Ethereum and Bitcoin are the Apple and Samsung of cryptocurrency. Over the years, they are undeniably the most popular currencies in the crypto world. Bitcoin and Ethereum make up more than half of the crypto market. Generally, you can estimate the overall performance of the crypto market based on these two currencies. Are these warriors intended to brace each other or revamp the crypto world? Let’s find out.
What is Bitcoin?
Bitcoin was the first cryptocurrency launched in January 2009. It materialized on the idea of Satoshi Nakamoto – a digital currency without a centralized authority, unlike government-issued currencies. Bitcoin is created, stored, transferred, and distributed using a decentralized network called Blockchain. BTC is the abbreviation of Bitcoin. It is not mandatory to buy the entire Bitcoin; you can buy a fraction. A public ledger records all the transactions of Bitcoin, and the system maintains it on servers all over the world.
What is Ethereum?
We know that Bitcoin uses Bitcoin Blockchain for performing transactions and has nodes and messages for each transaction. What is Ethereum? Why did it come into existence?
Ethereum is a decentralized, robust, open-source, and blockchain-distributed platform. The native currency of the Blockchain is called Ether(ETH). The co-founders of Ethereum are Gavin Wood, Buterin, Jeffrey Wilcke, Charles Hoskinson, Mihai Alisie, Anthony Di Iorio, and Amir Chetrit. The founders launched the Ethereum project in July 2015 with one goal – decentralization.
Moreover, Ethereum uses smart contracts – self-executing programs on the Blockchain run on certain conditions. Ethereum even has its programming language called Solidity.
What is the purpose of bitcoin?
The purpose of Bitcoin was to create a digital currency not bound to the centralized governing authorities. Further, Bitcoin is a medium of exchange and storing value. The 2008 financial crisis may have been the seed of the idea of Bitcoin. Over the years, Bitcoin has gained significance among investors. Moreover, it has carved a niche in the financial industry despite frequently being criticized.
The real-world applications of Bitcoin:
- Payments: Stores worldwide now accept bitcoin payments to purchase goods across stores worldwide.
- Online Gaming: Gambling sites like Royal Bitcoin and Bitzino accept Bitcoin payments.
- Mining: Bitcoin mining is validating bitcoin transactions and registering them in the public ledger.
What is the purpose of Ethereum?
The purpose of Ethereum was to implement applications that go beyond digital currency. It has a decentralized payment system and stores computer code called smart contracts that automatically execute certain conditions. Besides, Ethererum is also an investment used for purchasing goods and services on the Blockchain and paying transaction fees with its native currency, Ether.
The real-world applications of Ethereum are:
- Voting System: With Ethereum, the results of the polls are publicly available, enabling a transparent and fair voting system.
- Banking System: Banks use Ethereum for remittances and payments because of its decentralized nature.
- Agreements: With smart contracts, Ethereum implements a self-executing code system that intruders cannot alter.
- Shipping: Ethereum in shipping helps to implement an efficient system, thus, reducing misplaced goods or counterfeit.
What are the main differences between Bitcoin and Ethereum?
Although Bitcoin and Ethereum have many similarities– like distributed ledgers and encryption- their purposes differ. So, what makes Ethereum different?
The following are the significant differences between Bitcoin and Ethereum:
Base | Bitcoin | Ethereum |
Definition | Bitcoin is a digital currency that investors can transfer on the bitcoin network. | Ethereum is a decentralized blockchain platform powered by its native currency, Ether. |
Abbreviation/ Native currency | BTC is the native cryptocurrency of Bitcoin. | Ether(ETH) is the native cryptocurrency of the Ethereum blockchain. |
Launched | Bitcoin came into existence in 2009. | The Ethereum co-founders launched it in 2013. |
Purpose | The purpose of Bitcoin was to create an online currency to replace the national currency during the 2008 financial crisis. | The purpose of Ethereum is to create a decentralized payment system and maintain computer code(smart contracts). |
Consensus Mechanism | It uses the Proof-of-Work consensus mechanism. | Ethereum uses the Proof-of-Stake consensus mechanism. |
Smart Contracts | Bitcoin’s smart contracts are less flexible than Ethereum’s. Moreover, they don’t provide a programming language’s entire range of functionality. | Ethereum allows you to create smart contracts. Hence, it is far more flexible. |
Programming Language | Bitcoin’s programming language is Script and Clarity. | Ethereum uses a programming language called Solidity. |
Block Time | Bitcoin’s block time is 10 minutes. | Ethereum’s block time is 14 to 15 seconds. |
Popularity | Bitcoin is the largest digital currency. | Ethereum’s native currency, Ether, is the second-largest digital currency. |
What is the difference between Ethereum and Ether?
Ethereum and Ether are wildly different. While Ethereum is the network, Ether is the fuel that drives the network. Ether is finite. Moreover, the value of Ether fluctuates based on demand. Generally, we hear people investing in Ethereum, which means they have purchased Ether.
Given that, the following are a few significant differences between Ethereum and Ether:
- While Ethereum cannot be bought or sold, we can buy and sell Ether.
- Ethereum is an open-source, decentralized platform, but Ether is a digital asset associated with the Ethereum network.
- Ethereum has different applications, such as finance, web browsing, gaming, and supply chain management. Ether has only one application – to enable operations on the network.
Which is better between Ethereum and Bitcoin?
Although the transactions in Ethereum are faster than in Bitcoin, they have different goals. Moreover, the debate of Bitcoin vs ethereum is perpetual. Bitcoin’s founders intended to replace traditional currencies and function as a medium of exchange to store values. On the other hand, the experts conceived Ethereum to take forward its predecessor’s decentralized system. As a result, it has several applications such as Defi, payment, NFTs, gaming, and technology.
Ethereum’s network is growing by leaps and bounds, thanks to its venture into dApps, and Defi projects. The booming network would soon introduce sharding in 2023. On the other hand, Bitcoin underwent the taproot upgrade for smart contracts. The Bitcoin Lightning Network is another project in the pipeline. It is a “layer 2” payment protocol that intends to speed up transactions and upscale the Bitcoin network.
Bitcoin vs Ethereum price
So, what does Bitcoin vs ethereum chart suggest? Which one is a better investment? Bitcoin is a good investment for the long term. However, it does not imply that Bitcoin will overtake Ethereum price in a few years. You can buy Ethereum if you intend to venture beyond Bitcoin. However, cryptocurrency is volatile and risky, and you should consider studying the Bitcoin vs ethereum long-term charts before investing in either of them.
Why is it that Bitcoin and Ethereum are not exactly competing with one another?
Bitcoin works with peer-to-peer transactions. Ethereum’s purpose is to create distributed applications and smart contracts. Bitcoin has applications within financial applications in Ethereum. Further, you can borrow and supply the largest cryptocurrency when an Ethereum token is pegged to Bitcoin. So, when Ethereum grows, Bitcoin’s network expands as well. To conclude, they both have different risks, profits, and starkly different comparison metrics; hence, they should co-exist and complement each other.
Conclusion
The Bitcoin vs ethereum clash has induced the attention of investors worldwide.
Bitcoin and Ethereum share a few attributes. However, their goals are miles apart. Due to its popularity and limited supply, people refer to Bitcoin as digital gold or “gold 2.0”. Moreover, it is the first and the most significant cryptocurrency to date, with a market cap of $324.55 billion. In contrast, the crypto world refers to Ethereum as digital silver, the second largest cryptocurrency with broad applications in the crypto world. Therefore, these cryptos are not for comparison; but to complement each other to achieve an ecosystem of decentralization.
