In the world of cryptocurrencies, Ethereum vs. Bitcoin is an ongoing debate. Despite the similarities in these digital currencies, there are fundamental differences in their purposes. Ether or Ethereum was proposed to take Blockchain beyond digital money.
It was intended to develop a fail-safe, decentralized finance system that would be free from manipulation. Bitcoin, on the other hand, did take digital currency away from the absolute control of an umbrella corporation.
Be it the shared principle of decentralization, or Blockchain influences, the differences between Bitcoin and Ether are discussed a lot. It is only through careful analysis between the two that this debate can be given closure. Let’s begin, shall we?
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What are cryptocurrencies?
Cryptocurrency can be called as one of the applications of blockchain technology in terms of digital money, distributed across nodes via a ledger-based system. Since the transactions take place in the Blockchain network that assigns each block a numeric value, it sustains the anonymity of the participants. Most people often confuse this protective layer as something lucrative. The overall market cap of Bitcoin is at $147.3B while Ether’s remains at $84.2B, at first and second places in the fin-tech industry, respectively.
Because of the credibility of transactions, cryptocurrencies have mainly attracted investors for acquisitions. According to data, the market for Ethereum has grown by 2,700 percent since 2016. However, because of its heavily fluctuating market values, cryptocurrencies are often scrutinized.
Breaking Down: Ethereum
Ethereum can be defined as the largest well-established, decentralized platform. Its crux lies in the implementation of the entire open-ended platform other than being a cryptocurrency.
Since the scope of Ethereum technology is more than being just a cryptocurrency, its indigenous cryptographic token known as Ether has multiple functionalities – each different from the other. Ether can be used as a fuel to power the compelling Ethereum network and reap its vast possibilities. On the other hand, it can also be used as collateral between individuals.
Here are some of its key features:
- Ethereum helps in the deployment of decentralized applications and contracts that can run tamper-free and with no third-party involvement.
- It is built primarily for developers and comes with its framework.
- Its cryptocurrency counterpart Ether or ETH is also used by developers to create and execute distributed applications.
- It changes the process of block creation by data miners in the Blockchain technology and instead grants control to the most significant stakeholders in the network.
- The dapps (decentralized applications) are similar to the apps we have on our phones or computers, but they run on the Ethereum network that uses ETH as its currency.
- Ether trades at a volume of $2.4m a day on average.
Also check: 10 Best Tools for Ethereum Development
Best defined as the digital dollar of the finance industry worldwide, it was in 2009 that Bitcoins were launched. Bitcoins are money minus all the processes in between. This is unlike the perceived notion to masses about the currency being involved with banks.
Bitcoins aren’t any physical currency and instead are a cryptographical balance attached to the public ledger system. Bitcoins aren’t the first attempt at the cryptocurrency, but can be deemed as one of the most successful ones. In recent years, when people are getting familiar with the idea of virtual, decentralized currency, bitcoins have emerged as a popular means of payment among individuals. Thanks to its coexisting attribute, bitcoins have carved out a niche in the financial industry.
- Similar to Ethereum, Bitcoin doesn’t require any third-party interference.
- Bitcoin is digital money that can be used for purchasing services and commodities.
- Currently, bitcoins receive the most reliance from large investors. It is because of its stable and pure nature as a cryptocurrency.
- It has a trading volume of $8.9m per day on average, and therefore, can easily be converted into cash.
Learn more: All You Need to Know About Bitcoin
Ethereum vs. Bitcoin: Understanding Similarities
The crux of Blockchain architecture lies in the ledger distribution of blocks, thus empowering every participant with all information. Such transparency leads to the elimination of any central or single-point system in the network, and thus becoming more secure and efficient. Ethereum and Bitcoin are both decentralized and therefore preferred for transactions by corporations, big and small.
Blockchain is a public distributed ledger system that has blocks containing data spread across a vast mesh of networks. In every transaction that occurs, a block containing transaction data, chosen from a pool, and then verified by miners becomes a part of the system. Since the block information gets distributed across all nodes, the encrypted data becomes transparent and, therefore, free from any potential tamper.
Ethereum and Bitcoin use and build on the same ideology to develop a secure, stable, and quick digital network.
In a Blockchain network, the blocks first get verified by data miners by the help of their data containing digital signatures, before becoming a part of the network. Taking from the same ideology, the Ethereum framework called ‘Solidity’ is used to set conditions for stimulating a transaction to occur. Because of its quick and safe functionalities, developers create smart contracts in the Ethereum network that can go without any downtime. Learn more about smart contracts in blockchain.
Ethereum vs. Bitcoin: Discerning Factors
Both the cryptocurrencies have close differences that could help you tell between them. However, these need to be looked at carefully. They are:
Bitcoins mean your money in digital form. It’s that simple.
However, Ethereum, despite being the second most popular cryptocurrency, is used by developers to program smart contracts and decentralized applications.
Bitcoins were created primarily as a secure, robust digital currency.
Ethereum was created to build a safe, powerful, and quick Ethereum network.
Bitcoins function like any other digital currency you’re familiar with online.
Ethereum functions on strict conditions that are automated and downtime-immune.
Ether is what fuel is to cars – it drives the Ethereum network and therefore is fast!
Bitcoins are similar to real money, and therefore, it is fast in comparison to other cryptocurrencies.
Bitcoins are limited to 21,000,000 digital coins and therefore have a supply-demand chain.
Ethereum is continually minted and therefore has no limitations to its numbers.
Bitcoins came around in 2009.
Ethereum is six years younger than Bitcoins.
In a nutshell, both are perfect for innovation and are indispensable. The entire purpose of Ethereum is not to compete with Bitcoin or any other cryptocurrency, and instead, it shows the vast possibilities of a powerfully simple system of Blockchain. Both Bitcoins and Ether can be considered as two contributors to the cryptocurrency community and bring high value to the system.
There is a rise in careers in blockchain technology and blockchain has tremendously changed the very face of the technology industry forever. If you’re interested to become a blockchain developer and build smart contracts and chaincodes, checkout IIIT-B & upGrad’s Advanced certificate program in blockchain technology.
What does the future hold for Blockchain?
Blockchain technology is in high demand because many businesses want to use it to better their processes and systems. It is looking for people who can navigate this new technology due to its wide variety of applications. As a result, blockchain expertise will be needed to help businesses turn their goals into actual value through the use of technology. The need for blockchain and cryptosystems developers will expand as demand develops and more firms succeed. As the technology of Blockchain advances, it will offer many job opportunities to its learners. Blockchain professionals will be in great need for many years to come since Blockchain will be a focus of discussion for businesses for a long period of time.
What are the benefits of using Bitcoin?
All Bitcoin users benefit from the attribute of accessibility and adaptability. It implies that anyone with a Bitcoin wallet can utilize its services regardless of their location or what money they use. Transactions on a platform that supports bitcoin are quick, which helps to cut down on time wasted. Second, Bitcoin offers total transparency to its users because all transaction data are openly available, with no tracking. It also gives its users privacy because they are identifiable by numerical codes rather than their names or other credentials. Because Bitcoin is a decentralized system, no central authority will require its users to keep a specific balance or demand coins.
What are the benefits of Ethereum?
The Ethereum platform's fundamental goal is to create smart contracts that can be performed safely and without the involvement of a third party. This platform provides customers with peace of mind since payments made with Ethereum go straight to the owner of the goods or services being paid, with no middleman. Ethereum is built on an open-source platform, allowing for future advancements. This is beneficial to platform users since it provides better stability and transparency, and if an issue or failure happens in any transaction, it can be resolved by inputting the source code of the transaction. Due to the lack of third parties, Ethereum has its own identifiers, making it unique, and its usage is less expensive.