Bitcoin Cash taking on Bitcoin
Bitcoin scalability issue led to its split on August 1, 2017, and resulted in the creation of Bitcoin Cash. The legacy Bitcoin code had a maximum block size limit of 1 megabyte, which rendered transaction fees and confirmation speed unacceptable due to network congestion caused by usage of Bitcoin on Bitcoin core network. As a result, the intended goal of Satoshi Nakamoto, the creator of Bitoin, for Bitcoin to serve as transactional coin rather than storage of value thus far has not been fulfilled.
Earn’s fee statistics show the median transaction size of 226 bytes results in a fee of 223,740 satoshis (around $34). Bitinfocharts records an average median fee of $41 per transaction. The average recorded by Bitcoinfees.info lists the average bitcoin fee globally is $37 per transaction. This prevents Bitcoin from becoming peer-to-peer payment system for smaller items such as coffee, grocery shopping, gas pump payment, etc.
The amount of transactions per day, per block, and the fee rate per transaction has led to an average processing time of 34 to 1,138 minutes according to Blockchain.info for Bitcoin. Johoe’s mempool data reveals transactions with lower fees either are getting evicted or transactions are taking extremely long time for final confirmation (in days).
Bitcoin’s significant slow processing time and exorbitant transaction fee precludes it from being adopted as a mainstream payment tool. Thus far, Bitcoin has mainly been adopted as a storage of value not a transactional tool, contrary to Satoshi Nakamoto's intent, which is to make Bitcoin a massively adopted, and better transactional tool than our fiat/paper money. Bitcoin attempted to incorporate lighting network, and segx1 and segx2 to fix the speed inefficiency but resisted in adjusting the block size.
Bitcoin Cash takes a better approach of directly addressing these two dominant issues of slow network confirmation and expensive transaction fees by increasing the block size to 8 megabytes with protocol permitting expandable block size for future adjustment. Additionally, it does not preclude the addition of layer two approach like lightning network, segx1, and segx2.
The average fee for the BCH chain is roughly $0.027 per transaction on December 21 according to Bitinfocharts. The median fee has touched highs between $0.06 and $0.11 per transaction pursuant to Bitinfocharts' aggregated data. As people realize the benefits and viabilities of Bitcoin Cash, more of them will likely switch over from Bitcoin to Bitcoin Cash platform. The Bitcoin Cash chain has seen a spike in 24-hour transaction count, as there are 57,000 to 127,000 transactions recorded daily according to Bitinfochars compared to Bitcoin’s 300,000 – 450,000 confirmed transactions a day.
In sum, Bitcoin will likely remain world’s #1 digital currency for a while. However, its inefficiencies of slow network and expensive transaction fee will allow Bitcoin Cash to narrow the gap, and potentially overtake Bitcoin as more miners and users adopt Bitcoin Cash for a transactional purposes better aligning its purpose with Satoshi Nakamoto's original intent. Kudos to Bitcoin Cash!!!