Bitcoin vs Bitcoin Cash vs Bitcoin Gold vs Bitcoin SV

BTC
Bitcoin

Bitcoin vs Bitcoin Cash vs Bitcoin Gold vs Bitcoin SV

The emergence of bitcoin over a decade ago has generated a lot of interest from investors and miners alike. But the most interesting thing about the development and growth of cryptocurrency and blockchain technology, particularly bitcoin, is the rise of many other related innovations around it, such as Bitcoin Cash and Bitcoin Gold among others. But did you know that despite their names, these Bitcoin variants are not the same thing as Bitcoin? Yes, they are all based on Bitcoin, and of course piggybacking on its name, but they are in fact different.

Why are there so many version of Bitcoin?

Bitcoin is a digital currency (cryptocurrency) that uses peer-to-peer technology to facilitate payments and act as a store of value. Because it is based on open source code, anyone with the right skills can take the code, modify it, and release their own version. Developers took advantage of the open source codes for bitcoin and created different versions of bitcoin offshoots, commonly referred to as a “Hard Fork” of Bitcoin. In the world of blockchain, a “fork” occurs when a blockchain diverges into two potential paths forward, or in other worlds the initial protocol and a new modified version of that protocol. This is done by taking an existing code from any open source Blockchain, modifying it, and using it as the basis for a new project. There are quite a few Bitcoin forks in the crypto world today, but the following are the most popular and well known:

  • Bitcoin Cash
  • Bitcoin Gold
  • Bitcoin SV (Satoshi’s Vision)

Coins such as these Bitcoin variations are projects that run on their own, and are completely different from the “parent” Bitcoin coin code and team from which they were derived.

Bitcoin (The original)

The number of Bitcoins (the supply) is limited to 21 million, while Bitcoin blocks are limited to 1 MB. Despite its popularity, Bitcoin does not necessarily satisfy everyone. There are people who have disagreed with Bitcoin design, scalability and of course decisions made in the Bitcoin project. For example, in mid-2017, about 90 percent of mining pools and companies voted to support the incorporation of SegWit2x. This is a segregated witness technology that makes the amount of data that needs to be verified in each block smaller. Signature data is estimated to constitute up to 65 percent of data processed in each block, making it a major technological shift. According to BitMex study, the implementation of SegWit2x is said to have helped increase the block size, hence its steady adoption. But some developers disagreed with the adoption of this technology because it was seen as betrayal, due to it being a major move away from the initial vision of it’s illusive founder Satoshi Nakamoto. 

Since the beginning Bitcoin was perceived as an amazing accomplishment but one that had flaws nonetheless; these perceived flaws were: slowness, it wasn’t scalable and ultimately led back to a new form of centralization, centralized mining. Because mining bitcoin is best performed by ASICs (An application-specific integrated circuit) this meant that wealthy people or companies that had enough money to buy the most ASICs would ultimately have the most mining power (Hash power) and this subsequently meant that a form of centralization and control would still exist. These complaints and concerns led some of the dissatisfied developers to create forks, such as Bitcoin Cash, Bitcoin Gold and Bitcoin SV.

 

Bitcoin Cash 

(The Bitcoin Cash fork took place on15 November 2018)

The dissatisfied Bitcoin miners and developers created Bitcoin Cash to overcome the problems they felt Bitcoin was not solving, namely speed and scalability issues. They also felt that the introduction of SegWit2x betrayed the decentralization and transparency principles the founder of Bitcoin had envisaged. Moreover, the adoption of the segregated witness technology was not transparent at all. 

As such, the developers created Bitcoin Cash (BCH). BCH is now its own stand alone blockchain and has some unique technical features from those of Bitcoin. The new digital currency has increased block size of 8 MB to speed up the verification process. This ensures that it is able to support more miners than BTC’s blockchain. 

Bitcoin Cash was designed for low fees and quick transaction times. The original Bitcoin was often viewed as being a good store of value and not very good as a means of payment, therefore, the new coin’s name pitches it as a sort of “electronic cash”. Bitcoin Cash embraces a larger block size, which means the network can support more transactions. At the time of this writing, Bitcoin Cash is the most valuable Bitcoin hard fork.

This sounded particularly compelling in December 2017, when Bitcoin’s high transaction fees topped out at over $40. It’s still a meaningful difference in 2020, whereby the Bitcoin Cash fees are often 80% less than those of Bitcoin.

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. 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.

BTC proponents argue that Bitcoin Cash’s changes are unnecessary, that SegWit (Segregated Witness) has already helped bring transaction fees down, and that the Lightning network would bring cheap, near instant payments to Bitcoin. Although the reality remained that BCH was still faster and cheaper.

Critics have pointed out that Bitcoin Cash seems to have been intentionally designed to be confusing. Both bitcoin.com and the Twitter account @Bitcoin are both used to push Bitcoin Cash. But Bitcoin Cash (BCH) isn’t the same thing as the original Bitcoin (BTC.) The Bitcoin Cash website argues that Bitcoin Cash is the “real Bitcoin,” but the larger Bitcoin community doesn’t agree.

 

Bitcoin Gold 

(The Bitcoin Gold fork took place on October 24th, 2017.)

Bitcoin Gold tackles another problem some see with Bitcoin: the increasing centralization of Bitcoin mining that requires specialized hardware and makes it impossible for the average person to mine. Specialized hardware known as application-specific integrated circuits (ASICs) is required to mine profitably. And those mining companies can wield power over the network thanks to their massive size.

The Bitcoin Gold hard fork tackles this problem by swapping out the SHA-256 mining algorithm in Bitcoin for another algorithm called Equihash. This is still a proof-of-work algorithm that requires an immense amount of electricity and computing power, but it’s made to be much more difficult for ASIC-based optimization, often referred to as being an ASIC resistant blockchain. Bitcoin Gold is designed so that the average person—or at least the average person with a powerful graphics processors (GPUs)—can mine Bitcoin on their PCs once again, making the network more decentralized.

Bitcoin SV (BSV)

(The BSV fork took place on 15 November 2018.)

Bitcoin SV (Satoshi’s Vision) was created as a fork of Bitcoin Cash (not the original Bitcoin). This new blockchain and project are managed by the nChain company and was named “SV” for Satoshi’s Vision, because they claim that their fork was created to restore the greatness of the original Bitcoin protocol. nChain claimed that BCH had implemented too many protocol changes, thus deviating too greatly from the original Bitcoin. Despite all these initial statements about other forks deviating too greatly from Bitcoin, in 2019 SV went ahead with the “Quasar” upgrade. This upgrade was focused on the default block size “hard cap” on BSV from 128MB to 2GB (2000 MB). Although the default maximum block size was decidedly set to 2GB, far higher than any other competing Bitcoin project. But they didn’t stop there, in early 2020 they announced that they were moving forward with “Genesis”, which would include a full removal of the block size. The nChain team viewed this not so much as a protocol upgrade but rather a protocol restoration. This was viewed by the nChain team as a crucial step in BSV’s transition to finally unlocking the massive on-chain scaling power and robust technical capabilities that they believed were always possible with the original Bitcoin.


Summary

When comparing Bitcoin vs Bitcoin Cash vs Bitcoin Gold vs Bitcoin SV, we must recognizer that all variations of Bitcoin emerged as forks of Bitcoin to solve the perceived problems of the latter, which were increasing centralization, lack of scalability, and low speed of transactions. Nonetheless, they all derive their value from how much they are adopted, used, and demanded in the market. Therefore, if your desire to get involved with and invest in cryptocurrency comes from a desire to fund the future of money, then choose the team that most closely aligns to the ideals you believe in. However, if your desire for understanding cryptocurrencies is for profit, then you are best to analyze them in terms of return on investment (ROI) and value growth.

 

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