Bitcoin is referred to as digital gold and Ethereum as digital oil; But what do these terms mean? What are the differences and similarities between Bitcoin and Ethereum?
Today, the hype surrounding Bitcoin, Ethereum, digital currency, and blockchain technology equals the .com bubble of the 1990s, and the trading volume and market value of some of the major cryptocurrencies are competing with the world’s largest companies.
Most people can say, “Yeah, I heard about bitcoin!” To say; But most people do not know exactly what bitcoin is and are even more confused about Ethereum
The world of cryptocurrencies has completely transformed the process of financial transactions. Digital currencies themselves include three subsets of cryptocurrencies such as bitcoin, virtual currency such as digital yuan, and central bank digital currency (CBDC) . Bitcoin is the first cryptocurrency to enter the realm of finance.
Created by Satoshi Nakamoto, the cryptocurrency was first introduced in the industry and later influenced other economic makers to introduce more digital currencies. Since Bitcoin and Ethereumare two prominent names and the most valuable digital currency market of these two, in this article we will examine these two cryptocurrencies.
What is Bitcoin?
Bitcoin (BTC) was launched in November 2009 and its new idea was published in a white paper by Satoshi Nakamoto. Unlike government-issued fiat (traditional unsecured currency) currencies, bitcoin offers secure transactions without central control. Bitcoin is not a physical coin, and its balance sheet is held only by the General Office and is secure because it is encrypted.
But Kevin was not the only attempt to build digital and online currency, and before that, there was another attempt. Bitcoin is the ancestor of all cryptocurrencies introduced in the last decade.
Through years of trial and error, decentralized virtual currencies have gained acceptance among governments and legislators. The disappointing fact about Bitcoin is that it is not accepted as an official means of payment or a source of value.
Of course, recent efforts have been made in this regard; Like buying Tesla with Bitcoin; But this Ramzarz has successfully gained its place over the years. Bitcoin continues to coexist with the traditional financial system despite controversy and scrutiny.
In the first phase of the cryptocurrency boom in 2017, the bitcoin market value accounted for 87% of the total cryptocurrency market.
What is Ethereum?
The applications of blockchain technology go beyond its use as a digital currency. Ethereumwas released in July 2015. Ethereumis the largest, most popular, and most unlimited decentralized software platform.
Ethereumpromotes the use of smart contracts alongside decentralized or DApp applications that are built and run without deception, corruption, interference, or third-party control. Ethereumruns entirely on its blockchain with its software language. Ethereumallows developers to build and run distributed software.
Promising Ethereumapplications are widespread. They use a local cryptocurrency token called Ether, abbreviated ETH. It should be noted that Ethereumis the name of the blockchain and local token networks on this network.
Ether has two main purposes:
- Like other digital currencies, it is traded on various exchanges.
- Used on the Ethereumnetwork to run applications.
“People all over the world use ether to make payments, as well as as a source of value as collateral,” Ethereum said.
Now that we are familiar with Bitcoin and Ethereum, let’s first talk about the similarities between Bitcoin and Ethereum, and then look at the differences.
Similarities between Kevin and Ethereum
- The blockchain networks that Bitcoin and Ethereumoperate on are both based on cryptographic concepts and distributed ledgers.
- Both BTC and ETH are global digital currencies.
- Bitcoin and Ether use the Consensus Proof (PoW); That is, its transactions are verified by hardware called Miner. Therefore, transactions must be agreed upon by all nodes across the network. It should be noted, however, that due to high transaction costs and high energy consumption, Ethereumis migrating to Ethereum2.0 and using PoS.
Bitcoin and Ethereumdifferences
- Transactions on a bitcoin network are data used solely to store notes; But Ethereumnetwork transactions may contain executable data.
- Ethereumhas a much shorter blockchain time than Bitcoin. Ethereumtransactions take only a few seconds to confirm; But for Bitcoin it takes several minutes.
- Ethereumprocesses 10 to 15 processes per second and Bitcoin 3 to 5 processes.
- Bitcoin is more stable than Ethereumin terms of price.
Bitcoin is a medium for exchange and a source of value ; But Ethereumis a platform for smart contract execution and decentralized applications
- Bitcoin is limited to 21 million coins; But the Ethereumis not like that and it does not have a high limit. However, blockchain experts have claimed that the number of Ethereumcoins will never exceed 100 million.
- Ethereumuses the e-hash algorithm; While the bitcoin algorithm is SHA-256.
- Ethereumand Bitcoin networks differ in their purpose. Bitcoin cryptocurrencies have been created as an alternative to national currencies and to become a source of value and a medium of exchange. Ethereumalways intends to be a distributed general ledger platform that facilitates the construction and execution of immutable and programmable contracts and applications through its own currency.
- Ethereumdoes not intend to be an alternative to the monetary system. Ethereummonitors and facilitates the operation of depots and smart contracts.
- GitHub has only four bitcoin repositories; While Ethereumhas 247 tanks. Repository is a term used to describe a place where developers work together to access project information.
Ethereum should not theoretically be compared to Bitcoin; But from the traders’ point of view, Ethereum’s popularity has made it compete with other cryptocurrencies.
It should also be noted that decentralized finance tokens (DIFAs) are based on Ethereumand have smart contracts that make them easier to exchange across different platforms.