Bitcoin is currently the world's most popular and valuable cryptocurrency. It has a few derivative coins designed for specific purposes, such as Bitcoin Cash, Bitcoin Gold, and Bitcoin Diamond.
Bitcoin Diamond is the lesser-known of the three, with many not even knowing that it exists. So, what exactly is Bitcoin Diamond, why was it created, and how does it differ from Bitcoin and its most popular hard fork, Bitcoin Cash? Let's find out.
What Is Bitcoin Diamond (BCD)?
Bitcoin Diamond is a Bitcoin hard fork that occurred in November 2017. A hard fork involves a split in a blockchain, through which a new protocol is created. The original blockchain remains, but a new blockchain now exists. A hard fork blockchain will share some similarities with the original, but there are always new features and changes, as this is the whole point of a hard fork.
Two Bitcoin miners who go by the names Team Evey and Team 007 pioneered this hard fork, as they found the Bitcoin Core protocol to be lacking. Bitcoin Core is the most widely used software for connecting the Bitcoin network and is behind Bitcoin's original blockchain protocol. The main issue Evey and 007 found with Bitcoin's protocol was that it could not offer users fast transactions. On top of this, Bitcoin's user privacy levels and scalability limitations were dissatisfactory to the two miners.
What Does Bitcoin Diamond Offer?
The developers claim that BCD is "better than a credit card, better than cash, better than fiat" on Bitcoin Diamond's website. But what features does it have that would make this the case?
Faster Transactions
Well, firstly, Bitcoin Diamond is quicker to use than Bitcoin. The Bitcoin network can only process a handful of transactions every second, which means it constantly has a backlog of pending transactions waiting for approval. On the other hand, Bitcoin Diamond can process a far more impressive 100 transactions per second, making the network a lot less clogged and increasing user convenience.
This has been made possible by an increase in block size on the Bitcoin Diamond blockchain compared to Bitcoin. The blocks within Bitcoin's network sit at a mere 1MB in size, but Bitcoin Diamond's developers have achieved a block size of up to 8MB, which paves the way for much lower transaction times. The faster transactions on the BCD blockchain are also made possible by its second-layer payment protocol, known as the Lightning Network.
These features all come together to offer increased scalability on top of quicker transactions, as reduced blockchain congestion allows more users to use it at any one time efficiently.
Lower Transaction Fees
On top of faster transactions, Bitcoin Diamond offers lower transaction fees than Bitcoin. Transaction fees have always been a point of contention among crypto enthusiasts, as platforms require them to make a profit, but they can be frustratingly high sometimes, to the point where you can lose big chunks of your profits. So, the fact that Bitcoin Diamond offers lower transaction fees is a great plus for users, especially those who make transactions regularly.
These are two main reasons why Bitcoin Diamond's developers and supporters believe it is a solid alternative to traditional payment methods, like cash and card. But this isn't where Bitcoin Diamond's features end.
Privacy
The BCD blockchain has a clear focus on privacy, wherein all transactions and wallet balances are kept totally anonymous, allowing each user to maintain a high level of privacy.
However, Bitcoin Diamond's developers recently decided that they would not add any extra privacy features to the BCD protocol, which some would consider disappointing.
Easier to Mine
Another great thing about Bitcoin Diamond is that it's easier to mine than Bitcoin. You can use either a GPU or ASIC rig to mine BCD, so you can either splash the cash or opt for more affordable hardware. A huge problem with the original Bitcoin blockchain is that the complexity and cost of mining have given way to a mining community consisting mostly of professional miners, making it very difficult for newcomers to get started.
Though Bitcoin Diamond offers some useful features, another Bitcoin hard fork was designed in a similar light, known as Bitcoin Cash, or BCH. So, do BCH and BCD differ in any way?
The Similarities and Differences Between Bitcoin Diamond and Bitcoin Cash
Bitcoin Diamond is certainly more similar to Bitcoin Cash than it is to Bitcoin itself, as they both offer faster transactions, lower fees, and increased scalability (also made possible through an increase in block size). What's more, Bitcoin Cash's launch came just months before that of Bitcoin Diamond, in August 2017. And, as you may have guessed, both coins use the proof of work mechanism, as they're both hard forks of Bitcoin.
Bitcoin Diamond and Bitcoin Cash seem so similar, so what exactly differentiates them?
Firstly, Bitcoin Cash is much more popular than Bitcoin Diamond. Bitcoin Cash stands as the most widely used Bitcoin hard fork, and its value is the highest among all BTC hard forks, too, which currently sits at around $330. Compared to Bitcoin Diamond's value of around half a dollar, it's safe to say these two coins differ drastically in value.
Additionally, Bitcoin Cash is even more scalable than Bitcoin Diamond, with a block size of up to 32MB, four times that of Bitcoin Diamond's maximum block size.
Bitcoin Cash, like Bitcoin Diamond, is also easier to mine and is more of an open field for novices and newcomers than the highly competitive field of Bitcoin mining. However, Bitcoin Cash can only be successfully mined using an ASIC rig, whereas Bitcoin Diamond miners have the option of using a GPU, which is generally cheaper to buy.
At the moment, Bitcoin Diamond doesn't seem to be doing so well, with an ever-decreasing coin value and trading volume. So, if anything, Bitcoin Cash seems to be the more widely successful coin, which seems to have caught on a lot more in the market. But this doesn't mean Bitcoin Diamond has no future in the industry. As is the case with most cryptos, there's no knowing where it will end up.
Bitcoin Cash May Have Overshadowed Bitcoin Diamond
Though Bitcoin Diamond certainly offers some useful features, the popularity and success achieved by Bitcoin Cash may have somewhat left it in the shadows. But if there's one thing we know for sure about the crypto industry, it's that it is unpredictable, so there's still a chance that Bitcoin Diamond may bounce back and gain more of a solid footing in the market in the future.