Bitcoin vs Ethereum - What Is The Difference?
The global interest in the cryptocurrency business seems to be growing every day. However, if asked what cryptocurrency actually was and how it functions; a large number of ordinary people would be left rather puzzled.
The hype surrounding crypto investments and digital currency these days is beyond extensive. And although the majority of enthusiasts have proven themselves to be mainly Bitcoin-minded, other cryptocurrencies (sometimes known as Altcoins) such as Ethereum, have been gaining more attention over time.
The simplest way to define Bitcoin would be to call it a digital Dollar/Euro, or any other traditional currency. It is basically your money in a digital form that can be transferred between two parties (using peer-to-peer technology) - yourself and any other Bitcoin user anywhere around the world.
Bitcoin is based on Blockchain, the record-keeping technology which is a public ledger that contains information about every transaction ever executed. These transactions are being confirmed by Bitcoin miners, specialized computers that include each transaction to blocks and add them to the blockchain.
Another important role of Bitcoin miners is providing security to the network by making it difficult to attack, alter or stop. The more miners there are, the more secure the network is.
There can be a few reasons for buying Bitcoin: some users purchase it because they do not want to store their funds it in a bank, others see it as an investment as the Bitcoin price may increase considerably in a few months or years time, yet others buy Bitcoin as a means of investing in companies that raise money through an ICO (Initial coin offering).
When we look at Ethereum, we can see that its goal is essentially different. If Bitcoin serves as digital currency, Ethereum works as a decentralized platform which runs smart contracts, and has its own digital currency called Ether (ETH).
Just like Bitcoin it is bought and sold, and used by investors to buy into ICO opportunities.
However, what makes Ethereum different is its technology. Ethereum is programmable, which means that developers can use it to build new kinds of applications that never go offline and cannot be edited by third parties, and many of which you can use today.
Such applications include cryptocurrency wallets, financial applications, decentralized markets, games, and many others.
Both Bitcoin and Ethereum work on blockchain, however, the latter is way more robust, meaning that it allows for the building of previously mentioned decentralized applications to be built on top of it.
Given all that, one could say that Ethereum is really great for innovation. Another detail worth pointing out is that Ethereum technology is receiving substantial support from the so-called Enterprise Ethereum Alliance - a group of fortune 500 companies the main and common goal of which is to work together to learn and build upon Ethereum’s smart contract technology.
It is also worth noting that Bitcoin’s transactions are manual and Ethereum’s transactions are automatic/programmable. Furthermore, Ethereum’s block time, or in other words transaction speed, takes just seconds whilst Bitcoin’s block time is minutes.
In the end, we can definitely say that there are a number of things to know about Bitcoin and Ethereum, and before diving into the vast crypto waters it is important to note their fundamental differences to ensure the specific project's potential to grow and, therefore, to justify the user's investment in it.