Bitcoin Vs Ethereum, What’s the Difference?

July 21, 2022|Bitcoin, University

Bitcoin (BTC) and Ethereum (ETH) remain the two most well-known cryptocurrencies within an ever-dynamic digital asset market. How do these two popular crypto coins compare? Learn more below in this quick read; Bitcoin Vs. Ethereum.

Bitcoin is known as the first real cryptocurrency, dubbed ‘digital gold’ due to its stature and current prominence. However, Ethereum remains popular due to the usefulness of its blockchain network in deploying and running decentralized applications (dApps).

When it comes to Ethereum, Ether is the ‘fuel’ for these dApps and serves as the ‘cryptocurrency’ for the entire Ethereum network. Therefore, it’s essential to know the distinction between Ethereum and Ether when looking at the whole ecosystem.

The unique attributes of both coins have made Bitcoin and Ethereum (Ether) the longstanding top two cryptocurrencies based on market capitalization, trade volume, and unique wallet addresses.

However, there are some crucial differences between Bitcoin and Ethereum. Let’s examine how Bitcoin and Ethereum diverge. Some might argue that these differences make the duo competitors. Others maintain that Bitcoin and Ethereum merely serve different purposes and should not clash.

Bitcoin Vs. Ethereum, How Do They Differ?

A Basic Overview of Bitcoin And Ethereum

Bitcoin was initially launched in January 2009. A whitepaper shared by the still-mysterious Satoshi Nakamoto, who envisioned a currency without a central authority secured by blockchain, marks BTC’s humble beginnings.

Bitcoin is not the first attempt at a digital currency. However, over the years, the coin has shown growth and notoriety. Now Bitcoin is the foundation for all other modern cryptocurrencies that have emerged in the last decade.

Ethereum’s white paper emerged in 2013. The project’s co-founders sold Ether in 2014 to fundraise. Finally, July 2015 brought the launch of the Ethereum network in an attempt to usher in a decentralized Internet.

Today, Ethereum allows smart contracts and dApps to be deployed and remains the most popular open-source decentralized software infrastructure. Ether, the native cryptographic token, is used to run applications and is bought, sold, and traded on crypto exchanges like many other digital assets.

Key Differences Between Bitcoin And Ethereum

Consensus Mechanism

Right now, Bitcoin and Ethereum rely on the Proof-of-Work (PoW) consensus mechanism. However, the Ethereum team is right in the middle of a shift away from PoW to Proof of Stake as part of network optimizations and upgrades commonly known as ‘Ethereum 2.0.’ The Ethereum team is switching to PoS to enhance scalability and security and to help mitigate high gas fees.

Utility

Utility is another critical difference between the Bitcoin Vs. Ethereum race. According to Bitcoin’s whitepaper, the cryptocurrency functions as a medium of exchange and a store of value as an alternative to traditional fiat currencies. In contrast, Ethereum helps to facilitate dApps and smart contracts with the help of Ether as the native currency. Ether’s primary focus is not to serve as a new global currency but to help monetize the Ethereum platform.

Transaction Data

Transactions on the Ethereum network can contain pieces of executable code to build smart contracts or interact with existing smart contracts and other protocols. On the other hand, bitcoin transactions are focused on monetary activity and are only able to have encoded notes and messages.

Token Issuance

Many might not know that it’s possible to issue tokens on both the Bitcoin and Ethereum networks. Created in 2013, the Omi Layer is a decentralized software layer developed on top of Bitcoin that enables the creation of custom cryptocurrencies. However, adoption has largely just stayed focused on stablecoins and is not nearly as popular as token issuance on Ethereum. Ethereum tokens are issued based on hundreds of standards, including the ever-popular ERC-20 standard.

Transaction & Network Details

Bitcoin and Ethereum also have several differences in the network in general. For example, Ethereum adds new blocks about every 15 seconds. Bitcoin adds blocks about every 10 minutes. In addition, public Bitcoin wallet addresses start with a 1,3, or bc1, while Ethereum ones begin with ‘0x.’ Bitcoin also has a 1MB block size limit, while Ethereum’s blockchain does not have a limit.

The Bottom Line

Bitcoin and Ethereum have a few similarities but vastly more differences. Really, there is no Bitcoin vs. Ethereum, because they are vastly different and play significantly different roles in the space! Nevertheless, both Bitcoin and Ether remain the two most popular cryptocurrencies by market capitalization. As of early July 2022, Bitcoin’s price sat at $21,605, while Ethereum’s was at $1236.

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