While checking Bitcoin rates, you might have stumbled upon a crypto called Ethereum. Many think that Ethereum, just like Bitcoin, is a cryptocurrency but that is not at all true.
In this article, we are going to bust down all the differences between Bitcoin and Ethereum. Which one is the best to invest in? Are Bitcoin and Ethereum competitors or companions? Which kind of transaction takes more time? Don’t worry, we have the answer to all your questions. Using Bitcoin News Trader App, you can start investing in Bitcoins.
What’s the Difference Between Paper Currency and Cryptocurrency?
One of the biggest advantages of owning cryptocurrency is that there is no government interference. There are no banks to manage or track your money or your transactions. You are not answerable to any financial government agency if anything goes wrong during the payment process via cryptocurrency, unlike when cash is involved. You have complete control over your cryptos.
While a transaction is taking place, in the whole world, only the two people participating in the transaction are aware of it, the sender and the receiver.
What is Bitcoin?
It was on 3rd January, 2009 that the Bitcoin network came into existence. It has been gaining popularity ever since. Especially in the years 2020 and 2021, when competitors like Dogecoin and Ethereum started coming up as well. In this article, we are going to talk about the cryptocurrency giant, Bitcoin.
Bitcoin is a virtual or digital currency. It is simply known as the online version of cash. Today, one Bitcoin is worth $38484 or ₹2811612.
What is Ethereum?
Launched in the year 2015, Ethereum is the largest and the most well known decentralized system of software. Ethereum was invented by a 19 year old, Russian-Canadian teenager named Vitalik Buterin.
Ethereum is not designed to be a digital currency as some believe. It is a fuel or a medium for wide ranges of digital currency transactions. It is a computing network for faster crypto transactions.
If you thought Ethereum was a cryptocurrency just like Bitcoin, you are not completely wrong. The cryptocurrency version of Ethereum is called Ether (ETH). This currency is just like Bitcoin and can be used for peer-to-peer transactions.
Similarities Between Bitcoin and Ethereum
Ethereum is a medium of network through which cryptocurrencies can pass through smoothly and fast. It aims to be a decentralised super computer that is distributed over all nodes of the Blockchain. That is right! Ethereum actually uses blockchain technology and is in no way a competitor of Bitcoin.
Long paragraphs of description about Ethereum, that even Wikipedia can give you. To know exactly the difference between Bitcoin and Ethereum, we must first clear out the similarities they share.
- Digital currency: Bitcoin and Ehtereum are non-centralized cryptocurrencies. Both have their digital currency version. Both require verification and confirmations while performing any kind of transaction.
- Decentralized system: Both being decentralized, the cryptocurrencies are in no shape or form directly related or regulated by any banks in the world. Both use the blockchain technology but in different ways.
- Crypto wallets: Ether and Bitcoins being actual coins, they need a storage unit also called cold storage to keep them safe and secure. These cold storages are commonly called crypto wallets and everyone, be it a trader or an investor, needs to have one. Wallets come in hardware forms as well as in website forms. You are given a wallet address through which you can transfer crypto back and forth between your wallet and your trading account.
Differences Between Bitcoin and Ethereum
Apart from knowing the fact that Ethereum is not a digital currency but a network system, we now introduce you to the major differences between why most of the investors and traders opt for Bitcoin and not Ether.
Go through the table to get an idea about their differences and continue reading to widen their differences in more depth.
|Type||Digital currency||Mode of transaction|
|Invented on||January 2009||July 2015|
|New currency produced in||10 minutes||10 seconds|
|Inventor||Satoshi Nakamoto||Vitalik Buterin|
- Transaction time: Ethereum takes just a few seconds to confirm a transaction whereas Bitcoin transactions can take weeks and even months for confirmation.
- Algorithm: Bitcoin uses SHA 256 which is an algorithm, in the world of computer programming, that takes an input and gives only a 256-bit number output. Ethereum uses an algorithm called ethash.
- Aim of the crypto: Bitcoin aims to be an alternative to the national currency. It also acts as a medium of exchange. Ethereum, on the other hand, is more programing inclined. It uses coding languages like Solidity, to write what are called “Smart Contracts” that run decentralized applications over the Ethereum network. Smart contracts involve the enforcement, payment, performance and management of the currency, Ether.
Which One is the Best to Invest in?
In January 2020, Ether’s market capital was under $16 billion. Bitcoin, around the same time, had double the market capital ($147 billion). Bitcoin is much more popular than Ethereum and this increases the chances of big companies and investors to get involved with Bitcoin even more. It is supposed to be the most stable and secure cryptocurrencies even with transaction time being a major drawback.
At present, there are 21 million Bitcoins mined out of which 18 million are already part of the blockchain. Ethereum does not have any limit of market capitalization. The graph of Ether will be ever-increasing. New Bitcoins are mined every 10 minutes but 480 Ethers can be mined every hour. This increase in supply of Ether does bother some investors as an increase in the supply could mean a decrease in value in the future.
In the world of cryptocurrency, it is hard to predict which is better. Bitcoin was the very first cryptocurrency to come into existence and hence, the most trusted too. Which one you choose lies on the factors that you wish to fulfil by buying a cryptocurrency.
We hope this article has helped you understand the similarities and differences between Bitcoin and Ethereum. Make wise decisions and more money! All the best!