Battle of the crypto assets: Bitcoin versus Bitcoin Cash

The top-10 crypto assets by market cap are all in the green today.

The Bitcoin (CRYPTO: BTC) price edged higher over the past 24 hours, up 1% to US$37,272 (AU$51,766).

Moving further down the list, not every crypto is gaining.

Bitcoin Cash, the number 28 token by market valuation, is flat over the 24 hours, trading at US$277.

While every crypto investor will be well familiar with Bitcoin, not everyone is up to speed on Bitcoin Cash.

With that in mind, The Motley Fool reached out to Ray Brown, market analyst at Australian cryptocurrency exchange CoinSpot.

What brought about Bitcoin Cash? 

First, we wanted to know how Bitcoin Cash came into being.

Brown told us:

Whilst Bitcoin Cash holds a number of similarities to the original Bitcoin, it’s an entirely independent form of cryptocurrency which was ‘forked’ from Bitcoin.

It was created in 2017 by a segment of the Bitcoin community who had the intention of leveraging the successful elements of Bitcoin, whilst solving some of the drawbacks such as limited scalability.

Bitcoin Cash has seen some success and has become a formidable contender to other cryptos. However, it hasn’t come close to matching the popularity of Bitcoin.

Why the push for crypto scalability?

So why did the Bitcoin community want to increase the world’s first crypto’s scalability?

According to Brown:

Bitcoin was originally created with the intention of being a digital currency. However, as more and more people invested, the slower the processing of transactions became. This is due, in part, to the size of the blocks being limited to just 1MB which allows very little room for scalability. Because of this, Bitcoin has become somewhat of a store of value as opposed to a way for people to easily make daily transactions.

So, has Bitcoin Cash managed to overcome these shortcomings?

“Bitcoin Cash was created to amend these limitations and has somewhat achieved this by incorporating a maximum block size of 32MB,” Brown said.

He continued:

This allows for faster transactions and increases the amount of people that can use it at one time. So much so, the team behind Bitcoin Cash claim it’s capable of 200 transactions per second, while Bitcoin averages just seven. As a result of this, the cost per transaction of Bitcoin Cash has decreased and the ability to scale has increased.

Bitcoin Cash has underperformed Bitcoin in 2022

Despite the decreased cost per transaction and increased ability to scale, Bitcoin Cash has underperformed Bitcoin in 2022. While BTC is down 22%, BCH has tumbled 38% in the New Year.

Brown told The Motley Fool:

Most altcoins, including Bitcoin Cash, have been underperforming so far in 2022. However, many are starting to now stabilise since the major crypto selloff in January 2022. This selloff wiped out $1 trillion in market cap from the industry. Bitcoin and Ethereum also lost up to half of their value from the peak.

As most altcoins are impacted by the movements of Bitcoin, this means they felt more pain.

 What should crypto investors take into account?

Finally, we asked Brown what crypto investors should take into account before deciding which of the tokens to potentially invest in.

“Bitcoin Cash doesn’t currently have the level of consumer trust that Bitcoin does and therefore doesn’t have nearly as many investors, just yet,” he said. “This means that, at the time of writing, Bitcoin Cash in a ‘real-world’ scenario is lessened.”

Brown ended with this investor caveat, “Although the market is showing Bitcoin to be more popular than Bitcoin Cash right now, you should always do your own research to determine which crypto asset is right for you.”