Bitcoin, Bitcoin Cash, and Bitcoin Gold: What's the Difference?
Types of Bitcoin and Where to Buy Them
Bitcoin really gained a lot of attention when its price skyrocketed in 2017. But what a lot of people don’t know is that there are currently three types of Bitcoin: Bitcoin (BTC, Bitcoin Cash (BCH), and Bitcoin Gold (BTG). There are also a few other more obscure forms, though these three tend to be the most popular.
The different cryptocurrency denominations can be super confusing, which can lead to a lot of questions. Here's how these types of Bitcoin differ, work together, and relate to each other. Then learn where you can buy each one.
Why Are There Different Types of Bitcoin?
The original Bitcoin was meant as an experiment to fix central banking. While most people have heard about Bitcoin, there’s still a lot of confusion around what it is and what it’s meant to do. At the most basic level, Bitcoin is a peer-to-peer monetary system. It’s meant to fix a lot of the perceived and real problems with the central banking system and put money policy directly into the hands of the people.
There are two other types of Bitcoin to help limit certain groups from gaining control of Bitcoin and to help scale this cryptocurrency.
What Is Bitcoin Cash?
Bitcoin Cash is meant to alleviate some of the lag in transaction time that Bitcoin has experienced over time. In order to reduce spam and fraud with Bitcoin, Bitcoin was originally launched with something called a 1MB block. This was fine at the beginning, but as the currency became more and more popular, it meant that the transaction times for using or buying Bitcoin started to lag tremendously.
The 1MB limit means that Bitcoin is extremely limited to the number of transactions it can process per second. And lagging transaction times present huge obstacles to scaling.
This limitation is why Bitcoin Cash was developed with a significantly bigger block.
Bitcoin Cash has an 8MB block. Think about it like building an offramp on the Bitcoin highway. That offramp then goes to an express lane that only carries high-capacity vehicles. This allows many more transactions per second to be processed on Bitcoin Cash than on Bitcoin itself.
Right now, all three of these types of Bitcoin currencies are being traded on lots of exchanges, with Bitcoin being the most popular and available in most places.
What Is Bitcoin Gold?
You can currently “mine” Bitcoin with specialized computer equipment. To mine Bitcoin, you need something called ASIC mining hardware. This is expensive hardware and it’s also very energy-intensive to use. This has caused the main version of Bitcoin production to land more and more in the hands of the elite.
Bitcoin Gold is meant to put mining back into the hands of regular people. Instead of needing specialized equipment, Bitcoin Gold is meant to be mined by regular computers. This allows anyone with a regular computer to mine Bitcoin Gold, much like Bitcoin was in the beginning.
You can own Bitcoin, Bitcoin Gold, or Bitcoin Cash. They are related, but not the same. You can also have investments across all three.
Bitcoin vs. Bitcoin Cash vs. Bitcoin Gold
All three types of Bitcoin come from the same basic programming. You can own one, two, or all three types.
And in the marketplace, they tend to follow each other’s performance for the most part. So, if Bitcoin is trading up then Bitcoin Cash and Bitcoin Gold will usually be up as well. However, they trade at very different prices.
|Bitcoin||Bitcoin Cash||Bitcoin Gold|
|Price as of May 27, 2020||$9,162.05||$231.93||$8.92|
|Market Cap||168.46 billion||4.27 billion||$153.41 million|
|Supply||18.39 million||18.42 million||17.20 million|
Where Can You Buy Bitcoin, Bitcoin Cash, and Bitcoin Gold?
All three of these cryptocurrencies are available on various exchanges. And you can buy them in nearly any currency from throughout the world. This includes the U.S. dollar, the Euro, or the Pound.
You can buy Bitcoin and Bitcoin Cash at Coinbase. In order to buy Bitcoin Gold you need to go to a different exchange—Bitfinex is one of the many that buy and sell Bitcoin Gold.
Like most other stock trading applications, you do pay a fee for every transaction that you make on these platforms. It’s usually pretty small and you pay it both when buying and selling.
Bitcoin Cash and Bitcoin Gold are less expensive per unit currently than Bitcoin is. Mostly this is a function of them being newer on the market.
It’s important to note that you can also buy fractions of Bitcoin, Bitcoin Gold, and Bitcoin Cash. If you have $100 it would like to invest in one of these currencies, then you can get something like 1/100 of a bitcoin or 1/2 of a 1 bitcoin cash.
You don’t have to have the $10,000 or $250 it can take to buy a single one of these units (depending on where they’re at in the market at the time). You can buy in nearly any denomination that you’d like.
The Bottom Line
The U.S. Securities and Exchange Commission has warned of potentially unlawful online trading platforms that lack regulatory oversight. This is because a lot of what’s happening right now with cryptocurrency is kind of like the Wild West. It’s mostly unregulated or self-regulated, and there’s no guarantee that most of these platforms are following any other rules besides ones that are self-imposed.
It is important to understand that cryptocurrencies often go through extremely volatile swings, both up and down.
It will be interesting to see where these new types of non-government-backed currencies take us. The technology behind them is fascinating. And the ability of the communities to make their own monetary policy decisions is revolutionary.
The Balance does not provide tax, investment, or financial services and advice. The information is being presented without consideration of the investment objectives, risk tolerance, or financial circumstances of any specific investor and might not be suitable for all investors. Past performance is not indicative of future results. Investing involves risk including the possible loss of principal.
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