Bitcoin vs Bitcoin Cash: Understanding the Key Differences

2025.10.29 2025.10.29
Bitcoin vs Bitcoin Cash: Key Differences Between BTC and BCH

Michael Hypovhttps://www.litefinance.org/blog/authors/mikhail-hypov/

Since its inception, Bitcoin has redefined the global financial landscape by pioneering the concept of cryptocurrency and prompting a paradigm shift in investor behavior. However, over time, the Bitcoin community divided, and Bitcoin Cash emerged as a separate project, offering an alternative vision for the development of decentralized solutions technology.

Today, many traders and investors are asking themselves: What is the difference between Bitcoin and Bitcoin Cash? Read this article to explore their unique characteristics and grasp the full scope of these digital assets.

Major Takeaways

• Bitcoin became the world’s first cryptocurrency and established itself as digital gold and a safe-haven asset.
• Bitcoin Cash was created in 2017 as a result of a BTC hard fork following debates about Bitcoin’s scalability.
• Both currencies have the same maximum supply of 21 million coins, and the rewards for miners decrease every 210,000 blocks.
• The Bitcoin Cash blockchain’s increased block size of 32 MB reduces fees and speeds up transaction processing.
• BTC has a block size cap of 1 MB, which incurs higher fees during periods of network congestion.
• BTC is suitable for long-term investments and safeguarding capital, while BCH is designed for daily payments and peer-to-peer transactions.
• Bitcoin and Bitcoin Cash use the SHA-256 algorithm, rely on a decentralized model, and share the same codebase.
• You can choose between BTC and BCH depending on your investment objectives—whether you are seeking a reliable long-term investment or practical peer-to-peer electronic cash.

Bitcoin Scaling Debate

Between 2015 and 2017, the crypto community encountered a significant challenge regarding Bitcoin’s scalability. The network’s popularity grew steadily each year, leading to a notable surge in transaction volume. However, the standard 1 MB block size in the original Bitcoin protocol proved to be a bottleneck. Transaction confirmation times increased, and fees rose significantly. As a result, the viability of cryptocurrency as a mainstream payment method was called into question.

At the core of the debate was the pressing need to enhance network scalability while upholding security and decentralization. Some members of the developer community have proposed implementing second-layer solutions, such as the Lightning Network. These solutions aimed to enhance transaction speed, reduce fees, and maintain Bitcoin’s fundamental principles. This solution involves using the second layer to process most transactions, leaving the Bitcoin blockchain to confirm only the main operations.

Other members of the community voiced differing opinions. They wanted to increase the block size to enhance the network’s throughput. Increasing the block size would facilitate faster transaction processing, reduce fees, and enhance Bitcoin’s scalability without reliance on secondary solutions.

As a result, the debate evolved into a standoff. The protocol was only changed through a decision that did not satisfy everyone. Developers, users, and exchanges were divided into two camps: those who supported maintaining the current approach and developing new second-level solutions, and those who considered it necessary to change the protocol itself.

Both camps failed to agree on the future of the cryptocurrency, and in 2017, a hard fork occurred, giving rise to a new digital currency.

Bitcoin Cash Hard Fork

On August 1, 2017, the Bitcoin Cash hard fork took place. This event signified a key milestone in the history of cryptocurrency. Scalability issues prompted the decision to create a new cryptocurrency—an alternative to Bitcoin—with a larger block size.

Instead of a single active blockchain, two emerged — BTC and BCH. At the time of the fork, Bitcoin owners received an equal amount of BCH, which confirmed the creation of the new asset.

Bitcoin Cash focuses on fast transactions and low fees, which are suitable for everyday payments. Meanwhile, Bitcoin remains more conservative and reliable, retaining its status as the 21st-century digital gold.

What is Hard Fork?

A hard fork is a major update to the blockchain, in which the new rules are incompatible with the old ones. In summary, some nodes will continue to operate under the old protocol, while others will adopt the new rules. As a result, the blockchain divides into two separate chains.

In other words, imagine that a road has been widened from one lane to four. Old cars can only drive in one lane, while new cars can use the other three lanes, where the speed limit is higher. The same is true in the context of blockchain, where two different “pathways” emerge, and one of them has higher throughput.

In a similar manner, a new digital currency, BCH, appeared in 2017. This Bitcoin fork was designed to increase network throughput and reduce transaction fees. Thanks to the hard fork, users received an alternative cryptocurrency that retained the transaction history while pursuing its own path.

What is Bitcoin Cash and How Does it Work

Bitcoin Cash is an offshoot of Bitcoin that emerged in 2017 amid debate over network scalability. Unlike Bitcoin, BCH has a larger block size, enabling faster transaction processing and lower fees. The Bitcoin Cash network is more suitable for everyday payments.

The underlying concept of Bitcoin Cash is to implement the original concept of a digital cash system. While Bitcoin has come to be perceived as digital gold, BCH is focused on making transactions easy and accessible.

With Bitcoin Cash, you can send your BCH directly to other people without any intermediaries. This makes it like digital cash you can use anywhere in the world with Internet coverage. This is why Bitcoin Cash supporters believe it is closer to Satoshi Nakamoto’s original idea.

Benefits of Bitcoin Cash

The Bitcoin Cash network offers several features that have made it popular among traders and users. Unlike BTC, it is geared toward everyday payments and fast transactions.

• Low fees — due to the increased transaction block size, transactions are cheaper than those processed in BTC.

• Fast transaction confirmation — the network processes more transactions per unit of time.

• Scalability — the ability to sustain a high workload without excessive block congestion.

• Ease of use — BCH can be used as digital cash to pay for goods and services.

• Proximity to Satoshi Nakamoto’s original concept — a cash system for peer-to-peer transactions.

These advantages make Bitcoin Cash a convenient means for daily payments and an attractive asset for those who value both speed and accessibility in transactions.

Disadvantages of Bitcoin Cash

Despite its convenience and low fees, Bitcoin Cash (BCH) has some weak points. It is important to consider them if you are going to trade cryptocurrency or use it for payments:

• Lower capitalization — compared to Bitcoin, BCH has a smaller market cap, which affects its liquidity.

• Limited adoption — the Bitcoin Cash network is not supported by all trading platforms and services.

• Competition — there are other cryptocurrencies in the market with lower fees and faster transaction speeds.

• Centralization risks — increasing the block size requires more power to run nodes, which negatively affects decentralization.

• Less community trust — compared to the Bitcoin community, BCH has significantly fewer supporters.

Key Differences Between Bitcoin and Bitcoin Cash

Traders and investors should know the difference between BTC and BCH to choose the most appropriate strategy. Bitcoin and Bitcoin Cash have evolved in different ways. Today, these coins represent two distinct digital assets: digital gold and digital cash.

Difficulty Adjustment Algorithms of Bitcoin (BTC) and Bitcoin Cash (BCH)

Both Bitcoin Cash and Bitcoin use mining to confirm transactions, but they differ in how they adjust the difficulty. In the original Bitcoin protocol, difficulty is recalculated every 2016 blocks, or approximately every two weeks. This algorithm ensures a stable block generation time of about 10 minutes.

In the case of Bitcoin Cash, the algorithm was changed. In the early stages, the project experienced sharp fluctuations in the hash rate, prompting the implementation of a proprietary difficulty adjustment algorithm. It reacts faster and recalculates parameters more frequently, keeping the network stable when mining power decreases.

Block Size and Scalability

A key distinction between BTC and BCH concerns their block sizes. Bitcoin’s block size is limited to 1 MB to maintain decentralization and security while limiting the bandwidth of the BTC network. This is where the debate over the network’s future scalability began.

Supporters of Bitcoin Cash called for increasing the block size. At the time of the BCH launch, the new blockchain had an 8 MB block size, which was later increased, enabling the system to process more transactions per second while reducing fees.

As a result, Bitcoin focused on stability and the development of second-level solutions, while Bitcoin Cash prioritized block growth as its primary scaling method. Each approach has its advantages and disadvantages, which influenced the subsequent development of these projects.

Smart Contract Capabilities and DeFi

Bitcoin was not originally created as a platform for smart contracts. Its protocol focused on simple and secure transactions. However, over time, additional solutions appeared in the ecosystem: Bitcoin Ordinals and projects issuing tokens on the Bitcoin blockchain. They expand the network’s functionality but remain limited compared to Ethereum.

Bitcoin Cash employs a comparable approach, prioritizing payments and minimal fees over complex scenarios. Nonetheless, DeFI projects have also emerged within its ecosystem. BCH supports simple smart contracts that seamlessly handle token issuance and automated payments.

Therefore, Bitcoin and Bitcoin Cash are evolving beyond their initial use as mere payment systems. However, their capabilities in the DeFi space are still limited compared to those of networks designed solely for smart contracts.

Token Issuance

Bitcoin (BTC) and Bitcoin Cash (BCH) are created through Bitcoin mining. In both cases, the total supply is limited to 21 million coins. This protocol makes assets scarce and supports their role as a store of value. Every 210,000 blocks, a halving event occurs, reducing the reward by half. This event typically takes place every four years.

This algorithm is applicable to both the Bitcoin blockchain and the Bitcoin Cash network. For instance, Bitcoin miners initially received 50 coins per block, but today the reward is only 3.125. As a result, the issuance of new coins is predictably slowing down. This distinguishes BTC and BCH from traditional currencies and makes them attractive to investors.

Commissions and Transaction Speed

A key distinction between BTC and BCH lies in fees and payment processing speeds. Bitcoin blocks have a maximum size of 1 MB, so during periods of network congestion, Bitcoin transactions may incur higher fees and take longer to be processed. During periods of peak network activity, transaction fees on the BTC network can increase substantially. However, on the Bitcoin Cash blockchain, the transaction process differs.

By increasing the block size, the Bitcoin Cash network is able to process more transactions simultaneously. This reduces competition for space in the block, making Bitcoin Cash transactions cheap and fast. Thus, BCH is often more convenient for small payments, while BTC remains a more reliable option for long-term investments and large transactions.

Bitcoin and Bitcoin Cash Similarities

Despite differences in scalability and evolution philosophy, Bitcoin and Bitcoin Cash share a common origin and several key characteristics. Both assets are based on the same protocol and continue to rely on time-tested decentralization and mining mechanisms. Let’s compare BTC vs BCH in the table below.

Should You Invest in Bitcoin or Bitcoin Cash?

Bitcoin and Bitcoin Cash remain appealing investment vehicles, though their functionality differs. Bitcoin is widely regarded as digital gold and a reliable store of value. The limited supply and high market confidence of Bitcoin (BTC) make it a suitable option for long-term investments and risk hedging. Its high liquidity makes it especially convenient for large investors to buy and sell, which is a key benefit.

In contrast, Bitcoin Cash is closer to the concept of digital cash. Thanks to its larger block size and low fees, it can be used for everyday transactions and as a payment method. BCH may attract those seeking an alternative coin for payments.

Thus, the choice depends on your goals: BTC is better suited as a long-term investment and a means of capital protection, while BCH is an option for those who believe in the future of cryptocurrency as a payment method, value its practical use in P2P settlements, and for whom the Bitcoin price is too high.

Conclusion

Bitcoin and Bitcoin Cash share the same source code but have diverged in their evolution. Bitcoin has emerged as the best cryptocurrency for both savings and investment, with a market capitalization exceeding $2 trillion. It is well-suited for long-term investments and capital preservation.

Bitcoin Cash prioritizes its role as digital money, with its increased block size ensuring low transaction fees and high transaction speeds, making it convenient for everyday payments. Both assets are important for the cryptocurrency market, and the choice between them depends on your investment goals.