Differences between Bitcoin and Ethereum

Differences between Bitcoin and Ethereum

By the market cap, they are the two most valuable and popular cryptocurrencies as of writing this article. The total value of the market cap is $270 billion and bitcoin with $189 billion and dominance of 70.2% is the leader of the board and Ethereum in second place close to $20 billion is behind its competitor.To give you some prespective, the value market of Apple the world’s most valuable brand is around $200 billion. Also, I just want to clarify that investing in crypto assets is highly risky and anyone should be prepared to lose their entire investment.

While Bitcoin and Ethereum both simply examples of digital money transfer system using Blockchain technology, there are subtle differences in how they perform and what they can be used for.

So, currency is a term that identify stores of value which can be used to buy goods but in the other hand cryptocurrencies right now can’t be used for such a purchases yet. So, they are much like Gold that has value but no one accept them in a trade but we, everyone agree they have value. Thus we can accept them as assets because they hold value and can be sold for a dollars.

Let’s get to the differences.

Bitcoin was the first cryptocurrency and has been invented in 2009. Ethereum is kind of a recent development, went live in 2015. In the time between them, lots of cryptocurrencies invented trying to improve different aspect of bitcoin, for example its speed and fee of transactions. Ethereum goes much further, while it is blockchain based and performing as a store of value, it represent a platform for distributed computing which comes with its own currency know as a fuel for the system, called Ether.

While bitcoin blockchain is kind of a database of accounts or wallets with amount of bitcoin stored in them, the ethereum blockchain is capable of storing computer code that can use the CPU power going into the network to execute.

The Ether represents this CPU power, so the idea is that Ether will be bought and sold by businesses, governments or individuals to allow them to tap into the vast, distributed resources of the Ethereum network to run their own apps. The first application is known as “smart contract“. A way to automating contracts and agreements so they will be executed without mediators involving but when consensus says conditions have been filled.

The ethereum network also allows the creation of other cryptocurrencies or tokens using the same protocol as Ether but distributed on different blockchain systems that can be even private.

Which one is better to invest in? Bitcoin or Ethereum?

As I am not a professional financial advisor I wouldn’t tell you what to invest in. I only suggest some things that you should consider. Ultimately, the long-term growth of any cryptocurrency depends on useful applications being found for its assets. If Bitcoin goes on to become a widely accepted form of currency, or the Ethereum network becomes an established standard for distributed computing, then the value of these assets is likely to continue to grow.

On the other hand, in technology, there is always something snapping at the heels of the front-runners. Newer and more efficient algorithms could replace either Bitcoin or Ethereum. Additionally, both face the threat of government regulation. What is clear is that the huge increases in value we have seen over the last five years has largely been due to speculative investment – people buying them in the hope that they will be able to sell them for more money to someone else in the future.

This is often a recipe for inflated prices and an inevitable crash back down to earth – something that many believe could happen at any time and may have already started. Ultimately, achieving sustainable growth will be dependent on useful applications. More businesses accepting Bitcoin as a method of payment, and more applications becoming widely used and supported on the Ethereum network.

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