How Does Ethereum Compare To Bitcoin?
Updated: Aug 24, 2020
Bitcoin and Ethereum are the two biggest players in the world of cryptocurrency. Bitcoin was first traded back in 2009. During that time, people could buy one of the digital tokens for less than $0.15. But the prices rose steadily and reached its peak of more than $20,000 per coin somewhere in late 2017. On the other hand, Ethereum started its journey in 2015 at somewhere around $2.90 per token, reached its peak, and trades at $240.07 as of now.
Bitcoin and Ethereum are similar in different ways. Both of them uses the blockchain technology for digital ledger. Both of them can be stored in different types of crypto-wallets and can be traded through various online exchanges. Despite these similarities, the two biggest cryptocurrencies in the market are pretty different from each other. Bitcoin and Ethereum are developed for very different reasons and have different internal dynamics. Many people who are new to the world of cryptocurrency believes that Ethereum is only a digital currency just like bitcoin, but the truth is that Ethereum is much more than just that.
Before jumping further, it's better that we have some basic understanding of features and facts of Ethereum and Bitcoin.
Bitcoin(BTC): Bitcoin was started in 2009 by the mysterious Satoshi Nakamoto and was the first cryptocurrency of the world. It's also considered the first use of the technology called Blockchain. Bitcoin is a digital currency created as an alternative to the regular currencies with the aim to fix global finance problems. Bitcoin doesn't require any kind of third party system like a bank to do transactions, plus take only a few minutes to perform a transaction. Bitcoin is considered highly liquid, which simply means that you can convert your Bitcoin into cash. Although Bitcoin was not the first attempt at creating the digital currency, it was the most successful one and it's like a predecessor to mostly all cryptocurrencies developed over the decades.
Ethereum(ETH): Ethereum was launched in July 2015 and considered as Blockchain 2.0 because it took the idea of Blockchain technology and took it beyond just digital currency. Ethereum is the largest and well established, open-ended decentralized software system. Ethereum powers the deployment of decentralized applications popularly known as dApps / smart contracts without any fraud, downtime, or interference from third party services. It comes with its own programming language called Solidity, which allows developers to build new dApps.
The potential use cases of Ethereum are wide-ranging and are backed by its crypto token called Ether. Ether is like a fuel for running commands on the Ethereum platform and is used to build and run applications on the platforms. Currently, ether is used mainly as a digital currency on exchange and to run applications on the Ethereum network.
Since we got some basics understanding of Bitcoin and Ethereum, let's look at some of the main differences between them.
Concept: The main concept of bitcoin revolves around digital currency whereas, on the other hand, Ethereum revolves around smart contracts.
Objectives: The main aim of Bitcoin is to act as a store of value and provides a way to send money to others. On the other hand, Ethereum acts as a building platform for dApps or smart contracts, which allows it to send ether token that represents some values. These values can be things other than digital currencies.
Market Supply: Bitcoin is limited to 21 million coins, which leads to supply and demand situations that are good for a store of value. On the other hand, Ethereum is not limited, the production of ether is continuous, but will eventually slow down over time.
Transactional Capabilities: Ethereum transaction speed is fast when compared to Bitcoin. Bitcoin's block time is a few minutes whereas, on the other hand, ether's block time is just seconds. Bitcoin mainly acts like money but Ether acts more like fuel because it is designed to power the Ethereum network and transactions.
Bitcoin and Ethereum have very different purposes. Ethereum's purpose is to power and runs decentralized smart contract applications using blockchain whereas on the other hand Bitcoin's purpose is to serve as a decentralized store of value for financial transactions and eliminate the need for the third party in payment.
In short, Bitcoin mainly focuses on payment technology whereas Ethereum focuses on smart contracts.
Now, it is pretty much clear that both Bitcoin and Ethereum have their own benefits. Ethereum is technologically better and has more uses than Bitcoin, but Bitcoin is more liquid than Ethereum as it has lower coin supply.
Since Ethereum has more use cases than Bitcoin, therefore it serves a much bigger purpose if compared to Bitcoin. Therefore we can say that it is better than Bitcoin. Technologically also, Ethereum is ahead of Bitcoin. Ethereum's blockchain is an advanced version of Bitcoin's blockchain that's why it's termed as Blockchain 2.0, plus Ethereum's transaction is much quicker and cheaper compared to Bitcoin.
Bitcoin currently has a bigger position in the market, but Ethereum has better technology and much bigger potential which makes it a worthy opponent for Bitcoin. Therefore we will not be surprised if Ethereum overtakes Bitcoin in the coming future.
We hope that this post provided you some insightful information about Bitcoin and Ethereum and you learned something new about the world of cryptocurrency.
Thank you so much for reading this post, please feel free to leave your feedback.