Bitcoin and Bitcoin Cash

Bitcoin (BTC) is a cryptocurrency/ digital currency, which works on cryptography i.e. Encryption and Decryption and has no middlemen for regulation and generation of the currency. It also uses the blockchain technology which helps in recording the bitcoin transactions. It is the first decentralized digital currency. It was invented by an unknown person named Satoshi Nakamoto in 2009.

How it works?

Technology — Blockchain

Blockchain records the bitcoin transactions, it is a decentralized ledger available to the public. It is a chain of blocks, each block contains a hash of the prior block up to the genesis block of the chain confirming the integrity of each blocks. Information on the blockchain is shared, and continually reconciled database. The information available is not centralized, hence making it difficult to hack.

Transaction can be found on the blockchain and its public. It has 3 elements.

Input — This is the record of the BTC address from which the sender received the BTC he wants to send to the receiver

An amount — Specific amount to be transferred

Output — this is the bitcoin address, also called the receiver’s public key.

Public keys are like an email address, it can be safely shared with others where as private keys are like a password to email address, it should not be shared with anyone.

For example, in a transaction, the sender uses his private key to sign the message with the transaction details whose input is the source transaction of the coins sent to the sender’s address previously. The transaction usually takes 10 minutes to find each block in the chain.

Bitcoin Mining

- Mining verifies if the transaction are valid

- It bundles the transactions in a block

- It inserts the transaction into the new block as a hash

- Solving Proof of Work problem — method to ensure the new block was costly and time consuming to be made.

- After finding solution, this new block is added to the blockchain network.

Bitcoin mining — verifies transaction, adds to the public ledger “blockchain” and also releases new bitcoins.

Bitcoin cash

Bitcoin cash (BCH) is hard fork of Bitcoin, it came into existence in August 24, 2017. To understand it better, we have to understand what is hard fork? There are two types of forks, soft and hard. The Soft fork is backwards compatible where the hard fork is not.

How it differs from Bitcoin

- Block size, for BTC the limit is -1MB allowing 250,000 transactions per day, Whereas BCH has limit — 8MB, allowing it for around two million transactions per day.

- Bitcoin cash also removes Segregated Witness (SegWit), a proposed code adjustment designed to remove certain parts of the transaction so as to free up the block space and to speed up the transaction.

- Low fees compared to bitcoin and much faster transaction rate.

- It is created by independent multiple teams whereas bitcoin was created by a single centralized team.

- Bitcoin uses segwit technology and bitcoin cash uses SecureSigs technology.