More and more investors are now taking an interest in cryptocurrencies. AND WHY NOT – Cryptocurrencies are considered the best-performing asset classes today.
Despite being regularly critiqued and questioned, cryptocurrency has created a unique identity for itself and persists in interoperating with the financial system. There is no doubt that these asset classes are going to be the next big thing in finance.
If you’ve also started taking an interest in Cryptocurrencies, then indeed, this post is for you. Here, in this post, we shall discuss the key differences between two major currencies, namely, Bitcoin vs. Ethereum.
So, without wasting any moment, let’s get started…
Let’s first understand the basic definition of both Bitcoin and Ethereum.
Here we go…
Table of Contents
- What is Bitcoin?
- What is Ethereum?
- Bitcoin vs. Ethereum: Key Differences Between The Two
- The Bottom Line
What is Bitcoin?
Bitcoin, also popular as BTC, is one of the famous cryptocurrencies that was launched in 2009. Investors/traders can buy and sell bitcoins using different currencies on “bitcoin exchanges.” Bitcoin transactions are done without banks – this implies there is no intermediary. Bitcoin can be used for myriads of purposes, such as booking hotel rooms on Expedia, buying furniture on Overstock, etc.
However, Bitcoins are more popular as an asset class for trading and making money. In 2017, Bitcoin became very popular when its market value accounted for nearly 87% of the total cryptocurrency market.
It introduced a concept outlined in a white paper by the enigmatic Satoshi Nakamoto—bitcoin, unlike government-issued currencies, offers the assurance of an online currency that is secure without the intervention of a central authority. There are no physical bitcoins; ideally, balances are linked to a cryptographically secured public ledger. Despite the fact that there are numerous cryptocurrencies, bitcoin has served as a forerunner in some way to nearly all cryptocurrencies developed in the last decade.
What is Ethereum?
Ethereum, also known as ETH, is a blockchain platform. Launched in 2015, Ethereum is the largest and most comprehensive open-ended decentralized software platform and the second-largest cryptocurrency by market cap today. Ethereum enables the creation and implementation of smart contracts and decentralized applications (dApps) with no outage, embezzlement, control, or third-party interference.
It has its own cryptocurrency, Ether (ETH), and its own programming language, Solidity. Ether is basically used for two purposes: for trading as a digital currency on exchanges and to run applications on the Ethereum network. Solidity which runs on a blockchain, allows developers to create and run distributed applications.
Ethereum, as a blockchain network, is a decentralized public ledger used for transaction verification and recording. In addition to using Ether cryptocurrency as payment, people can create, publish, buy and sell, and use applications on the network.
As of May 2021, Ethereum is the second most valuable cryptocurrency globally, trailing only Bitcoin.
Bitcoin vs. Ethereum: Key Differences Between The Two
Before we talk about the difference between the two, let us first take a look at the similarities between them. Yes, there are some similarities between bitcoin and ether.
Wondering how are they similar???
Both Bitcoin and Ethereum are digital currencies with their networks based on the distributed ledger and cryptography principles. Both of them can be traded on online exchanges and stored in various types of cryptocurrency wallets. Both are decentralized, which means they are not issued or regulated by a central bank or other government entity. Both bitcoin and ether make use of blockchain, a distributed ledger technology. However, there are some significant differences between the two in terms of technical level, market cap, and so on.
It’s time to take a look at the differences between bitcoin and ether in more detail.
Here we go…
Transactions on the Ethereum network require executable code, whereas data attached to Bitcoin network transactions are only for keeping notes.
Other differences include block time. An ether transaction is confirmed in seconds, whereas a bitcoin transaction takes minutes.
Both of them use different algorithms – Bitcoin uses SHA-256, while Ethereum uses Ethash.
Furthermore, the Bitcoin and Ethereum networks have different overall goals. Bitcoin was created as a substitute for national currencies, serving as both a medium of exchange and a store of value.
Ethereum, on the other hand, was built as a platform for inalienable, programmatic contracts and applications using its own currency.
Even though Bitcoin and Ethereum are digital currencies, their primary purpose differs. Ether facilitates and monetizes the operation of the Ethereum smart contract and decentralized application (dApp) platform. In contrast, Bitcoin can be used for a variety of purposes, such as booking hotel rooms on Expedia, buying furniture on Overstock, etc.
If we see the market cap of both the two, Bitcoin is two times larger than Ethereum. Undoubtedly, ether has performed quite well since its inception. But still, it lags behind bitcoin in market cap rankings of the top cryptocurrencies. As of May 2021, ether’s market cap was $505 billion, while bitcoin’s was over $1 trillion, making it the world’s largest and most prominent cryptocurrency.
All in all, Bitcoin has the edge over Ethereum!
The Bottom Line
So it all comes down to Bitcoin vs. Ethereum. We hope that this article has been informative and enlightening for you and that it has helped you understand the fundamentals of both well-known cryptocurrencies.
You could consider trading either of them because they are both hot pies right now. Cheers!
Thanks for reading this article!!
Happy Trading… ☺ ☺