Bitcoin and Ethereum are two biggest cryptocurrencies in the world. Bitcoin is the first cryptocurrency and is world-famous. In recent years, it has gained the attention of the public and is considered to be the most trustworthy crypto.
After the easy adoption of Bitcoin by the public, many other cryptocurrencies came into the market. But Bitcoin remained in the “Lime Light”. Nevertheless, Ethereum is another cryptocurrency that is only 4 years old but has become an important part of the crypto market, as it serves not only as a cryptocurrency but is also indulged in many other operations. It is the more general implementation of Blockchain technology on the other hand Bitcoin serves only the purpose of cryptocurrency.
Overview of Bitcoin and Ethereum
BITCOIN: A POWERFUL CRYPTO
An unknown person or group of individuals under the name of Mr. Satoshi Nakamoto developed Bitcoin and released it year 2009 as an Open Source Software.
Its coding is done using C++.
Bitcoin is completely based on the concept of Blockchain and is decentralized as no authority or bank controls or monitor its activities.
Blockchain is a digital ledger, which is incorruptible. The transactions that are recorded are publically viewable.
You can buy and sell Bitcoin by making use of various crypto exchanges. Bitcoin only serves the purpose of digital currency, nothing else than this.
ETHEREUM: NOT ONLY A CRYPTO
Ethereum is not only a cryptocurrency but a much wider concept. Ethereum makes use of Blockchain Technology and desires to replace internet third party application that stores the user data and financial records.
It was developed by Mr. Vitalik Buterin and was released on 30 July 2015.
It is coding is done using C++, Go, Rust, Solidity.
Ethereum programs and services linked with the network that requires computing power and power is not free.
So, Ether is the solution to the issue of payment; it is a digital asset bearer like a bond or other security and function like cash. It does not require the third party for processing or approval of transactions.
Ether can be considered as “Fuel” to the apps on the decentralized Ethereum network.
Ether is a native cryptocurrency denoted by ETH.
It is purely digital and can be sent to anyone anywhere in the world instantly.
Ether is bought and sold by businesses, governments or individuals to introduce them to tap into the vast, distributed resources of the Ethereum network to run their own apps.
On Ethereum, one can write the code that controls the digital value, runs exactly as programmed accessible everywhere. It also allows developers to build new kinds of applications.
It also allows the creation of other cryptocurrencies, or tokens, using the same protocol as Ether but distributed on different blockchains, which can be public or private. This means they can be created by organizations to represent shares, voting rights or as means of proving identity or authorization credentials.
Some of the Ethereum Applications are listed below:
The first of these applications is known as “smart contracts”. This is a way of automating contracts and agreements so they will execute when consensus says that conditions have been filled. Though simple, their uses are potentially widespread – such as enabling payment systems which will release funds on completion of work, or authorizing the transfer of ownership of good when payment has been made.
- Bitcoin, a network of incentivized open-source developers
- Cent, a social network where you earn money by posting
- Cryptokitties, a game where you collect and breed digital collectible cats
- DAI, a stable cryptocurrency that holds value at $1 USD, backed by the crypto collaterals that can be viewed on Ethereum Blockchain.
Key Differences between Bitcoin and Ethereum
|Basis of Distinction||Bitcoin||Ethereum|
|1. Year of stepping in the market||Bitcoin is much older than Ethereum as it is ruling the market since 2009.||Ethereum is quite new to the market and is gaining equal importance since 2015.|
|2. Purpose||Bitcoin serves the purpose of payment. It does not have any other use. It is only a crypto currency.||Ether is the built in currency that serves the purpose of Crypto Currency, except this it serves as the programming platform on which one can write applications.|
|3. Speed of Transactions||Bitcoin blockchaincan simply be pictured as a database of accounts (or wallets) with an amount of currency stored in each.||The Ethereum network blockchain is a more sophisticated construction, capable of storing computer code – applications – that can use the CPU power going into the network to execute.|
|5. Nature||Bitcoin is limited in nature. Only 21 Million can be mined out of which 17 million are already into existence.As a result, there is price of BTC.||Ethereum is unlimited in nature. While mining, the matter of inflation is always taken into consideration, to desist the ruining of coin’s value.|
|6. Mining Time||Bitcoin mining creates 12.5 new Bitcoins every 10 minutes (or roughly 75/hr).||Ethereum creates 3 new Ethers every 15 seconds (or 720/hr).|
|7. Problem of Scaling||Bitcoin introduced a system called SegWit (Segregated Witness), which is a new way to make the transactions easier and faster. It even introduced the Lightning Network which involves setting up multiple payment channels to go around the Blockchain.|
Thus, solved the scaling problem.
|For handling the scaling problem, Ethereum introduced Plasma, which will only broadcast smart contracts to the main Ethereum Blockchain after the contract’s completion, and Casper, which involves switching from the old proof-of-work mining system to a more efficient proof-of-stake algorithm.|
|8. Transaction Cost||Bitcoin transactions cost is measured based on their block.||The costing of transactions varies on needs and have a different cost (called Gas) based on bandwidth use, computational complexity, and storage space.|
|9. Hashing Algorithim||Bitcoin’s hashing algorithm is SHA-256, which can be performed efficiently with special purpose hardware, known as ASICs (Application-Specific Integrated Circuit).||The Ethereum hashing algorithm is Ethash that is memory intensive so it is far more difficult to build an economical special-purpose chip. This allows for Ethereum to have greater mining decentralization.|
|10. Risk of Cyber Attacks||Bitcoin has a risk of cyber-attacks but as compared to Ethereum it is less vulnerable.||Ethereum is more complex so it more vulnerable to cyber -attacks.|
|11. Limit of Transactions||The number of transactions in a block cannot exceed 1 MB, thus setting alimit ofa single block.||It does not have a block limit, the number of transactions in a block is decided by the miners.|
|12. Complexity of Transactions||Bitcoin transactions are simple.|
For instance, Mr A sends 5 BTC to Mr B.
Thus, transactions are manual.
|Ethereum transactions work on smart contracts.
For instance, send 5 ETH to Mr B if A’s Balance is less than 10 ETH.
Thus, transactions are automatic.
When you think of Bitcoin-“It’s digital money” whereas Ethereum-“It’s mart contracts”, this is the main difference between both. The Bitcoin transactions are quintessential for real-world transactions in terms of money, on the other hand, ether is the fuel for the Ethereum network so it is treated as gas.
Ethereum introduced smart contracts; one can set the specific condition for a transaction to happen. It also fixed some issues of Blockchain that bitcoin uses. So, here it became better than bitcoin.
Ethereum provides the platform and programming language to users while bitcoin only focuses on peer-to-peer trading and eliminates the need for third-party applications.
Therefore, both have their own advantages, bitcoin is more liquid than Ethereum, but is better in technology.
In Bitcoin and Ethereum battle, none can get “Winner Trophy” instead, these both can go side by side as it is not at all compulsory to choose one from them.