lower fees, it does not have the community’s acceptance the way regular Bitcoin has; this makes it hard to find wallets and exchanges that support BTH compared to BTC.
Since Bitcoin is well established in the industry, it has far greater stability and security because of the support from miners and the infrastructure behind it. Bitcoin has approximately 10x more full nodes compared to Bitcoin Cash which does not have a large distributed network. But the tradeoff lies in the transaction time; Bitcoin tends to take a lot of time compared to Bitcoin cash, and it also has higher rates.
Future of cryptocurrency
While it can be tough to speculate about the issues around cryptocurrencies, top of the list include government regulation which can erode the premise behind its existence. Since cryptos still have few merchants who are continuously increasing in number, they are still very few. For cryptos to become used more widely, consumers have to accept them as a form of payment. However, their complexity compared to the traditional currency still deters people from accepting it.
For cryptocurrency to be accepted as part of the mainstream finance, it has to be mathematically complex but simple for users to understand. It needs to be decentralized buts till secure; it will also need to preserve anonymity, but it should not be a channel of tax evasion.