Ethereum vs Bitcoin Cash: Comparing Two Approaches for Bitcoin’s Challenges

Explore how Ethereum and Bitcoin Cash address Bitcoin’s scalability issues respectively, plus how the two cryptocurrencies compare in utility.

Introduction

Created in 2015 by Vitalik Buterin, Ethereum (ETH) has transformed blockchain technology by introducing smart contracts and decentralised applications (dapps), expanding the function of cryptocurrencies beyond digital payments to enabling financial ecosystems. Ethereum offers broader utility than Bitcoin, enabling decentralised finance (DeFi), non-fungible tokens (NFTs), and other decentralised applications through its programmable blockchain.

When Bitcoin’s Proof of Work (PoW) consensus mechanism became too slow and energy-intensive, Ethereum further differentiated itself by shifting to a Proof of Stake (PoS) model to speed up transaction processing while reducing its carbon footprint. These changes have driven the long-term success of Ethereum’s ecosystem. 

In contrast, Bitcoin Cash (BCH) took a different path, focusing on optimising peer-to-peer (P2P) transactions. Roger Ver, an early Bitcoin investor and advocate known as ‘Bitcoin Jesus’ for his evangelism of BTC, became disillusioned with Bitcoin’s scalability issues and growing transaction fees. Years of debate over how to scale Bitcoin by increasing the block size or relying on off-chain solutions like the Lightning Network ultimately led to a split in the community. 

In 2017, together with a group of developers, Ver initiated a hard fork to create Bitcoin Cash, aiming to preserve Bitcoin’s original vision as a fast, low-cost payment system. Bitcoin Cash is quicker and cheaper than Bitcoin, but internal conflicts and concerns over centralisation have limited its adoption.

While both ETH and BCH have sought to improve blockchain efficiency, Ethereum has prioritised programmability and scalability, while Bitcoin Cash has remained committed to larger on-chain blocks to speed up transactions. Both are compared to BTC, but how do they compare to each other? Let’s review their radically different approaches to solving Bitcoin’s challenges. 

Key Differences Between ETH and BCH

Ethereum Overview

Ethereum is an open-source software platform that enables the creation of smart contracts and dapps, offering developers the ability to build without downtime, centralised control, or third-party interference. Buterin, a Canadian software engineer, was inspired by Bitcoin’s blockchain technology, but believed it could do more than facilitate payments, as described by Bitcoin creator Satoshi Nakamoto. In 2014, Buterin wrote a white paper and partnered with a list of co-founders, including Anthony Di Iorio, Gavin Wood, and Charles Hoskinson, to launch Ethereum through crowdfunding on 30 July 2015. 

Buterin recognised the benefit of allowing developers to create dapps without having to build a separate blockchain for each one, and Ethereum has become the most-used blockchain network as of this writing, with a robust ecosystem of dapps, NFT marketplaces, and play-to-earn (P2E) video games. This has also led to the development of standards like ERC-20 that have enabled support for tokens on Ethereum beyond ETH. For example, Gods Unchained originally used ETH, but now has its own ERC-20 token, Gods Unchained (GODS).

Ethereum has significantly evolved since its launch, perhaps most notably with ‘The Merge’ in September 2022, which represented Ethereum’s switch from a PoW consensus mechanism (comparable to Bitcoin) to PoS, reducing network energy consumption by an estimated 99%. The Merge has prepared the network for subsequent upgrades designed to speed up transaction processing and reduce fees.

Check out Ethereum’s current value and recent price trends.

Bitcoin Cash Overview

Bitcoin Cash emerged in 2017 as an alternative solution to Bitcoin’s scalability challenges. The popularity of BTC resulted in slower and more expensive transactions, and its decentralised community agreed that something had to be done. One group advocated for the Segregated Witness (SegWit) software upgrade, supporting Layer-2 blockchains like the Lightning Network to decrease congestion and expedite transactions. 

Another group, led by Roger Ver, argued that SegWit favoured Bitcoin speculators over daily users, in contrast to Satoshi’s Vision (SV), and instead pushed for larger block sizes to facilitate faster payments, lower fees, and improved transaction capacity. 

SegWit supporters outweighed Ver’s group, and the software upgrade was activated in August 2017. But Ver’s faction refused to admit defeat, and the group forked Bitcoin’s blockchain to create a brand-new token: Bitcoin Cash (BCH). It was identical to BTC, except that its block size was eight megabytes (MB); it has since increased to 32 MB. Bitcoin has retained its original block size of one MB.

Ver’s BCH coalition eventually fractured. First, Bitcoin SV (BSV) was created in November 2018 via a hard fork after Craig Wright and others argued that Ver had lost sight of Satoshi’s Vision. Then, Bitcoin Cash ABC (BCHA) was created in November 2020 via another hard fork to add a miner’s tax to incentivise developers to work on the network. 

Ver’s influence within the BCH ecosystem diminished after successive forks, with critics citing concerns over perceived centralisation due to concentration of early support and mining power. Despite these internal conflicts, Bitcoin Cash remains one of the most popular cryptocurrencies, continuing to serve its role as an alternative to Bitcoin with a focus on faster, lower-cost transactions.

Check out Bitcoin Cash’s current value and recent price trends.

Ecosystem Comparison: ETH vs BCH

Ethereum and Bitcoin Cash’s Consensus Mechanisms

Ethereum and Bitcoin Cash used a similar PoW system prior to ‘The Merge’, but Ethereum has been a PoS protocol since 2022. With the PoS system, in order to participate in block production, validators must stake ETH into a smart contract on Ethereum’s network. Every 12 seconds, the network randomly selects one validator to propose a block and assigns a committee of validators to validate it. Validators earn rewards based on the amount of ETH they have staked, incentivising participation. 

To increase their odds of selection, ETH validators can form or join staking pools, creating a larger collective stake in exchange for a proportional share of any earned rewards. This system democratises staking while maintaining security. However, validators acting dishonestly face ‘slashing’, where a portion or all of their staked ETH is destroyed; this discourages bad behaviour.

The committee-based validation system helps to distribute network load, resulting in an efficient, secure system that avoids centralisation by allowing the entire community to participate by staking tokens. While staking rewards increase supply, Ethereum’s EIP-1559 burn mechanism helps offset inflation. Under high activity, ETH issuance may even turn deflationary.

Bitcoin Cash still uses the PoW consensus mechanism it inherited from Bitcoin, where miners receive a set block reward plus transaction fees for successfully adding a block to the blockchain. Block proposals must be accompanied by a mathematical proof of work, or the solution to a complicated math puzzle. There’s no shortcut to finding the answer, so miners use powerful computers to find it first and collect the reward.

Mining rewards add fresh tokens to the ecosystem and periodically decrease through halving events, creating scarcity in BCH’s tokenomics. This system is secure but slow and energy-intensive. It may also promote centralisation since the highest hashrate will win the most blocks.

Ethereum and Bitcoin Cash’s Scalability

Ethereum became more sustainable following The Merge, averaging about 15 transactions per second (tps), with a recorded max of 62 and a theoretical cap of about 120. That’s double Bitcoin’s average speed of seven tps, but falls short of large payment processors and many competing networks.

Ethereum also has relatively high transaction fees compared to other scale-focused cryptocurrencies, averaging about $1, but spiking during busy network conditions. While Bitcoin Cash’s larger blocks enable about 200 tps in theory, current network activity results in an average of just over one due to a lack of economic activity.

In May 2024, Bitcoin Cash introduced the Adaptive Block Size Limit Algorithm (ABLA), dynamically adjusting block sizes from a minimum of 32 MB to up to 4 times during demand surges, improving scalability without hard forks.

Like Bitcoin, Bitcoin Cash’s PoW model is energy-intensive and rewards computational power, raising concerns about sustainability and miner centralisation. However, Bitcoin Cash has low transaction fees, averaging less than $0.01 — partly due to lower adoption (approximately 13,000 daily transactions, against Ethereum’s 700,000), reducing competition for block space.

Tokenomics Comparison

Ethereum Use Cases

ETH secures the Ethereum network through staking, and allows holders to access dapps and purchase ERC-20 tokens. It can also be exchanged for other cryptocurrencies and fiat on trustworthy platforms like Crypto.com, and its high liquidity makes buying and selling fast and convenient. 

ETH is increasing in popularity as a secure value store, as well as through financial products like exchange-traded funds (ETFs). Thanks to the platform’s flexibility, Ethereum is the most popular choice for blockchain developers.

Acceptance as a Payment Method

Vendors accepting ETH payments include Play-Asia.com (entertainment), HostMeNow (web hosting), and Trovelle (high fashion). ETH holders may also purchase gift cards to popular retailers or use services like Crypto.com Pay to buy a variety of things. 

Bitcoin Cash Use Cases

BCH is the native cryptocurrency of Bitcoin Cash’s network and used to compensate miners and pay transaction fees. It also acts as a secure virtual value store, but the token’s lower liquidity may lead to a higher spread when exchanging it for fiat or other cryptocurrencies. Multiple companies have floated BCH ETFs, but such products lack regulatory approval as of this writing. 

Acceptance as a Payment Method

Merchants accepting BCH payments include Scan (a UK-based computer hardware company), Crypto Goodies (apparel), and Travala (travel booking). BCH holders can also buy more products and services with cryptocurrency by getting gift cards or using services like Crypto.com Pay.

Key Pricing Moments

Crypto is volatile, and factors like broad macroeconomic trends, influencer activity on social media, and upcoming technology updates can cause price swings. Below is a quick timeline for the price histories of Ethereum and Bitcoin Cash. 

Ethereum — Key Price Events

Bitcoin Cash — Key Price Events

Performance and Market Metrics

Ethereum has a market capitalisation of about $278 billion as of this writing. It doesn’t have a capped supply, and staking rewards regularly add new tokens to the ecosystem, which may cause inflationary pressures on ETH. However, its circulating supply of over 120 million ETH is lower than many altcoins. The ecosystem’s robust collection of dapps and altcoins keeps demand high, giving each token a value around $1,900–$4,100. 

Bitcoin Cash has a market cap over $8 billion as of this writing. BCH has the same tokenomics as Bitcoin, giving it a hard-capped supply of 21 million tokens, of which 19.8 million are currently in circulation, creating scarcity that may appeal to crypto traders since it limits inflation. However, demand for BCH isn’t as high, and the price per token generally lands in the $300–$620 range, with price upside potential for more. 

Developments and Roadmaps: ETH and BCH

Ethereum’s Roadmap and Community

Ethereum has a detailed roadmap highlighting the protocol’s future goals, including cheaper transaction fees, extra security, a superior user experience (UX), and future-proofing. 

Layer-2 blockchains, called rollups, already batch transactions together and send the output to Ethereum’s mainnet, and the introduction of Zero-Knowledge (ZK) rollups is expected to reduce transaction fees by 40 to 100 times.

The Ethereum Foundation provides developers with documentation on foundational concepts and the existing development stack, but developers work on upgrades at their preferred pace. Thus, there is no specific timetable on Ethereum’s roadmap for upgrades.

Community engagement around a cryptocurrency may provide insight into its future. Ethereum has 3.8 million X followers and 3.7 million Reddit followers as of this writing; despite having a few ‘Ethereum challengers’ hot on its heels, it still has the largest ecosystem and support amongst developers.

Bitcoin Cash’s Roadmap and Community

Bitcoin Cash doesn’t have a roadmap since its community may vote to change the protocol’s plans at any time. BCH enthusiasts sometimes propose unofficial, non-binding roadmaps highlighting community goals, but most centre around promoting community awareness and expanding merchant acceptance rather than software upgrades. 

Bitcoin Cash has 12,700 X followers and 108,000 Reddit followers as of this writing, indicating a small but passionate user base. 

Conclusion

Ethereum and Bitcoin Cash were created to address inefficiencies in Bitcoin, but they focused on different issues. 

Ethereum offers broad utility and an energy-efficient consensus model, but its high base-layer fees can hinder its viability for everyday payments. Bitcoin Cash focuses on offering a more efficient way than Bitcoin to execute financial transactions, but it offers little beyond that in terms of utility.

Speculators may favour Ethereum for its programmability and growing DeFi ecosystem, while Bitcoin Cash appeals to those valuing a fixed supply and transactional utility. Always research a token’s price history, tokenomics, development team, documentation, and recent price trends before considering a purchase.

Due Diligence and Do Your Own Research

All examples listed in this article are for informational purposes only. You should not construe any such information or other material as legal, tax, investment, financial, cybersecurity, or other advice. Nothing contained herein shall constitute a solicitation, recommendation, endorsement, or offer by Crypto.com to invest, buy, or sell any coins, tokens, or other crypto assets. Returns on the buying and selling of crypto assets may be subject to tax, including capital gains tax, in your jurisdiction. Any descriptions of Crypto.com products or features are merely for illustrative purposes and do not constitute an endorsement, invitation, or solicitation.

Past performance is not a guarantee or predictor of future performance. The value of crypto assets can increase or decrease, and you could lose all or a substantial amount of your purchase price. When assessing a crypto asset, it’s essential for you to do your research and due diligence to make the best possible judgement, as any purchases shall be your sole responsibility.