What’s the difference between Bitcoin Cash and Bitcoin Gold?
Understanding Bitcoin for the first time may be difficult enough, but adding the concepts of Bitcoin Cash and Bitcoin Gold can seem baffling too. In fact, they aren’t that difficult to understand, as this article will explain.
In summary, Cash and Gold are just different versions of Bitcoin (BTC), known as ‘forks’. If you imagine the blockchain as a straight road, then a cryptocurrency fork is just like a fork in that road: the road splits into two directions from that point.
There are two types of fork. A ‘hard fork’ is a split in the blockchain that entirely separates the two networks. Nodes on the old network do not interact with the new one, and vice versa. In a ‘soft fork’, the new network still recognises transactions on the old one – it’s ‘backwards compatible’, in the jargon. The old network, however, will not recognise transactions on the new one. In this situation, the old network is unlikely to have much of a future, since the new network can do everything it does and more.
There are a variety of reasons why a blockchain implements a fork. Sometimes it represents a split in the community, with two groups each wanting to take the blockchain in a different direction. Other times, a fork is a way of upgrading the blockchain technology to add new features or deal with a technical problem.
Bitcoin Cash (BCH)
The hard fork that led to Bitcoin Cash was implemented in August 2017. The aim was to speed up transactions and lower transaction fees. It has led to a version of the currency that is more efficient for payments – users often receive payment confirmation within minutes, rather than days.
Bitcoin Cash uses the same ‘proof of work’ algorithm as Bitcoin and mining is carried out on the same application-specific integrated circuit (ASIC) hardware. At the time of writing, BCH is the fourth-largest cryptocurrency by market cap, behind BTC, Ethereum and Ripple.
Bitcoin Gold (BTG)
This fork came about in October 2017 and is another hard fork, this time intended to restore mining capability of graphics processing units (GPUs – sometimes known as ‘graphics cards’), instead of ASICs. Those behind the fork reasoned that ASICs were pricing ordinary users out of mining and putting the process in the hands of a small number of well-funded miners.
Unlike Bitcoin and Bitcoin Cash, Gold uses a different proof of work algorithm, one known as ‘equihash’. Otherwise, it operates in the same way as the core Bitcoin technology. At the time of writing, BTG is ranked 26th among cryptocurrencies by market cap.
The key thing to understand about Bitcoin, Bitcoin Cash and Bitcoin Gold is that they are entirely separate cryptocurrencies. Having a balance in one does not give you a balance in any of the others. Whether you invest – and which one you invest in – depends largely on what you plan to use the currency for and your expectation of the currency’s future.