How Do Bitcoin and Ethereum Compare?

what is bitcoin

It seems almost impossible to go anywhere without hearing about cryptocurrency.

Bitcoin, which is somewhat of the cornerstone of the cryptocurrency world, soared in 2017 and it has a lot of investors wondering if it’s something they should get involved in.

Bitcoin isn’t the only kid on the block, however. There’s also Ethereum, and it’s taking more of the cryptocurrency market share, but it’s doing so in a different way. What is Bitcoin in comparison to Ethereum?

What should you know as you contrast the two?

An Overview of Bitcoin

First, what are the basics of Bitcoin?

Bitcoin holds the distinction of being the first virtual currency, and its primary benefits include lower transaction fees and decentralized authority, as compared to currencies issued by governments.

There is no physical Bitcoin, but instead, it’s based on mathematical algorithms and balances.

While Bitcoin isn’t formally recognized as a payment, its acceptance is growing by not only the financial system in general but also regulators and governmental organizations.

What is Ethereum?

Having been launched just two years ago, Ethereum is newer than Bitcoin, and it’s also quite a bit different.

Ethereum is actually a software platform and a specific programming language that runs on a blockchain. It’s designed to help developers as they build and publish applications.

Ether is the actual digital currency exchange that operates as a cryptocurrency, and it’s used inside the Ethereum platform as a vehicle to run applications and provide payment for work done there.

The similarity between Bitcoin and Ethereum is primarily the fact that both are based on concepts of cryptography and distributed ledgers, but that’s really where most of the similarities end.

The Differences Between Bitcoin and Ethereum

Bitcoin is primarily seen as a way to have an alternative to currency issued by the government. It has payment and transaction value.

Ethereum, on the other hand, is a platform that serves as a vehicle for contracts between people and applications, and then it also serves as its own internal form of payment.

Bitcoin and Ether are digital currencies, but the objective with the utilization of Ether isn’t to become an alternative to government-issued currency. Instead, it’s meant as a way to help people working on the Ethereum platform as they build and run distributed applications.

Comparing Purposes and Objectives

When people talk about the competition between Bitcoin and Ethereum, it’s not exactly a genuine consideration of the two.

Bitcoin and Ethereum are similar in some ways, but they aren’t based on competing purposes. However, because of how much Ether is growing in its use, it’s in some ways a competitor in the overall cryptocurrency marketplace.

There are also a lot of technical differences that can be explored at length when looking at Bitcoin and Ether. For example, the majority of all Bitcoin have been mined at this point, and early miners have most, while Ethereum expects only half of all coins to be mined by its fifth year.

There are also distinctions when it comes to the cost of transactions, and there are differences in coding.

To sum it all up, while the technology of Bitcoin and Ethereum are similar to one another, the objectives are very different.  

Author: Susan Melony