Ever since the emergence of digital money, there’s been a never-ending arms race in cryptocurrency. The market is growing, but two competitors lead the race – Bitcoin and Etherium. So similar, yet so different, they each have their unique features but are decentralized and use blockchain – a distributed ledger technology.
The crypto industry is a highly competitive marketplace, so it comes as no surprise that it’s expected to be impacted by the central bank policy soon. This is due to the rise of the Metaverse, which requires cryptocurrencies for digital infrastructures and connectivity.
Despite this, Bitcoin and Ethereum remain the two strongest competitors in the industry. So, where do they defer? Keep reading to find the answer.
What is Bitcoin?
Satoshi Nakamoto decided to change the world in January 2009 and take the first steps to a digital revolution. Bitcoin is the pioneer that started the whole cryptocurrency market madness and highly contributed to its growth and expansion. Although this was not the first attempt at this type of currency, it was the most successful occurrence in the digital world nonetheless.
Its blockchain software was designed with clearly defined rules every participant must follow. Based on a decentralized network, it allows users currency management with no control of the government or any financial institution.
It uses blockchain technology for making monetary transactions, while each transaction is accompanied by messages and nodes.
What is Ethereum?
Co-founder Vitalik Buterin published the white paper in 2013, but it wasn’t until 2015 that the Etherium software platform was launched. Powered by Ether – the cryptocurrency made on this blockchain – this open-sourced decentralized platform allows the development of decentralized applications (dApps) that run without a third party interference.
Ethereum allows users to build and run applications using its programming language. Aside from monetary transactions, this crypto also supports trading and lending protocols, transaction fee payments, games, and more.
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Key Differences
The most significant difference between Bitcoin and Ethereum is the overall purpose and technical specification. The idea behind Bitcoin was to create an alternative to national currencies and store value as a digital equivalent of gold. New bitcoins are issued using the Omni Layer platform centered around stablecoins.
The purpose of Ethereum was to become a platform that would facilitate the process of intelligent contracts and NFTs and power the applications and network via its Ether currency. The ERC-20 is one of the most popular standards for issuing tokens for Ethereum. It defines the token network rules, including information on the token’s total supply and moving funds between addresses.
Since cryptocurrency has no physical imprint, both Bitcoin and Ethereum track the money over the web through blockchains so that they are not copied or counterfeited. Ethereum follows the money through the so-called smart contracts, which track and program transactions allowing users to exchange money, i.e., ether, among other things.
Determining the time for confirming transactions is done by adding new data blocks. In the Bitcoin network, the blocks are added approximately every 10 minutes with a possibility of 7 transactions per second. At the same time, this takes 15 seconds to do in the Ethereum network, with 30 transactions per second.
Currently, Bitcoin and Ethereum use the Proof-of-Work mechanism, meaning they use mining to receive cryptocurrency rewards. However, this process is criticized for using high-energy quantities due to the required computing power.
Ethereum will soon be switching to a new and improved blockchain protocol called Proof-of-Stake. It means that mining will be replaced with staking, where users put cryptocurrencies at stake, which will vouch for transaction accuracy.
Public wallet addresses are unique user identifiers used differently for both currencies. They are similar to the unique identifier banks use for receiving international funds – the International Bank Account Number. The wallet addresses in Ethereum start with “ox,” while in Bitcoin, they start with “bc1” or “bc3”.
There is also a supply limit that distinguishes these two competitors. While Ethereum has not set supply limitations, Bitcoin has set up 21 million bitcoins – the maximum bitcoins that can be created.
Bitcoin vs. Ethereum: Bottom line
The growing popularity of both Bitcoin and Ethereum will get more and more people to own a piece of the crypto pie. Compared to gold, which has 4% year-to-date returns, Bitcoin marks 130% in returns.
Many who decide to join the crypto industry tend to invest in Bitcoin and Ethereum, which is not to say that other cryptocurrencies are neglected. Considering the track records of these two coins, they may have different approaches in the digital crypto world, but analysts agree that both will remain leaders in this industry for a long time.
