Since the creation of Bitcoin, there have been questions about its ability to scale and grow effectively. While Bitcoin, like every other cryptocurrency, operates on blockchain networks, there are issues with the way this operation happens. The biggest problem with the blockchain used for Bitcoin is that it is a lot slower than that used for other cryptocurrencies, or even regular fiat transactions such as credit card transactions. For example, Visa, one of the biggest credit card companies in the world, processes nearly 150 million transactions per day, averaging roughly 1,700 transactions per second. This is far lesser than the company’s actual processing capability, as it can record over 65,000 transactions per second. In comparison, Bitcoin can process just seven transactions per second. Thus, Bitcoin transactions can take quite a few minutes to be processed, and as more and more people have entered the sector, waiting times have grown as the underlying technology has remained the same.
Thus, this has been one of the biggest problems surrounding Bitcoin, and developers and miners have come up with two major solutions for this issue. The first involved making the amount of data in each block smaller so that verifications can take place in a quicker and less expensive manner, while the second solution sees the blocks of data being made larger so that more information can be processed at one time. Bitcoin Cash (BCH) was therefore created out of the development of these solutions. In July 2017, there was a split or ‘fork’ in Bitcoin, which was a direct result of these issues and their solutions. Bitcoin Cash was created out of this ‘fork’, with the creators aiming to raise the token’s block size to 8 MB every 10 minutes from the existing 1 MB per 10 minutes. BCH blocks can now go up to 32 MB. In fact, Bitcoin Cash also saw a split in 2018, with another fork creating Bitcoin SV, which is now one of the biggest cryptocurrencies in the world with a market cap of around $8 billion.
Bitcoin Cash, therefore, has its own blockchain with a higher capacity than Bitcoin; however, the demand for Bitcoin continues to dwarf that of Bitcoin Cash. The market value of Bitcoin is at around $1 trillion, while Bitcoin Cash is at around $26 billion, showing the discrepancy in demand between these two cryptocurrencies. Ironically, it is Bitcoin that needs the faster processing times and larger blocks that Bitcoin Cash has. Even though both tokens have around 19 million digital coins in the market, their respective prices also show the scale of demand – 1 BTC is at around $35,000, while one BCH token is around $650. Another issue is that the stated aim of the BCH creators – to make transactions quicker, did not actually pan out in that way. BCH transaction confirmation times remain higher than that of Bitcoin for a number of reasons, but BCH still has a significant advantage over BTC in that it is cheaper to use.
Transaction fees for BTC have gone up to as high as $60 on average, but the average fee for BCH is only around 3.5 cents. This is a huge discrepancy, and explains at least some of the demand for BCH, even though it is still far lower than that of Bitcoin. BCH is available on most popular exchanges, and so there is no issue with regard to accessibility.
Bitcoin Cash offers a cheaper alternative to Bitcoin, and it has also seen significant growth over the last year or so in line with the larger crypto market. Bitcoin Cash is able to process transactions more quickly than the Bitcoin network, meaning that wait times are shorter and transaction processing fees tend to be lower. The Bitcoin Cash network can handle many more transactions per second than the Bitcoin network can. However, with the faster transaction verification time comes downsides as well. One potential issue with the larger block size associated with BCH is that security could be compromised relative to the Bitcoin network. Similarly, bitcoin remains the most popular cryptocurrency in the world as well as the largest by market cap, so users of BCH may find that liquidity and real-world usability is lower than for bitcoin.