What is the difference between Bitcoin and Ethereum?

What is the difference between Bitcoin and Ethereum?

Many fundamental parallels exist between Ether and Bitcoin, the money used to complete transactions on the Ethereum network, and Bitcoin. They're both digital currencies based on blockchain technology. This implies that independent computers all around the world volunteer to preserve a record of transactions, allowing the history of each coin to be verified.

Both are virtual currencies that are utilized for services, contracts, and as a store of value. Their popularity has piqued the interest of news outlets and traders alike, who want to learn more about how blockchain technology will impact the financial environment over time. The majority of the similarities end here.

Although their decentralized structure distinguishes them from traditional currencies, they are not universally accepted. While Bitcoin is more commonly acknowledged and regarded as international digital money, Ether is solely accepted for transactions involving Ethereum-based Digital Applications (Dapps).

» Learn more: Read our explainer on How does bitcoin work?

Ether's and Bitcoin's main differences

Ether and Bitcoin are both cryptocurrencies that use blockchain technology to operate. Aside from that, the currencies are very distinct and have very diverse applications.

Bitcoin

• When most people hear the words "blockchain" or "crypto," they immediately think of Bitcoin. It was the first application of blockchain technology, and it redefined what currency could be if it wasn't connected to a central bank or country.
• Because all machines on the decentralized network must agree on the conditions of any transaction, its technology makes it difficult to be stolen or tampered with. This usually entails verifying that the payee is the legal owner of the currency.
• The coin can be bought and sold on the open market, or you can lend your processing power to the network (mining) and get paid in Bitcoin (harvesting).
• Traders frequently monitor these occurrences since some have resulted in market volatility while others have had no effect.

» Learn more: Read our explainer on What is the difference between Bitcoin and alternative digital currencies?

Ether

1. Ethereum looked at how they were using blockchain technology shortly after Bitcoin's debut and anticipated how it could be used for more than simply cash.
2. Ethereum quickly understood that it needed a single currency for its platform that could be trusted in accordance with its protocols, starting with Smart Contracts and decentralized applications (Dapps). This prompted the Ethereum Foundation to create Ether, an organization that controls Ethereum's activities but cannot modify protocols unilaterally.
3. Ether is mined similarly to Bitcoin, however unlike Bitcoin, Ethereum miners have the ability to charge a fee for verifying a transaction. Furthermore, the amount of Ether that can be released has no restriction. This removed the perceived scarcity that could have contributed to Bitcoin's greater price.
4. Ether is the acknowledged currency within the Ethereum network, although it is not commonly accepted outside of it. On the other hand, Bitcoin is not recognized as a currency on the Ethereum platform.

Protocols

Ethereum and Bitcoin have unique protocols and methods. As a result, some transactions that are permitted on one platform may not be permitted on another. When comparing permissions and permissionless transactions, this becomes a point of contention.

Will Ethereum eventually surpass Bitcoin?

Many factors play a role in the prices of Ethereum and Bitcoin.

Traders who want to bet on the value of cryptos like Bitcoin and Ether must ask important questions like:

• How is each coin used?
• Is it still commonly accepted today? How widely will it be adopted in the future?
• What can we learn about this instrument from past data?

While Bitcoin has historically had a greater price value than Ether, it is crucial to remember that the cryptocurrency market has been and will continue to be highly volatile. Unlike equities, commodities, or even centrally-regulated currencies, the underlying value of a cryptocurrency is unknown.

Don't forget to read: What is Bitcoin and how does it work?