Initially written for a now-defunct cryptocurrency media website.
Bitcoin, Bitcoin Cash, Bitcoin Gold, Bitcoins – What’s the difference?
For the many analysts and investors that are financially savvy, when it comes to blockchain and Bitcoin technology, knowing the different kinds of alternative coins that we invest in is valuable knowledge.
Some of these alternative coins have distinct names, such as Ethereum, Litecoin or Dogecoin. But, what about the following: Bitcoin Cash? Bitcoin Gold? Bitcoin Diamond?
If you look back in the last few years, there were a few hard forks that gave birth to more ‘Bitcoins’. Bitcoin, the mother of all the cryptocurrencies, was struggling through tough times and in return, members of the Bitcoin Foundation were in talks to rectify the situation.
This gave birth to many more ‘Bitcoins’, aka. The ‘children’ if you can imagine it.
They have the word Bitcoin in them, but these are entirely different coins altogether.
For the average person, this can get very confusing. This article will introduce you to what these coins are.
What do the terms mean?
Blockchain: The blockchain is defined as a decentralized ledger, no middleman, processes are automated, with no (read: very little) human error. Some examples of human error include: not writing in addresses properly when sending Bitcoin, falling for scams, etc.
Forks: Forks are when a Blockchain is duplicated at a certain time period and runs in parallel to the original. These normally come up due to a dispute, or differing opinions.
One prime example would be the hard fork off Ethereum into Ethereum Classic: a whale (read: entity
with a large number of coins) had sold a significant number of coins, forcing ETH’s price to go on the rollercoaster ride of its life. Some individuals find this unethical, while others advocate for the whale’s right to do this. The solution then was to resolve the conflict by making 2 copies of ETH: one with the transaction going through, and one without. This resulted in the birth of ETC!
A fork is called a fork due to how it is visualized: as a blockchain is duplicated at one point in time and branched off to make its own way, when put on paper it looks like a two-pronged fork. At least, that is how the word came to be (I think).
Let’s take a look at all the different kinds of Bitcoin, shall we?
- What is it: A hard fork due to the bitcoin scalability debate. A lot of users wanted a block size increase, so it could account for more transactions (greater transactions = greater speed = greater liquidity = greater financial value). This change would further reinforce Bitcoin’s purpose as a transactional currency.
- When did it happen: August 1st, 2017.
- What should I know: If you had BTC prior to the August 1st hard fork, you would have an equivalent amount in Bitcoin Cash. Since it is a fork and uses a new hashing algorithm (think of it as a digital signature), Bitcoin Cash and BTC don’t get mixed up!
- More info: https://www.bitcoincash.org/
Bitcoin Gold (BTG)
- What is it: A hard fork designed to restore GPU mining functionality to Bitcoin, instead of ASICs. Since the rise and popularity of mining the cryptocurrency, ASICs’ prices have gone into thousands of dollars: BTG provides an alternative by allowing mining through GPUs instead.
- When did it happen: October 24, 2017.
- What should I know? A supposed developer was accused of adding a hidden mining fee when the fork had occurred, which had underwent investigations when certain mining pools were having their chains out of sync at times. There are also reports within the wallet provider mybtgwallet.com of being able to extract user’s passphrases, by retrieving them from Google Analytics.
- More info: https://bitcoingold.org/
- What is it: A fork that attempted to accommodate a proposal to increase the block size to 8mb, increasing automatically.
- When did it start: August 15th, 2015
- What should I know: The mentioned proposal was not implemented until early 2016, and by March the usage of Bitcoin XT had started to slowly decrease. When it was implemented though, some of the largest mining pools did not provide enough support.
- More Info: https://github.com/bitcoinxt/bitcoinxt
- What is it: A full node implementation for Bitcoin and Bitcoin Cash.
- When did it start: January 2016.
- What should I know: Users can choose which block size limit they prefer, and from there the majority consensus will dictate the overall true block size limit. The catch is, if the size limit is >1mb and not approved by nodes with a limit, a fork will occur, hence the ‘unlimited’ aspect. This was a potential solution to the 1mb block size problem: as more and more people adopt Bitcoin, there are so many transactions that need to be done that speed becomes concerning factor.
Bitcoin Classic (ceased operations)
- What is it: A fork from Bitcoin to increase the block size limit. When it was first launched, it doubled the size of the block (1mb -> 2mb), therefore increasing number of transactions processed per block.
- When did it start: 10th February 2016.
- When did it end: November 10, 2017.
- What should I know? Initially, Bitcoin Classic received the support of a few notable names (Coinbase, Roger Ver, Gavin Andresen to name a few). According to the entire Bitcoin community however, a hard fork wasn’t exactly necessary. This meant that the adoption rate of Bitcoin Classic from Bitcoin users wasn’t enough to sustain its blockchain, which resulted in a steady drop in usage from March 2016 onwards.
Will there be more?
There are others to take note of like Bitcoin Diamond, though it does get very technical and secret from there (eg. there’s little on the roadmap!). Due Diligence is an important part of your methods as a cryptocurrency investor, and it can be useful to have a quick overview of the different Bitcoin forks! Who knows, there could be another one coming again soon?
What factors in the future do you think will become a huge influence on a Bitcoin fork? Comment below!