Comparison between Bitcoin and Ethereum
As a fierce competitor of Bitcoin, Ethereum has also become a well-known cryptocurrency. Though developed afterwards, Ethereum has built upon the foundations laid down by Bitcoin, making both Bitcoin and Ethereum made to be used for different purposes.
What is Bitcoin (BTC)?
Bitcoin is the world’s first cryptocurrency. Bitcoin was developed in 2009 by Satoshi Nakamoto, a pseudonym, who had implemented the use of blockchain technology for the purpose of recording financial information and transactions, drawing in the attention of numerous popular figures towards Bitcoin, further pushing its demand higher. With this taken into account, in addition to the matters of a limited supply, Bitcoin’s price has skyrocketed since.
The Bitcoin blockchain utilizes the hash function encryption method popularly known as SHA-256 to change pieces of information into long and complex hashed forms for the purpose of ensuring security. However, computational power and resource absorption is still required in order to decrypt the hashed data to verify and create blocks. Note that the Bitcoin blockchain requires approximately 10 minutes to create 1 new block.
Bitcoin was designed to have only 21 million coins in total and every 210,000 blocks created on the blockchain network or around every 4 years, the rewards miners receive would be halved. The Bitcoin Halving occurrence renders prices to adjust immensely every 4 years. In current times, a total of 18 million BTC has been released, meaning that through calculations, by the year 2140, every Bitcoin would have been mined.
What is Ethereum (ETH)?
Ethereum is built on a decentralized blockchain network with Ether as it native token used as currency within the network. The structure was developed from Bitcoin, the first cryptocurrency in the world.
Ethereum was programmed and developed by Vitalik Buterin, its co-founder, in 2015 and is able to utilize smart contracts when processing transactions, creating demand for Ethereum. There is an initial supply of 72 million ETH with over 50 million ETH distributed in its ICO.
In simplification, smart contracts are programmed computer commands that function in accordance with the input set of commands. Developers are able to set their desired commands for specific use and everyone is able to transparently examine the program.
Currently, Ethereum is being developed into its 2.0 stage. The Ethereum 2.0 installation will change from a Proof of Work (PoW) basis to Proof of Stake (PoS), which would allow a reduction of energy consumption, while also being able to handle a larger amount of transactions.
Difference between Bitcoin and Ethereum
Bitcoin and Ethereum are quite different. Bitcoin is comparable to money one uses to spend or as a store of value, whereas Ethereum or Ether is not only a medium of exchange on its own network, but also the main driving factor behind smart contracts, allowing the creation of various applications on its blockchain network.
Moreover, an additionally distinctive differentiation between the two is that Bitcoin is limited to only 21 million BTC, whereas Ethereum is not limited at all.
Though Bitcoin is evidently the coin with the largest market share, Ethereum is also equipped with points of uniqueness like smart contracts. This has allowed ETH to become the second most popular coin on the market even without the Ethereum 2.0 implementation which would change its network functions from PoW to PoS.