What is the difference between Bitcoin and Bitcoin Cash?

Origins and Forking Event

1. Bitcoin Cash emerged as a hard fork from the original Bitcoin blockchain on August 1, 2017.

2. The split occurred due to persistent disagreements among developers, miners, and users over how to address Bitcoin’s scalability limitations.

3. A faction advocated for increasing the block size limit to allow more transactions per block, while others supported off-chain scaling solutions like the Lightning Network.

4. The Bitcoin Cash protocol raised the default block size from 1 MB to 8 MB immediately after the fork, later expanding it further to 32 MB.

5. This structural divergence meant Bitcoin Cash began operating on a separate ledger with its own consensus rules and development roadmap.

Block Size and Throughput Capacity

1. Bitcoin maintains a nominal block size limit of 1 MB, though Segregated Witness (SegWit) effectively increases capacity by reorganizing transaction data.

2. Bitcoin Cash removed SegWit entirely and instead relies on larger blocks to accommodate higher transaction volume.

3. At peak utilization, Bitcoin Cash can process over 60 transactions per second under optimal conditions.

4. Bitcoin’s throughput remains constrained to approximately 3–7 transactions per second on-chain without layer-two infrastructure.

5. Larger blocks in Bitcoin Cash reduce fee pressure during periods of network congestion but increase node storage and bandwidth requirements.

Transaction Fees and Economic Incentives

1. Bitcoin Cash consistently exhibits lower median transaction fees compared to Bitcoin, often measured in fractions of a cent.

2. Bitcoin transaction fees fluctuate dramatically based on demand and block space availability, sometimes exceeding several dollars.

3. Miners on Bitcoin Cash receive less revenue per block due to lower fees, but benefit from greater block reward stability in early years.

4. Bitcoin’s fee market evolved into a priority-based auction system where users bid for inclusion in the next block.

5. Bitcoin Cash developers introduced Canonical Transaction Ordering Rule (CTOR) to improve block propagation efficiency and reduce orphan rates.

Development Philosophy and Governance

1. Bitcoin follows a conservative, minimally invasive approach to protocol changes, emphasizing security and decentralization above all else.

2. Bitcoin Cash has pursued multiple contentious upgrades, including the introduction of replay protection, new opcodes, and adjustable block size caps.

3. The Bitcoin Cash ecosystem includes competing implementations such as Bitcoin ABC and Bitcoin Unlimited, each proposing different rule sets.

4. Bitcoin’s reference client, Bitcoin Core, maintains dominant influence over consensus-critical decisions through broad node adoption and miner signaling.

5. Bitcoin Cash’s governance model incorporates more direct developer-led proposals and faster implementation cycles, resulting in frequent specification revisions.

Frequently Asked Questions

Q: Does Bitcoin Cash support smart contracts?Bitcoin Cash does not natively support Turing-complete smart contracts like Ethereum. However, it reintroduced certain opcodes—such as OP_RETURN enhancements and OP_CHECKDATASIG—that enable basic programmable logic and token issuance.

Q: Can Bitcoin and Bitcoin Cash addresses be used interchangeably?No. Bitcoin and Bitcoin Cash use distinct address formats and incompatible private key derivation paths. Sending BTC to a BCH address—or vice versa—results in permanent loss unless recovered via specialized tools and shared control of both chains’ keys.

Q: Why did some exchanges delist Bitcoin Cash?Several major exchanges removed Bitcoin Cash trading pairs due to low liquidity, regulatory scrutiny around its branding, and internal risk assessments related to fork-related vulnerabilities and replay attacks during subsequent chain splits.

Q: Is Bitcoin Cash mined using the same algorithm as Bitcoin?Yes. Both networks use SHA-256 as their proof-of-work hashing algorithm, allowing compatible mining hardware—including ASICs—to switch between chains depending on profitability and difficulty adjustments.