Bitcoin vs Ethereum: Similarities and Differences

In this article, we’ll be comparing two of the most popular cryptocurrencies, Bitcoin vs Ethereum. While the two have several similarities, there are also quite a few distinctions between them. We’ll be taking a look at the similarities and differences between them. 

About Bitcoin (BTC)

According to Wikipedia, Bitcoin is a decentralized digital currency, without a central bank or single administrator, that can be sent from user to user on the peer-to-peer bitcoin network without the need for intermediaries.

Bitcoin was the first cryptocurrency to be launched that functions independently of any central authority. The first block of data on its blockchain was mined in January 2009 by its pseudonymous creator Satoshi Nakamoto. Since then, Bitcoin’s adoption has been steadily growing over time. Bitcoin was created as a peer-to-peer (P2P) electronic cash system, which means that transactions can be conducted without any central authority. 

Features of Bitcoin

1. Despite Bitcoin not being legal tender it charts high in popularity and has triggered the launch of hundreds of other virtual currencies collectively referred to as ALTCOINS (another name for various currencies launched after Bitcoins) 
2. Balances are kept on a public ledger that everyone has transparent access to, that – along with all the persons knowing each other transactions in records in a public ledger and protect by the number assign to them. 
3. Balances of Bitcoin tokens are kept using public and private “keys,” which are long strings of numbers and letters linked through the mathematical ENCRYPTION (it’s a means of securing the digital data using an algorithm and a key algorithm that was used to create them.) 
4. Small amounts of bitcoin that are used as alternative units are: millibitcoin (1 mBTC = 0.001 BTC), and satoshi (1 sat =0.000001 BTC) which is a millionth of a bitcoin in value.
5. As a consequence of its decentralization, Bitcoin cannot be censored or controlled by any government or corporate entity. 

Read Also: 5 DIFFERENT WAYS TO MAKE MONEY WITH BITCOIN

About Ethereum (ETH) 

Ethereum is a blockchain platform created in 2015. Ether is the cryptocurrency of the platform.

Ethereum is designed with a different blockchain platform and focuses on smart contracts, transfer of property and dApp production. 

The dApps created on the Ethereum blockchain use Ether tokens that come from the chain. While Ether tokens can also be used as a currency, their main focus is to power dApp creation.

Features of Ethereum

1. Ethereum allows the development and deployment of smart contracts. A smart contract is a simple computer program that facilitates the exchange of any valuable asset between two parties.
2. Ethereum allows people to create consolidated applications, called decentralized applications.
3. blocks are mined every 10 to 20 seconds.
4. Ethereum uses a Proof-of-Work mining system. Although, the network is considering switching to a Proof-of-Stake consensus, which would replace miners with validators.
5. Instead of transaction fees, Ethereum uses a different system called gas. Gas is a unit that measures the amount of computational effort required to execute transactions. When users send Ether tokens, they pay a gas fee to complete the transaction.

Read Also: REASONS WHY ETHEREUM STANDS OUT FROM OTHER ALTCOINS

Bitcoin vs Ethereum: Similarities 

1. They both operate using the proof-of-work consensus. This means that for both Ethereum and Bitcoin, the verification and confirmation of transactions require a network-wide consensus of nodes.
2. Both Bitcoin and Ethereum use a cryptographically secured public ledger which is used to validate and store transactions that occur on the network.
3. BTC and ETH are based on the concept of a peer-driven network without a central authority controlling the blockchain.

Bitcoin vs Ethereum: Differences

1. BTC was created as an alternative to national currencies and thus aspires to be a medium of exchange and a store of value, Ethereum on the other hand, was intended as a platform to facilitate immutable, programmatic contracts and applications via its own currency.
2. ETH  transactions are much faster than BTC transactions and are completed in a matter of seconds instead of minutes. 
3. They use different encryption algorithms. Ethereum uses ethash while Bitcoin uses SHA-256.

Conclusion

When it comes to selecting between the two cryptocurrencies which one to invest in, it depends on what your goals are. While Bitcoin is the most widely used crypto with Businesses accepting it as a payment method, Ethereum, although it is less widely used, is still not too far behind.