This could be the right time to discuss Bitcoin vs Ethereum. This text will shed some light on Ethereum and show you how Bitcoin is different.
What is Ethereum?
Ethereum is a Blockchain project created by Vitalik Buterin. A part of it is a cryptocurrency(called Ether), but there are additional properties that Ethereum brought to the table:
Ethereum Smart Contracts
Many people think that Smart Contracts didn’t exist before Ethereum, but this is not true.
Even Bitcoin has basic support for smart contracts but is limited to currency usage(although ICP aims at changing the situation here).
On other hand, Ethereum smart contracts have broader possibilities, allowing programmers to write their own contracts.
In a nutshell, smart contracts aren’t much different than normal life contracts.
Both parties have something to offer, and a third party is a middle man(or escrow) that guarantees for both sides.
What’s different? Ethereum becomes the middle man, cutting expenses and time that usually go with the contract.
Decentralized Applications on Ethereum(DAPPS)
Ethereum is an open-source programmable platform, which can be used to develop new applications that will work on Ethereum.
It’s also “Turing Complete”, meaning it has more space for development than Bitcoin does.
DAPPS on Ethereum are popping up like mushrooms.
The main benefits of DAPPS are decentralization and no way for anyone to alter the rules that have been defined and placed inside the Ethereum Virtual Machine.
This may sound complicated, but it’s just a new concept that’s yet to be grasped by the masses.
Here’s an example:
- Someone builds a decentralized social network on Ethereum and makes it online so anyone can use it.
- You come in, make a profile and start making posts.
- Each post gets written inside the Ethereum blockchain.
- No matter what you write, no one can remove it, ever.
There are countless examples like the one above, and all of them have the same in common- no censorship, no corruption, and no way to alter something that has been accepted as valid.
This is why many see Blockchain as a game-changer, and also why so many people, companies, and even governments are starting to catch up.
So we learned the two main things that Ethereum has and Bitcoin doesn’t- smart contracts and DAPPS.
And as mentioned before, Ethereum has Ether, which is also a cryptocurrency.
Still, Bitcoin and Ether aren’t the same, and here’s how they differ.
Bitcoin vs Ether
Almost all cryptocurrencies use a PoW(proof of work) to secure their balances and transactions, and the same stands for Bitcoin and Ethereum.
And there are quite a few algorithms that can be used for this.
Bitcoin works with SHA256, while Ethereum uses Ethash.
They’re both one-way hash functions that you can find in cryptography, but they operate in different ways and are suitable for different miners:
Ethash is memory intensive, so it’s most suitable for GPUs and fairly resistant to ASIC miners.
On the other hand, SHA256 favors ASICs and it’s utilizing a brute force strategy.
In my personal opinion a strong advantage of Bitcoin.
Bitcoin is deflationary, meaning there’s a certain amount of Bitcoin which won’t be able to change once it gets the maximum cap of 21 million.
Ethereum is inflationary and can be increased over time(same as FIAT currency).
Bitcoin takes around 10 minutes to verify the transaction, Ethereum does this in 10-2os.
Bitcoin is slightly simpler to send and receive the currency than Ethereum, although the process is quite similar.
Bitcoin vs Ethereum – Wrap up
As we saw until now, there are certain differences between these two projects.
This last part will summarize the differences but also add the investor/real-life perspective into the equation.
Bitcoin is more currency-oriented
It aims to provide a stable decentralized currency for a wide range of usage.
And it does a pretty good job of that, with more and more adoption and recognition throughout the world.
The longest runner in the game and the father of all cryptocurrencies is Bitcoin.
This comes with certain benefits, like stability and popularity, which no other cryptocurrency achieved till now.
It’s also the most expensive and least affected when prices are going down.
Ethereum is better and offers much more space when it comes to smart contracts and DAPPS
It has too many applications thus it isn’t a perfect mix for a stable currency.
But it’s the second most known cryptocurrency and has a market cap that only Bitcoin has passed.
Still, it’s more developer-oriented and hasn’t reached the same adoption level as Bitcoin.
Everyone has their own preference and needs so it’s up to you to decide, and it’s definitely possible to use both of them as and when you need them.
Just keep in mind that no one has beaten Bitcoin as a cryptocurrency yet, but also that Ethereum has much more space for smart contracts and DAPPS development.