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Bitcoin and Ethereum are undoubtedly among the most controversial cryptocurrencies, especially after the unrivaled bull run at the end of 2017 has launched prices to levels never before seen. While they are among the leading and most popular cryptocurrencies, the technology that supports each of them is quite remote.
Let's take a look at the most important differences between Bitcoin and Ethereum: their technology, mining, graphics and, of course, some alternatives.
Bitcoin
In short, Bitcoin represents a distributed digital peer-to-peer (P2P) currency that can be transferred in an instant and securely between two parties, regardless of their current location. It's essentially digital money that you can send to any other Bitcoin user anywhere in the world.
Bitcoin was introduced in October 2008 with a white paper published by an anonymous person (or group of people) known as Satoshi Nakamoto. The document itself is called "Bitcoin: a peer-to-peer electronic payment system".
Bitcoin is based on blockchain technology. The blockchain represents a public ledger that contains all the transactions in a given system that have never been performed. The ledger itself is stored throughout the network and to update one it is necessary to update all of them. It is this public ledger that contains the history of all past transactions. Bitcoin miners, on the other hand, they are there to confirm transactions to the rest of the network by including them in blocks – hence the importance of bitcoin extraction.
This is essential for the whole concept of Bitcoin. Once a transaction is transmitted and included in an extracted block, it is added to the blockchain. Once this takes place, it can not be reversed or altered in any way. It will remain in the public ledger and will be verifiable at any time.
Ethereum
If Bitcoin is intended to act as a digital currency, Ethereum is a decentralized platform that manages smart contracts. These are described as applications that function exactly as programmed without any possibility of fraud, censorship, downtime or interference from third parties.
When it comes to Bitcoin vs Ethereum, this is one of the fundamental differences. Ethereum is not a currency: it is a platform. It has its own digital currency called Ether (ETH).
Ethereum was launched in 2015 and is by far the largest open-ended decentralized software platform enabling the creation of distributed applications (dApps) and Smart Contracts.
The idea of the Ethereum platform was conceived by Vitalik Buterin – a programmer from Toronto, Canada. However, the project in its current form and form was co-founded by Vitalik Buterin, Mihai Alisie, Anthony Di Lorio and Charles Hoskinson. Buterin also announced that Dr. Gavin Wood and Joseph Lubin are also involved. The former published the yellow essay of Ethereum, while the latter continued to found ConsenSys, a company focused on decentralized applications.
Bitcoin vs Ethereum Mining
When it comes to Bitcoin VS Ethereum, particular attention should be paid to how the mines work for both. At the core of both Bitcoin and Ethereum is blockchain technology. However, key differences can be observed when it comes to their consent algorithms. Both Ethereum and Bitcoin have their distinct consent algorithms, which means that the ways in which they verify the validity of the information added to the ledger are different.
Bitcoin mining is based on the so-called Proof of Work (PoW) algorithm. Within this concept, the probability of a mining of a block is based on the amount of computational work it has done. The mining reward will be given to the first miner who can solve a complex cryptographic puzzle of each block. According to the concept of PoW, each network miner competes with all others in the use of computational power.
The extraction of Ethereum, on the other hand, is based on another algorithm called Proof of Stake (PoS). The likelihood of validating a new block within this consent algorithm is determined by the amount of mail held by a particular person or, in other words, by how many coins it has. In the PoS algorithm, block validators do not receive a block premium, but instead collect network commissions as a reward. In the case of Ethereum, the reward is called gas. With PoS there are no mathematical puzzles to solve and the creator of the new block is chosen in a deterministic way.
It is interesting to note that Ethereum has a fast blocking time: the amount of time it takes to validate a block. Currently, the average bitcoin blocking time is just over eight minutes, while the Ethereum blocking time is approximately 25 seconds, according to BitInfoCharts.
Bitcoin vs Ethereum chart
Of course, one of the things for which the public is most interested, especially when it comes to investing in cryptocurrency, is the price. BTC vs. ETH has historically been an interesting game to watch, but Bitcoin has certainly managed to outperform substantially Ethereum.
First of all, it is important to note that Bitcoin has been on the market for much longer than Ethereum. The first was introduced in October 2008, while the second in 2015.
The price of bitcoin peaked at around $ 20,000 at the beginning of January 2018. This marked the culmination of a historic price rally that took place throughout 2017 and especially towards its end. In early 2017, BTC traded at around $ 900, increasing its value more than 20 times by the end of the year.
ETH also had a remarkable 2017, as the cryptocurrency peaked at around $ 1400, starting at just $ 10 at the start of the year. This marked an increase of 140 times, which was much more than the improvement in Bitcoin prices.
However, 2018 was much less favorable to cryptocurrency investors and led the comparison between BTC and ETH to a completely different vertical. If 2017 were all about which currency it earns the most, 2018 is more about which one has lost more.
The price of Bitcoin has decreased by around 70% from its high historical value, currently trading around $ 4,280. The ETH, on the other hand, has been completely devastated, as the cryptocurrency is currently present at around $ 120, which is over 90 percent less than its peak. ETH also lost its position as Ripple's second cryptocurrency (XRP).
Alternatives to Bitcoin
There are many Bitcoin alternatives that have achieved both value and popularity over the years. Interestingly, the largest of these (in terms of market capitalization) is Bitcoin Cash (BCH).
Bitcoin Cash is the result of a hard fork (network split) on 1 Augustst, 2017. In short, a group of members of the Bitcoin community wanted to increase the size of bitcoin blocks. The resulting change caused the division of the network into two.
Another popular alternative to Bitcoin is Litecion (LTC). It is also a peer-to-peer digital currency that aims to enable immediate and economic payments to people all over the world.
Monero (XRM) is another alternative to Bitcoin. It is a cryptocurrency that puts emphasis on security, privacy and the fact that it is presumably untraceable.
Of course, there are many other coins that can be used, but Bitcoin has long established itself as the predominant market leader, accounting for almost half of the entire token market.
Alternatives to Ethereum
As we explained earlier, Ethereum is a platform rather than a digital currency and, as such, we would be looking at other platforms that are designed to allow the creation of decentralized apps.
Just like Bitcoin and Bitcoin Cash, Ethereum has also gone through its internal disagreements. Ethereum Classic (ETC) is perhaps one of the popular alternatives to Ethereum. It is the result of a hard fork that divided the network into two.
Another popular alternative to Ethereum is NEO. The NEO blockchain is perhaps the first to be launched as a dedicated project based on open source blockchain in China and is also commonly referred to as the "Chinese Ethereum".
Stratis (STRAT) is also a platform that competes with Ethereum. Supports C # compatible with Microsoft .Net framework. The network is designed to provide end-to-end for C # based blockchain applications.
Conclusion
As you can see, there are many things to know about Bitcoin and Ethereum. While the two largest digital currencies are commonly considered, the truth is quite different.
When you venture into the world of investments in cryptocurrency, it is important to make those fundamental differences. Many of the projects that are among the best in terms of market capitalization have their designations and not all of them are actually currencies, even if users usually call them as such.
Bitcoin and Ethereum are just two of the best known projects in the industry, but there are over 2,000 different and each of them has its own specifications. When thinking about investing in cryptocurrency, it is absolutely essential to perform a thorough and thorough due diligence process in order to ensure that you are well aware of the specifics of the project under consideration and its growth potential and, therefore, of justify your investment in it.
Which do you think is better – Bitcoin or Ethereum? Let us know your favorite in the comments below!
