Bitcoin is the world’s first Cryptocurrency and is the most popular Cryptocurrency around the world. But when a novice Crypto investor enters the exchange for the first time, he might be confused as he sees more than one coin with the name of Bitcoin.
For example, when I entered the Bitcoin mania and tried to invest for the first time, I was baffled. I saw three types of bitcoins trading in the exchange.
- Bitcoin
- Bitcoin Cash
- Bitcoin SV
It was challenging for me to choose the best Bitcoin. I think you too faced the same problem and finally, you are here, Right?
So read the full article to get the information on various bitcoins available and which one will be best for you.
To understand this article, you should know some basic terms like Cryptocurrency, Bitcoin, Blockchain technology, and its works. Hence before reading this article, if you are new to Cryptocurrency, I suggest you read the article on Bitcoin and Cryptocurrency.
Transaction Processing rate
What is a transaction rate? Let us take the example of some payment gateways like VISA, MASTERCARD, and PAYPAL to understand it.
Around the world, for every second, millions of money transactions occur. Let me explain it with an example.
If I want to send money to my friend, I will use a payment gateway like Visa and enter my friend’s account number, the amount required to transfer and click the send button.
Then the Visa intermediary will verify my account with the receiver’s account. If the company thinks the transaction is legitimate, it will process my transfer, and the amount will be deposited in my friend’s account.
It is how most payment networks like VISA, MASTERCARD, and PAYPAL work.
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Do you know the above-said payment gateways process more than one thousand transactions per second? It is a good number.
But all the above-said transactions are in terms of currency or money.
Now let us simulate the upper scenario with Bitcoin. So how can I send bitcoins to my friend?
If I want to send four bitcoins to my friend, I will first enter an exchange app like Coinbase or Wazirx. (Remember, both myself and my friend should have an account in this exchange).
So, I will enter my friend’s address code (Public key) and enter the number of bitcoins I want to send (either in the form of dollars or the number of bitcoins) and click send.
The next step is for the miner. So a miner must approve my transaction and register it in the ledger and store it in the block. To note the transaction, the miner verifies the transaction data. It contains the public keys of the sender and the receiver and information about the number of bitcoins to transfer.
The miner registers the same in a ledger and stores the data in a block. But the block can handle data up to 1 MB. When the block is filled, a new block is created, and the remaining data will be stored in the new block.
Later the same ledger should be updated into all the nodes (computers) connected to the Bitcoin network. This entire process is called the “Transaction verification process.”
When once the entire process is completed, then my transaction is confirmed. But due to this heavy and time-consuming approval process, each transaction takes 10 minutes for confirmation.
That means I must wait for 10 minutes for the confirmation of my transfer to Bitcoin. It is a major disadvantage related to Bitcoin currency.
This transaction processing rate has sufficiently met the demands of crypto users at the beginning days of Bitcoin because only limited users used to transfer bitcoins.
But in 2021, the number of users using Bitcoin has increased dramatically. Hence we should now require a fast-processing rate. In the present condition, for every second, only four Bitcoin transactions are being processed. The current Bitcoin processing rate is very slow.
The solution to slow processing rate.
Hence in 2017, the Bitcoin community came together to sort out a solution. The community finally decided to go for a “Soft fork” or a “Hard fork.”
But unfortunately, the community was divided into two halves. One half supported the Soft Fork while the other supported Hard Fork.
The people who supported Soft Fork continued to use regular Bitcoin. But people who voted for Hard Fork started a new version of Bitcoin called BitCoin cash.
So, what is this forking? Let us discuss this.
Soft Fork
In simple words, a soft Fork refers to a few modifications to the Original bitcoin protocol and the same software.
As a result, the old Blockchain will continue as usual with slight modifications to the protocols.
Hard Fork
On the other hand, Hard Fork means making a significant change in the Bitcoin protocols and updating the old software to a new version.
So, we can see a significant change in the rules and protocols compared to old Bitcoin. As a result, we see a new blockchain emerging by the side of the Old Blockchain.
So what are these changes?
Bitcoin group
The people who opted for a soft Fork had a solution to increase the processing speed. They found that more data is being processed when processing the digital signature of the sender and receiver.
Hence, they came up with a proposal to separate the signature data at the time of processing. As a result, the data left to be stored in the ledge will reduce the storage space required by 60%.
As a result, more amount of data can be processed at a given time. It means more transactions can be registered at a given time.
This entire process is called SEGWIT or segregated witness.
Bitcoin cash group
On the other hand, a minor number of people voted for Hard Fork. Coming to the Hard Fork, the following modifications were made to the BITCOIN protocols.
In conventional Bitcoins, each block can handle data only up to 1Mb. Instead of decreasing the processing data, the Bitcoin cash group voted to increase the data storage capacity of every block to 32 MB.
Hence the block in Blockchain will be increased to 32Mb. More storage means more data to process at a given time. Therefore more transactions can be registered each time.
So, people who opted for Hard Fork installed an updated version of Bitcoin in the name of Bitcoin Cash.
Bitcoin SV
In 2018, a group of people from the Bitcoin Cash group separated from Bitcoin Cash. The hard-forked the Bitcoin Cash to bring back the values that Satoshi Nakamoto proposed in his white paper.
They named it Bitcoin Satoshi Vision or Bitcoin SV. The group increased the block size to 128 MB, speeding up the transaction verification process much higher than the Bitcoin cash group.
Bitcoin Price in Indian Rupees
| Bitcoin | Bitcoin Cash | Bitcoin SV |
Conclusion
So, we can broadly classify bitcoins into three types. The classic Bitcoin still runs with a 1Mb block limit, while the Bitcoin cash runs with a 32Mb Block limit.
On the other hand, Bitcoin SV runs with a 128Mb block size.
Out of the three, bitcoin still holds a significant credibility share compared to the other two. We think that we provided enough information for you to decide between the three Bitcoins. But the decision will be yours.
I hope you liked the article. If so, please share it with your friends.
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