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As you enter the new and exciting world of crypto, one of the first things you will ask yourself will be about the differences between Ethereum vs Bitcoin. You may think of Bitcoin and Ethereum, as a lot of us do, as Apple and Microsoft of crypto.
However, unlike Apple and Microsoft, they are completely different from one another. Both have very different objectives in mind. In fact, other cryptocurrencies compare a lot closer to Bitcoin and Ethereum than Bitcoin and Ethereum compare to each other. When you look at Ethereum vs Bitcoin, you can see that their goals are largely different. So, besides statistics, how exactly do Bitcoin and Ethereum match up? Many beginners in cryptocurrency believe that Ethereum is only as a financial currency, like Bitcoin.
Here I will look at some of the features and facts of Bitcoin and Ethereum. This is the easiest way to understand and remember the primary difference between Bitcoin and Ethereum! Their purposes Bitcoin is a store of value and a way to send money to someone. Ethereum is also a way to send money to someone but only when certain things happen.
These values can be things other than digital currencies, making it different from Bitcoin. Their coin supply Bitcoin is limited to 21,, coins. This creates supply and demand, which is healthy for a store of value. Ethereum, however, is not limited. The production of Ether is continuous.
The supply of Ether will slow down a lot over time though. Their ages Ethereum is 6 years newer than Bitcoin and is further advanced. Ethereum vs Bitcoin, well both are of course decentralized. If something is decentralized, it is not in one central position.
Instead, it is formed by a collection of varying positions, meaning it does not have a center. They run via Facebook and Facebook only. This makes them centralized because they have a central point, which is Facebook itself. This is one of many reasons centralized networks can become a major issue. As you could imagine, right? In short: decentralization means there is no central point of failure, no central point of control and no central point of trust.
This is why many agree that decentralized networks are the future! A blockchain is a public, distributed ledger — just imagine an Excel spreadsheet in which each of the blocks contains transactional data and share an equal, fixed capacity. The ledger continues to grow and grow as more blocks add.
The blocks add up chronologically by using cryptographic techniques. Cryptographic techniques that ensure that blocks cannot reverse. Sorry hackers…. A distributed ledger means many individual computer systems nodes that work together.
The nodes process the data in the ledger and verify it, working as one big team. This way, it is impossible for a fake transaction to be verified, as it would need the consensus the group agreement of the blockchain.
Distributed ledger stores the verified blocks. It is shareable and downloadable by all other nodes on the network. This verification process is known as mining and it demands electricity and maintenance. This is the foundation of a typical cryptocurrency ecosystem. The exact number of Bitcoin nodes is unknown, but some sources estimate it to be upwards of ,!
Imagine trying to hack half of that! For more on blockchain technology, check out our Blockchain Explained guide. Smart contracts are a decentralized tool. In the Ethereum vs Bitcoin battle, Ethereum was the one who introduced smart contracts to the world. With smart contracts, you can set conditions that trigger a transaction when they happen. As the smart contracts on Ethereum are powered by the blockchain, developers can create applications that never go offline and cannot be edited by third parties.
Imagine if we had this power with the regular contracts we currently use as part of our everyday lives! A good way to think of smart contracts is to imagine purchasing a house.
Usually, this process requires third parties, such as a lawyer and a broker. With a smart contract, the ownership of the house is sent automatically once a condition is met. It looks something like this: John transfers ETH. The payment gets verified and he gets the ownership of the house. This is applicable to many different scenarios. Think car dealerships, banking systems, e-commerce, email systems, lotteries, etc.
This is why the possibilities with building on Ethereum are endless. Bitcoin and Ethereum have very different purposes! It provides users with a platform and programming language to build the applications on. It serves as a decentralized store of value — a peer-to-peer digital currency, used for financial transactions.
It eliminates the need for third parties in payment technology. In conclusion, the primary differences that separate Ethereum vs Bitcoin are their purposes and their concepts. Bitcoin has a lower coin supply and is more liquid than Ethereum, but Ethereum has better technology and provides more uses than Bitcoin does. Based on the fact Ethereum has more use cases than Bitcoin — and therefore serves a bigger purpose — I can say that it is indeed an overall better Bitcoin alternative.
It just means that because they are more similar to Bitcoin, one of them may be the best Bitcoin alternative. Blockchain technology is still in its early years. However, Ethereum is currently the clear winner. Instead, it runs alongside it as it pursues a different objective. With all this said, it is important to remember that even though Ether is not intended to be a store of value, it has certainly become one. Here are some examples of everyday life:. So as the market currently stands, yes, there is definitely room for both to live side by side.
Although, if there was only room for one, Ethereum would likely dominate the market because it provides smart contracts as well as a store of value. This is because it has unlimited use cases, whereas Bitcoin only tackles payment and banking issues. Bitcoin may have a better position in the market, but Ethereum has better technology and bigger potential.
A fun fact and an additional although minor Ethereum vs Bitcoin difference:. Save my name, email, and website in this browser for the next time I comment. Inspiring explanation! Keep it up. From the past few years, many people start their business with blockchain technology.
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If you want to know what is Ethereum, how it works, and what it can be used for, without going deep into the technical abyss, this guide is perfect for you. Important Note: This guide assumes a basic understanding of blockchain technology. Ethereum is a global, decentralized platform for money and new kinds of applications. On Ethereum, you can write code that controls money, and build applications accessible anywhere in the world. Although commonly associated with Bitcoin , blockchain technology has many other applications that go way beyond digital currencies. In fact, Bitcoin is only one of several hundred applications that use blockchain technology today.
This picture from the office of a crypto exchange CEO. Guess who? pic.twitter.com/aDcd0ipvm7— Michael Arrington (@arrington) October 13, 2019
Bitcoin and Ethereum are two cryptocurrencies that need no introduction for anyone active in the cryptosphere. However, if you are new to the ecosystem, you will definitely ponder over what makes Bitcoin and Ethereum different when both of them are blockchains. Well, the answer is simple but difficult to explain. I will still go ahead what is ethereum bitcoin it and try to throw some light on it.
But before I tell you more about the difference between Bitcoin and Ethereum blockchains, I would highly recommend you go through the links. These will give you a fair idea about the two cryptocurrency giants. Now that you have read what is ethereum bitcoin aforementioned articles, I am assuming you have a fairly good idea of both cryptocurrencies. Let us now get into the specifics of each blockchain and see what makes them different.
It was invented by Satoshi Nakamoto in as a peer-to-peer electronic cash system to give the world an alternative to the traditional banking. Also, unlike traditional money, you can send Bitcoin money to anyone and anywhere without seeking permission from banks or governments.
Read about Bitcoin mining. Update: Bitcoin has implemented segwit and Lightning network is on the rolling for more scalability that is must need to compete with other payment methods. First things. You can, but you need to understand what those transactions are for I am going to explain that further in this article. And these types of logical codes are written, executed, and are stored historically on the Ethereum what is ethereum bitcoin forever for future reference.
Ethereum is different from Bitcoin mostly because with Ethereum you can not only transfer money i. See our detailed guide on smart contracts and DApps. Post that, the cryptocurrency asset Ether helps in executing these apps and contracts. Therefore, Ethereum is not just a blockchain for transacting money. Instead, it is a decentralized programmable blockchain-based software platform that its married to its cryptocurrency asset called Ether — ETH which runs what is ethereum bitcoin Ethereum network.
Update: Ethereum is right now wrestling to update its what is ethereum bitcoin for higher scalability by implementing Casper Protocol.
Earlier last year the Ethereum network struggled from processing transactions from even a game like CryptoKitties. In this way, they all earn their cut. If a replica of these above applications is made on the decentralized Ethereum platform, it will result in the following advantages and a positive disruption of each industry:. Another aspect to understand is Ethereum is more of a company that has co-founders and executives. And this has solidified further with the formation of EEA-Enterprise Ethereum Alliancethe details of which I have already explained.
Instead, one can call it a decentralized platform for running DApps and smart contracts that get fueled by a cryptocurrency Ether that has some market value. I think this makes more sense in my opinion. In my opinion, Ethereum is fundamentally different from Bitcoin. Ethereum and Bitcoin are not competitors. They coexist and solve different types of problems in the real world and open up a possibility for a new future.
However, this may soon change when Bitcoin develops other capabilities of Ethereum with the launch of RSK network. RSK goal is to add value and functionality to the Bitcoin ecosystem by enabling smart-contracts, near instant payments and higher-scalability. But wait! That is not me making any predictions because in this crazy blockchain and crypto world anything is possible in the blink of an eye.
Also, if you find this post informative, kindly share it with your friends and crypto enthusiasts! An international speaker and author who loves blockchain and crypto world.
After discovering about decentralized finance and with his background of Information technology, he made his mission to help others learn and get started with it via CoinSutra. Your email address will not be published. Save my name, email, and website in this browser for the next time I comment. Notify me of follow-up comments by email.
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Ethereum vs Bitcoin - Explained (For Beginners)
Who created Ethereum
Instead, it runs alongside it as it pursues a different objective. With the private key, it is possible to write in the blockchain, effectively making an ether transaction. In other words, decentralization and scalability are currently at odds, but developers are looking for ways around. The id thus stands as a tamper-proof record of all transactions on the network and is accessible to all participants. Even people without a technical background can now potentially build blockchain apps. Bitcoin mining is based on the so-called Proof of Work PoW algorithm. Based on the fact Ethereum has more use cases than Bitcoin — and therefore serves a bigger purpose etheerum I can say that it is indeed an overall better Bitcoin alternative. While both Bitcoin and Ethereum are powered by the principle of distributed ledgers and cryptography, the two differ technically in many ways. The idea is that one entity will no longer have control over your notes and that no one could suddenly ban the app itself, temporarily taking all of your notebooks offline.