Advantages And Disadvantages Of Bitcoin Cash - The first knowledge sharing application in Vietnam

Introduction

Since its inception, investors have always questioned the effective scalability of Bitcoin. Every transaction performed within Bitcoin is processed, verified, and stored within a digital ledger known as the blockchain. However, this technology in the Bitcoin network is relatively slow, especially when compared to banks that deal with credit card transactions.

To solve this problem, developers and crypto miners came up with two essential solutions:

Making the amount of necessary data verified in every block smaller, thereby creating transactions that are faster and cheaper.
Making the data blocks bigger so that more information can be processed at one time.

These solutions generated bitcoin cash, whose advantages and disadvantages are going to be discussed in this article.

What is Bitcoin Cash?

Started by Bitcoin miners and developers, Bitcoin cash is known as the ‘hard folk’ of the Bitcoin blockchain. Some Bitcoin blockchain participants alter the rules to allow Bitcoin to process a substantial volume of transactions. Several nodes voted against changing the rules, thereby resulting in a hard fork and creating two common blockchain paths like Bitcoin and Bitcoin cash.

Advantages And Disadvantages Of Bitcoin Cash

Advantages

Bitcoin Cash provides its investors with the following advantages:

Faster And Less Expensive Transaction- Bitcoin cash has less transaction cost of up to one US penny and the potential of processing more than 100 transactions per second. It can be considered the most viable payment platform.
Accessible- Apart from the thousands of cryptocurrencies available in the market, Bitcoin cash is considered the most popular cryptocurrency. Also, it can be purchased from the most fundamental exchanges.
Highly Scalable Than Bitcoin- the larger blocks of Bitcoin Cash enables the blockchain to increase its scalability, which as a result, leads to fewer fees and more transactions.
Decentralized Money- Investors are often worried about the financial system’s centralized nature. That is why they opt for Bitcoin cash as it offers a currency system that is decentralized and is not controlled by any one entity.

Disadvantages

Bitcoin Cash also has some limitation that is addressed below:

Weaker Security- The transactions processed in Bitcoin Cash are faster and lower as compared to Bitcoin. It is because it requires less mining power to verify new blocks, thereby making the system less secure than Bitcoin.
Environmental Impact- Bitcoin Cash uses a blockchain proof-of-work system. Here, miners tend to run computers to solve cryptographic equations to process transactions. It uses a substantial amount of energy, leading to higher environmental costs.
Branding Trouble- After the fork, investors were battling to see which coin will become more popular. Since Bitcoin is a clear winner in this respect, it is relatively arduous for Bitcoin Cash to distinguish itself, especially when they have similar names.

How is Bitcoin Cash Different From Bitcoin?

With time, the difference between Bitcoin and Bitcoin Cash is growing as developers working on each network have different goals in mind. Their differences became so big that they are now been seen as a completely different assets.

Difficulty Adjustments- Difficulty Adjustments are the main difference between Bitcoin and Bitcoin Cash. It is because both networks use a similar SHA-256 hashing scheme. It makes miners shift to the Bitcoin cash network whenever they find mining in this network more profitable.
Smart Contracts And Decentralized Finance- Although Bitcoin does not support smart contracts, the entire work is performed with the aim to build decentralized finance. However, Bitcoin Cash has started using smart contract languages to enable more complex functions on it.
Token Issuance- If you want to issue tokens on top of the Bitcoin blockchain, it has to use the Omni layer. It is a platform for creating trading and creating custom digital assets and currencies. On the other hand, Bitcoin Cash Uses a Simple Ledger Protocol (SLP) that allows developers to issue tokens on top of BCH, similarly to the tokens issued on Ethereum Blockchain.
Replace By Fee- Bitcoin network has to Replace by fee feature that allows the investors to get a transaction that is stuck without being processed. Nevertheless, Bitcoin Cash has dropped this feature, making unconfirmed transactions irreversible on its network.

Conclusion

Bitcoin Cash is widely available on some of the crucial cryptocurrency exchanges. However, you need to ensure that you conduct thorough research before choosing what you are investing in.