While Bitcoin, Bitcoin Cash, and Bitcoin SV have similar-sounding names, there are key differences between these cryptocurrencies. Unfortunately, for those new to crypto, these differences may not be immediately obvious.
In this guide, you will learn about the history and technical specifications of Bitcoin (BTC), Bitcoin Cash (BCH), and Bitcoin SV (BSV) to understand the differences between them.
Bitcoin (BTC) holds the distinction of being the world’s first cryptocurrency. Created by pseudonymous inventor Satoshi Nakamoto, the digital currency launched the age of cryptocurrencies and blockchain technology when it went live on January 3, 2009.
It is important to note that Nakamoto published a document explaining in great detail the technical specifications of his creation on October 31, 2008, known as the Bitcoin whitepaper. At 2:10 p.m. Eastern Standard, people who had signed up to the cypherpunk-focused Cryptography Mailing List hosted on Metzdwowd received a message from Nakamoto titled “Bitcoin P2P e-cash paper”.
In the message, Nakamoto stated that he had been “working on a new electronic cash system that’s fully peer-to-peer, with no trusted third party,” which he believed would launch a new age where users could have financial sovereignty. A few months later, Nakamoto mined the Genesis Block of the Bitcoin blockchain, embedding in the coinbase a text that said “The Times 03/Jan/2009 Chancellor on brink of second bailout for banks.”
In the decade that followed, bitcoin grew in popularity, spurring on the development of myriad cryptocurrencies. These new digital currencies came to be known as altcoins – short for alternative coins – because they were introduced into the market with the aim of providing alternatives to Bitcoin.
Examples of altcoins include Litecoin, which was designed to be the “digital silver” to Bitcoin’s “digital gold,” Bitcoin Cash, and Bitcoin SV.
The Technical Details
Bitcoin is an open, decentralized, peer-to-peer payment network. This means that it is possible for anyone with an internet connection to join the Bitcoin network and execute financial transactions on it.
Nakamoto designed the network in this manner as it would confer a number of beneficial features to the network. To join the network and participate as a node, one simply needs an internet connection and sufficient memory to download the blockchain.
The fact that anyone can join the network confers it with greater protection in the face of censorship from central authorities, such as governments. Due to the continued robustness of the Bitcoin network over the years, the decentralized, distributed peer-to-peer template has become an accepted standard for creating newer cryptocurrencies, especially if they hope to stand the test of time.
Bitcoin is also the first-ever use case for the blockchain. A blockchain refers to a ledger that is based on sets of data that are linked to each other. Each set of data is linked to the one before it through cryptography. These data sets are called blocks, hence the term blockchain. In the Bitcoin network, each block contains a cryptographic hash of the block before it, a timestamp, and data on the transactions contained in the block.
Distributed networks, such as Bitcoin, face a peculiar problem. They require a tool through which independent parties, in this case, nodes, can come to an agreement over a specific issue. In cryptography, this problem is referred to as the Byzantine Generals problem. A consensus mechanism is thus, how distributed networks achieve finality on a certain issue. To support the creation of a globally accepted state in the ledger, the Bitcoin network leverages a proof-of-work (PoW) consensus mechanism.
Proof-of-work is a consensus mechanism that requires nodes to expend energy to solve complex mathematical equations. Nodes will attempt to find the correct value of a random mathematical problem. Only once they have successfully computed the right value, can they add a new block to the ledger. In the Bitcoin context, nodes that attempt to add new nodes to the ledger are called bitcoin miners.
It is important to note that a number of factors in its design are essential to the immutability of the Bitcoin ledger. To begin with, when a new node joins the network, they must download the entire blockchain. Everyone has access to the agreed-upon and verified version of events. As a result, it is very difficult to roll back the ledger and introduce falsified transactions.
Additionally, there is the fact that PoW large amounts of energy. Therefore, for an attacker or malicious party to edit or falsify the ledger, they must have access to a large amount of energy and money to fund this endeavor. The size and reach of the Bitcoin network make this an almost impossible feat.
In exchange for their work in securing and adding new blocks to the ledger, miners are entitled to a certain number of new bitcoin per block. This number changes at pre-specified intervals (every four years). This is also the mechanism through which new bitcoin are brought into circulation. The maximum number of bitcoin that will ever exist stands at 21 million.
Lastly, the Bitcoin network stands on the principle of voluntary actions. Each node can join and leave the network at will. Similarly, if users are unable to agree on a way forward, they are able to branch off and create their own blockchain. The longest chain represents the agreed-upon version of history. However, if any party at any time wants to branch off and create a new chain, they are free to do so. This is typically called a hard fork.
Bitcoin Cash (BCH) is a hard fork of the original Bitcoin blockchain. The altcoin came to be on August 1, 2017, following growing tensions between members of the Bitcoin community over scaling concerns and how to address them.
The majority of the Bitcoin community believed that the implementation of an update known as SegWit would be sufficient to significantly better processing capabilities on the bitcoin network. However, a relatively small but determined group of people believed that the block size would need to be increased in order to better scale the network. Led by frontman Roger Ver, the group implemented their own software update at block height 478559, creating a new cryptocurrency.
The new digital currency came to be known as Bitcoin Cash, an allusion to the division in ideology that buoyed the entire debate. The Bitcoin Cash camp believed that the increase in block size would lead to the ease in use, allowing people, to employ the cryptocurrency as a transactional currency in everyday situations.
Technically speaking, Bitcoin Cash is quite similar in many ways to its parent, Bitcoin. They both employ PoW as a consensus mechanism with a focus on the SHA256 algorithm. Additionally, they both feature reward halving at prespecified times.
The big defining difference between these two is the fact that Bitcoin Cash has a much larger block size to include more transactions in the set and thus better scale the network. This difference renders them un-interchangeable and, therefore, separate and distinct cryptocurrencies.
On November 15, 2018, the Bitcoin Cash blockchain experienced a hard fork, resulting in the creation of a new cryptocurrency named Bitcoin SV (BSV). Bitcoin SV stands for Bitcoin Satoshi Vision. The name of the digital currency is a reference to the differences that led to the Bitcoin Cash camp, further splitting into two.
As we have seen once before, Bitcoin SV proponents and the Bitcoin Cash community differed over the block size. The Bitcoin Cash community wanted the block size to remain at 32 MB while the Bitcoin SV camp wanted it to increase to 132 MB. These differences proved irreconcilable, leading to the hard fork that ultimately created Bitcoin SV.
In terms of technical specifications, Bitcoin SV mainly differs from both Bitcoin Cash and Bitcoin only through its block size. It is this feature that has proven to be the biggest and irreconcilable difference.
While Bitcoin, Bitcoin Cash, and Bitcoin SV may share a name, they are all distinct cryptocurrencies. Bitcoin is the world’s first digital currency, while Bitcoin Cash and Bitcoin SV are both altcoins that aim to fulfill different roles that Bitcoin does today.