See a comparison of the two most popular virtual currencies in the world
Since the world of cryptocurrencies was established, Bitcoin has been (and still is, for now) the leader of the electronic currency market. But Ethereum is another cryptocurrency project that has accumulated a considerable amount of interest due to its unique qualities.
What is Ethereum?
Ethereum is a blockchain-based platform that uses peer-to-peer contracts for its currency, called Ether. Blockchain-based applications used in Ethereum smart contracts provide a decentralized way to verify and enforce these contracts, making it harder for potential fraud and censorship to occur.
These smart contract applications run on Ether, which has quickly become the second most valuable digital currency in the world.
Just like Bitcoin and your Bitcoin Wallet, Ether is held in the Ethereum Wallet.
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Ethereum vs Bitcoin: The Battle for the Crypto Throne
It is important to understand that Ether is different from Bitcoin, so they have different uses and overall different impact on the market.
The first difference between the two blockchain-based projects would be the average block time (which is the time it takes to issue a new token). It is 10 minutes for Bitcoin, while Ethereum’s block time ranges from 10 to 20 seconds, with an average of 12 seconds. This time lag is due to Ethereum’s GHOST protocol.
The money supply of the two cryptocurrencies is also different. Bitcoin’s supply style is inflationary in nature (a finite number of Bitcoins exist/will be produced), while Ethereum’s is the opposite, meaning that more Ether tokens will be created over time. The current number of mined Bitcoins is 16 million (most of which are owned by old miners). There is no supply limit for Ether, which is why its money supply is considered inflationary in nature.
On Ethereum, transaction costs depend on storage needs, bandwidth usage, and the complexity of smart contracts. Such transactions on the Bitcoin network are limited only by the block size.
Mining Ethereum is easier, with 5 tokens given for each block, in contrast to Bitcoin’s half of a token every 210,000 blocks (that’s 12.5 tokens every 4 years). Ethereum uses a proof-of-work memory-hard hashing algorithm called Ethash, appealing to users looking for a decentralized way to mine, rather than using ASICs to mine, as is the case with Bitcoin.
Bitcoins can be used for anything from purchasing goods and services to storing value (much like precious metals). Ethereum can be used to build decentralized applications on its blockchain that represent virtual shares, assets, proof of membership, etc. Both coins, however, are commonly used for trading. Due to Bitcoin’s intrinsic value and highly speculative price, users are more likely to adapt its use to other third-party applications, such as Bitcoin trading robots, who trade with Bitcoin.
Conclusion:
While both are considered cryptocurrencies and it is normal to compare how the technologies differ from each other, it is important to keep in mind the objective of each project.
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Bitcoin was designed to be a new currency to compete with existing money, aiming to be a globally stable digital currency, while Ethereum makes use of its smart contracts to make digital agreements and transactions.