Cryptocurrency users are likely most familiar with Bitcoin, the largest digital currency by market capitalization and the most popular crypto coin. But there is potential for confusion, as there are also multiple other cryptocurrencies that include “Bitcoin” in their names as well. Two of these digital tokens are Bitcoin Cash and Bitcoin SV. Below, we’ll explore how Bitcoin differs from these two altcoins and why their names are similar.
Overview for Fast Readers
- Bitcoin launched in 2009 and is one of the earliest and the most popular cryptocurrencies in the world.
- Disagreements among developers and miners have led to numerous hard forks throughout Bitcoin’s history.
- Hard forks change the underlying rules which govern how a cryptocurrency operates and create a second, newly named cryptocurrency in the process.
- Bitcoin Cash is the result of 2017 hard fork of the Bitcoin blockchain, while Bitcoin SV is the result of a 2018 hard fork of the Bitcoin Cash blockchain.
What is the Difference Between Bitcoin, Bitcoin Cash, and Bitcoin SV?
Before we look more closely at the specific differences between Bitcoin, Bitcoin Cash, and Bitcoin SV, it’s useful to acknowledge that these are three separate cryptocurrencies, each with its own independent network, market capitalization, and trading price. They are not interchangeable terms, and cryptocurrency exchanges like DxOne may facilitate trading of any number of these three tokens.
If Bitcoin, Bitcoin Cash, and Bitcoin SV are distinct cryptocurrencies, why do they all share “Bitcoin” in their names? That has to do with the nature of Bitcoin and a phenomenon known as a hard fork. Bitcoin, like many other cryptocurrencies, is based upon a set of rules, called a protocol, that governs how tokens are created, how transactions are conducted and recorded, and more.
If there is a change to the protocol at some point after the launch of a cryptocurrency, that generates a hard fork. One set of nodes in the network no longer accepts the previous protocol, while a different set of nodes accepts only the previous protocol. The result is that the blockchain—the set of all records and transactions for the cryptocurrency network throughout its history—splits in two, with one branch following the new protocol and the other following the previous version. In effect, this creates a second cryptocurrency which retains some aspects of the Bitcoin protocol but also includes some new rules. Bitcoin Cash and Bitcoin SV are each the products of separate hard forks related to the Bitcoin network. They are not the only examples of such hard forks, but as of December 2020 they are two of the most prominent.
Bitcoin is one of the earliest and most popular cryptocurrencies in the world. Since its launch in 2009, most other cryptocurrencies that have followed have adopted some elements of the Bitcoin network. This is a reflection of how influential Bitcoin has been on the cryptocurrency space more broadly. However, there have also been conflicts and issues that have arisen surrounding Bitcoin, too.
One of the major issues that the Bitcoin network has struggled to address is scalability. The problem comes down to the size limitation of each block of transaction data in the Bitcoin blockchain. Every block in the chain contains 1 megabyte of data, which means that in many cases a block can only contain records of a small number of transactions. Given the time necessary to verify a block before it is added to the chain, this means that there can be a significant bottleneck effect when it comes to Bitcoin transaction verification and that individual transactions can end up being relatively expensive. This issue has been one of the leading factors in various Bitcoin hard forks throughout the years.
Bitcoin Cash emerged as the result of a Bitcoin hard fork that happened in August, 2017. Bitcoin Cash increased the size of each block from 1 megabyte to 8 megabytes. This significantly increased the transaction verification and processing time while decreasing transaction costs. On the other hand, larger block sizes could potentially contribute to increased security concerns for Bitcoin Cash as compared with Bitcoin, and Bitcoin Cash currently trades at only about 1% the value of Bitcoin, a reflection of Bitcoin’s significant advantage in reputation and global spread.
Bitcoin SV (“Satoshi’s Vision”) was created by a hard fork of the Bitcoin Cash network in November, 2018. In this case, the changes to the Bitcoin Cash protocol involved not only an additional increase in block size to up to 128 megabytes, but also changes related to Bitcoin Cash’s use of newer blockchain technology such as smart contracts. Bitcoin SV purports to stay true to the vision of Bitcoin founder Satoshi Nakamoto as laid out in the original Bitcoin whitepaper document, while allowing for improvements to transaction speed and cost. It does appear that in many ways Bitcoin SV has succeeded in those areas, with transactions that are much faster and significantly cheaper to process than Bitcoin’s. However, like Bitcoin Cash, Bitcoin SV suffers from a lack of reputation and user awareness.
Will There Be More Bitcoin Forks?
While it’s not certain, it does seem likely that there could continue to be hard forks to either Bitcoin or one of its cousin cryptocurrencies in the future. With the dramatic proliferation of cryptocurrencies in recent years, there may be added incentive for developers to distinguish themselves by crafting a highly-specific protocol for a new iteration of a digital currency. On the other hand, each new Bitcoin offshoot may threaten to further dilute user interest and attention among a growing field of competitors.
Those new to the cryptocurrency space may experience confusion when encountering multiple cryptocurrencies that seem to be related to Bitcoin. In the case of relatively well-known altcoins like Bitcoin Cash and Bitcoin SV, these digital currencies were created as a result of hard forks to earlier blockchains. The forking process revised the underlying protocol governing the cryptocurrency and created a split in which the preexisting token continued to exist while a newly named digital currency also came into being.