Cryptocurrency is known by a variety of names. You’ve probably heard of Bitcoin, Litecoin, and Ethereum, among the most prominent cryptocurrencies. Cryptocurrencies are becoming increasingly popular as a means of making online payments.
When there are over 2,000 different blockchain assets to learn about, it might be overwhelming! Fortunately, understanding these assets, particularly Bitcoin and Ethereum, can be a little easier.
Bitcoin was the first cryptocurrency, and it is still the most popular, influential, and well-known. Since then, Bitcoin and other cryptocurrencies such as Ethereum have risen as digital alternatives to government-issued currency.
We’ll go over the differences between cryptocurrencies in this article. You should have a decent knowledge of these after reading this and identify between them quickly.
You might also like to explore on What is Bitcoin mining and how does it work?
What Is Ethereum and its Function?
Ethereum is a blockchain platform with its currency, Ether (ETH), and programming language, Solidity.
Ethereum is a decentralized public ledger for validating and recording transactions that run on a blockchain network. Users can create, publish, monetize, and use applications on the platform, and they can pay with Ether, the network’s money. The decentralized applications on the web are referred to as “dApps” by insiders.
“The world’s programmable blockchain,” Ethereum claims. It differs from Bitcoin in that it is a programmable network that functions as a marketplace for financial services, games, and apps.
It differs from Bitcoin in that it is a programmable network that acts as a marketplace for financial services, games, and apps, all of which can be purchased using Ether cryptocurrency and are free from fraud, theft, and censorship.
The Ether cryptocurrency was explicitly created for the usage on the Ethereum network. Ether, like Bitcoin, is currently accepted by some retailers and service providers. Overstock, Shopify, and CheapAir are just a few of the online stores that accept Ether.
How Does Ethereum Work?
Ethereum, which is based on blockchain technology, is made up of a series of cryptographic, or secure, public records that are linked together and are impossible to change because they are stamped with user data, time and date, and changes that must be allowed by all users.
Anyone can construct a financial contract or keep debt or ownership registries on the ledger, eliminating the need for a third-party recordkeeper or trust officer. They’re dubbed “trustless” transactions since they don’t require you to trust the transaction’s counterparty because the contract is self-fulfilling.
The critical technological difficulty with ethereum has been speed and stoicism due to its vast size and breadth.
While the entire industry is referred to as a currency, it may be more practical to think about crypto as a token that may be spent for a specific purpose provided by the Ethereum platform. The coin, for example, enables functions like transmitting money and purchasing and selling products. Ethereum, on the other hand, can accomplish a lot more, including serving as the foundation for smart contracts and other applications.
What Is Bitcoin and How Does It Work?
Bitcoin is digital money that works independently of any central authority, such as banks or governments. Instead, peer-to-peer software and cryptography are used.
All bitcoin transactions are recorded in a public ledger, and copies are kept on servers worldwide. Every transaction is broadcast to the network and passed from node to node in real-time. Miners aggregate these transactions into a block group and upload them to the blockchain permanently every ten minutes or so.
Bitcoin was created solely to function as a digital currency; unlike ethereum blockchain, it does not have a broader application of blockchain technology. Regardless of color, gender, religion, species, or political leanings, anyone can access and use the Bitcoin network. This opens up a lot of doors for the Internet of Things. We may see systems in the future where self-driving taxis or Uber vehicles have their blockchain wallet.
Bitcoin is marketed as a digital currency or an alternative currency. As every transaction is public, it’s extremely impossible to copy Bitcoins, create fake ones, or spend ones you don’t have. Therefore, bitcoin has established itself as a more reliable digital currency.
How is Ethereum different from Bitcoin?
The difference between Ethereum and Bitcoin is that Bitcoin is simply a currency, but Ethereum is a ledger technology that businesses use to construct new programs. Here are a handful of differences:
- Institutional investors are particularly interested in Bitcoin, and for a good reason: an increasing number of firms have begun to accept Bitcoins as a means of payment. Ethereum is a cryptocurrency that focuses on usefulness. It will grow in popularity as one of the first networks that allow intelligent contracts.
- As a currency substitute, Bitcoin is far more generally accepted. El Salvador recently declared Bitcoin to be legal tender. It’s the world’s first country to do so. Ether can be used as digital money in the meanwhile, but that is not its primary function. The Ethereum platform was created mainly to monetize Ethereum intelligent contracts and decentralized applications (apps).
- The block size limit on the bitcoin blockchain is 1 MB. That is, the total number of transactions in a single block cannot exceed 1 MB. A new block on the bitcoin blockchain takes around 10 minutes to mine or create. In practice, this means that the bitcoin network can process 3-4 transactions per second. There are no block limits on the Ethereum blockchain.
- The supply is another significant distinction. Whereas Bitcoin has a limit of 21 million coins ever minted, Ethereum has no such limit. Mining is used to create both Bitcoin and Ethereum. There are plans to switch Ethereum production to a proof-of-stake paradigm, more environmentally friendly than mining.
Final Thoughts: So, which one should you choose?
Cryptocurrency is a high-risk investment in general, so make sure you’re willing to tolerate the high levels of risk and volatility before you start investing (or investing it all if you think you know more than the average crypto enthusiast).
It is advised by many traders to keep up with the latest crypto news to minimize the risks if you do decide to trade cryptocurrency.
While none of these cryptocurrencies is a “safe” investment, Bitcoin may be less risky than Ethereum because it has a longer track record and is more well-known. On the other hand, the latter may have more excellent room for expansion in the long run.
Whatever path you select, make sure you’ve done your homework and are prepared to take risks. Cryptocurrency isn’t for everyone, but the correct investment can help you get ahead.