Bitcoin vs Ethereum. Bitcoin is the first and the most popular crypto currency in the world. As such, it has established itself as the digital asset with the highest value. However, there are other crypto currencies that are able to rival it. In this article, we will cover the differences, advantages, and disadvantages between bitcoin and ethereum. Ethereum (ETH) has received a lot of attention since its announcement at the North American Bitcoin Conference in early 2014 by Vitalik Buterin. Ethereum has been growing in popularity ever since. However, BTC was the first one and it’s still holding the primate. You can find more information about it on the blockchain website.
In this article we will cover the core characteristics of these two coins. Additionally, we will talk about the difference between bitcoin and ethereum mining. Last but not least, we will cover the main advantages and disadvantages of both BTC and ETH.
Put simply, Bitcoin represents a distributed peer-to-peer (P2P) digital currency which can be transferred in an instant and securely between two parties, regardless of their current whereabouts. It’s essentially digital money that you can send to any other Bitcoin user anywhere around the world. Bitcoin is based on blockchain technology. The blockchain represents a public ledger that contains all transactions in a given system which have ever been executed. The ledger itself is stored throughout the entire network and to update one is to update them all. This ledger holds the history to all past transactions.
It’s important to know that it’s the miners who confirm the transaction for the rest of the network. They include them in blocks which is why bitcoin mining is so important. The blocks are the most important thing about bitcoin. When a transaction is broadcasted and then included in a mining block, it’s added to the blockchain. It will be a part of the ledger and it can be verified at any moment.
Blockchain technology creates applications that go beyond just enabling a digital currency. Launched in July of 2015, Ethereum is the largest and most well-established, open-ended decentralized software platform. Ethereum comes complete with its own programming language which runs on a blockchain, enabling developers to build and run distributed applications. The potential applications of Ethereum are wide-ranging and are powered by Ether – its native cryptographic token. Ether is basically the fuel for running commands on the Ethereum platform. Developers use it to build and run applications on the platform.
Ether has two main purposes. First, it trades on exchanges just like other crypto currencies. Second, Ether is used on the on the Ethereum network to run applications. According to Ethereum, it can codify, decentralize, secure, and trade almost everything.
Bitcoin vs Ethereum
Both coins run by the principle of distributed ledgers and cryptography. However, the two differ technically in many ways. For instance, Ethereum transactions have executable code. On the other hand, Bitcoin transactions are generally only for keeping notes. The block time is different for both coins as well. It takes just a couple of seconds for an Ethereum transaction to be confirmed. For bitcoin though, it takes several minutes. The algorithms the both run on are different too. Ethereum uses ethash while Bitcoin uses SHA-256.
However, the main difference of these crypto coins is the reason why they were created. Bitcoin is an alternative to national currencies as well as a medium of exchange. Ethereum, on the other hand is a platform which facilitates immutable, programmatic contracts, and applications via its own currency. This means that Ether is a crypto currency but it’s main use is not to be an alternative monetary system like Bitcoin. Its main use is to facilitate and monetize the operation of the Ethereum smart contract and decentralized application (dapp) platform.
Basically, the Ethereum platform is a blockchain that supports Bitcoin. This means that they shouldn’t be in competition with each other. However, it’s popularity puts it in competition with all other crypto coins. For more information about digital assets, check our Bitcoin Dictionary section.