Origins and Philosophy
Bitcoin was founded in 2008 by an anonymous person or persons by the pseudonym ‘Satoshi Nakamoto’. Bitcoin’s journey formally began when a paper titled Bitcoin: A Peer-to-Peer Electronic Cash System was published to the domain bitcoin.org in October 2008, months after the domain was purchased. In January 2009, the software for bitcoin was published as an open-source code and the first-ever bitcoin block, the genesis block, was mined in the same month. It should be noted that the coinbase for the Bitcoin software had a text titled “The Times 03/Jan/2009 Chancellor on brink of second bailout for banks”. This is regarded as Nakamoto criticizing the financial systems that led to the 2008 global meltdown that saw many countries go into recession and many individuals face financial hardship.
In many ways, bitcoin is seen as a means of revolting against the ongoing financial system by creating a way for consumers to carry out transactions without the need for a middleman in the form of banks. The coinbase for the software seems to allude to Nakamoto’s distaste for the banking system and its perceived corruption. This has been interpreted by many as a desire on the part of Nakamoto for bitcoin to be, first and foremost, a medium of exchange and this heavily contributed to the dispute that brought about Bitcoin Cash.
Bitcoin Cash came into existence in 2017, almost a decade after Bitcoin’s existence. The reason for Bitcoin Cash’s existence is a dispute within the community regarding block size. The average block size on the Bitcoin network is 1 MB and this means that transactions across the network take minutes to go through. The problem with that is if Bitcoin is going to become a global peer-to-peer system that provides a suitable alternative to the current financial system, it has to accommodate a lot of people. Hence, its small block size makes it unsuitable for this purpose. Besides this, many within the Bitcoin community seemed to focus more on the token as an investment tool and not as a currency.
In 2017, the BIP 91 upgrade was applied to the Bitcoin ecosystem and this drew criticism from individuals like Roger Ver, who felt that such a change without an increase in transaction power only harmed Bitcoin as a currency. After second layer processing was then enabled on the Bitcoin network, a sub-section of the community, including Ver, broke away and initiated a hard fork. A hard fork occurs when the original source code of a cryptocurrency is altered to a degree, and a similar token is created as a result.
Inner Workings
There is a finite amount of bitcoins in existence and this can be obtained either by purchasing on a cryptocurrency exchange or by mining. Mining is the process of obtaining a block by solving a very complex mathematical equation using specialized computer systems. This is very energy-intensive and time-consuming and once the equation is solved, the block, which contains a pre-determined amount of bitcoins, is given to the miner or team of miners who completed the task. Bitcoins are stored in cryptocurrency wallets and all bitcoin transactions are recorded on a public, irrefutable ledger. Despite the alert key and code control of Bitcoin being given to developer Gavin Andresen, the network has remained decentralized, in accordance with Satoshi’s intentions.
Bitcoin Cash, despite being created in opposition to bitcoin itself, has many similarities with the original token. They are both obtained through the process of mining and the token received are stored in cryptocurrency wallets. The networks behind both are decentralized and transactions are stored on a public ledger. The difference between the two is evident in their block size. Bitcoin has an average block size of 1 MB while Bitcoin cash has a block size of 8 MB. This was the major reason behind the hard fork that created Bitcoin Cash. A larger block size means that transactions across the Bitcoin Cash network are faster and this caters more towards its use as a currency.
Price and Trading History
Despite having a smaller block size, Bitcoin is still the most widely-used cryptocurrency in existence and has a market capitalization of over $150 billion. Its all-time high price was $20,089 on December 17, 2017.
Bitcoin Cash has seen its highest ever price of $4,355.62 and the lowest ever price drop of $75.03 on December 15, 2018.
