Most senior tech enthusiasts will remember the dot-com bubble in the 90s – with all the excitement and energy to study and adopt the internet and the high-paying jobs that it suddenly created. And those people must be currently going through a sense of ‘Dejavu’ with all the fuss around Blockchain, Bitcoin, Ethereum, and cryptocurrencies that we hear about in the tech world today. We are indeed going through a new revolution, wherein Blockchain technology is changing how everything, including business, governance, and communication, is done in the world. Today there are several cryptocurrencies that use Blockchain technology. Out of all of them, Bitcoin and Ethereum have come out as the most popular ones. Even in the tech world, most people have a hazy idea of what Bitcoin and Ethereum are, how they are different from each other, and which among the two is better. This article takes a comprehensive look at the two cryptocurrencies and attempts to put an end to the Bitcoin vs Ethereum debate.
It all started with a white paper presented by the anonymous ‘Satoshi Nakamoto’ in 2008. The paper introduced the concepts of a decentralized currency called Bitcoin and immutable distributed ledgers called Blockchains that could store details of Bitcoin transactions.
Bitcoin presents the prospect of an online currency secured without any central authority, which makes it different from government-issued currencies.
However, there are no physical bitcoins. They are present only as balances associated with cryptographically secured public ledgers.
As the first successful online currency, Bitcoin has come to be known as the predecessor to virtually all cryptocurrencies developed ever since. Even today, Bitcoin is the most valuable and widely used cryptocurrency in the world.
Ethereum is a Blockchain-based platform that is actually a derivative of Bitcoin. But its huge popularity has made it a rival to Bitcoin. The network currency of the Ethereum ledger is called Ether (ETH). Unlike Bitcoin, Ethereum is not merely a currency or financial tool. It can be used to store data of several types safely and securely.
Ethereum permits us to deploy smart contracts and decentralized applications (dApps). These can be built and run without the disadvantages of downtime, control, fraud, or interference from any third parties.
Ethereum has its own unique programming language that can run on a blockchain. This allows developers to build and run distributed applications easily.
Ethereum has many potential applications that are wide-ranging. It is powered by its native cryptographic token called ether (ETH).
Ether is used for two main purposes: It is traded on exchanges as a digital currency similar to other cryptocurrencies and acts as a fuel for running various commands on the Ethereum platform.
Differences between Bitcoin and Ethereum
Let us look at some of the main differences between Bitcoin and Ethereum in terms of the technology used, their prices, future scope, and growth potential.
Difference between Bitcoin and Ethereum Technology
Although both Bitcoin and Ethereum networks are both powered by the concept of distributed ledgers and cryptography, there are significant technical differences between the two. For instance, Ethereum transactions may contain executable code, whereas Bitcoin network transactions are generally only for keeping notes. There are differences in block time too. An ether transaction is often confirmed in seconds, compared to a few minutes for a bitcoin transaction). While Bitcoin runs on the SHA-256 algorithm, Ethereum runs on Ethash.
Currently ,both Bitcoin and Ethereum use a consensus protocol called proof of work (PoW) to validate transactions. However, in 2022, Ethereum will be moving to a different validation system called proof of stake (PoS) with its Eth2 upgrade. This will make Ethereum more scalable, secure, and sustainable.
Proof of work is highly energy-intensive because it requires computational power. Proof of stake, on the other hand, replaces computational power with staking and hence, is less energy-intensive. PoS will replace miners with validators.
Bitcoin vs Ethereum applications
There are fundamental differences in the overall aim of Bitcoin and Ethereum networks. Bitcoin was created as a viable single alternative to national currencies. It strives to be a medium of exchange as well as a store of value. Ethereum, on the other hand, was created as a platform to enable immutable, programmatic contracts and decentralized applications via its own currency.
Bitcoin vs Ethereum value
As of July 15, 2022, Bitcoin had a market cap of $392.2 billion, accounting for about 48% of the total cryptocurrency market. The value of a single Bitcoin is $20,582.79 on the same date. Ethereum, with a market cap of $192.3 billion, had a market share of 23.4%.
As of July 15, 2022, there were 19,093,818.75 BTC and around 120 million ETH in circulation.
Bitcoin vs Ethereum long-term prospects
The maximum number of Bitcoins which can be mined is limited to 21 million. So, it is expected to retain a high value. The Ethereum ecosystem, on the other hand, is growing rapidly, thanks to the surging popularity of its dApps used in finance (decentralized finance, or DeFi apps), arts and collectibles (NFTs), gaming, and technology. Ethereum is the fastest-growing cryptocurrency.
Difference between Bitcoin and Ethereum in tabular form
To summarise, we have compiled the main differences between Bitcoin and Ethereum in a tabular form below:
|1||Bitcoin cryptocurrency was conceived by a person or group known by the name Satoshi Nakamoto in 2008.||Ethereum as a cryptocurrency was proposed by Vitalik Buterin in 2013.|
|2||Bitcoin was invented to replace national currencies following the financial crisis of 2008.||The purpose of creating ethereum was to mainly utilize blockchain technology for storing computer code along with maintaining a decentralized payment network.|
|3||Blockchain does not have smart contracts.||Ethereum, on the other hand, allows the creation of smart contracts. Smart contracts are computer codes that are stored on a blockchain that execute when some predetermined terms and conditions are fulfilled. Smart contracts on ethereum are compiled in various programming languages such as Solidity, Vyper, etc.|
|4||Generally, bitcoin transactions contain only notes.||Ethereum transactions sometimes contain some executable code.|
|5||Bitcoin runs on the SHA-256 hash algorithm.||Ethereum runs on the Ethash proof-of-work algorithm.|
|6||The block time of a bitcoin is 10 minutes.||The block time of ether is 12 to 15 seconds.|
|7||The blockchain ledger of bitcoin has a block limit of 1 MB.||However, the ethereum blockchain does not have a block limit.|
|8||Bitcoin is the highest valued and most widely used digital currency in the market to date.||Ethereum is the second-largest cryptocurrency after bitcoin as of now.|
Similarities between Bitcoin and Ethereum
Despite some fundamental differences, both Bitcoin and Ethereum share a few similarities: both of them are assets created on the basis of a publicly displayed distributed ledger known as the blockchain; they can be stored in digital wallets, and they both use alphanumeric strings as their addresses, and they are traded on cryptocurrency exchanges. Both Bitcoin and Ethereum currently use a consensus protocol called proof of work (PoW), although Ethereum will be moving on to proof of stake (PoS) with the ETH2 upgrade.