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November 28th, 2021

What Is Ethereum, and How Is It Different From Bitcoin?

Bitcoin is a cryptocurrency, ethereum is a platform, lets explore the difference.

Ethereum is a blockchain application platform that Vitalik Buttering created in 2013. Bitcoin, on the other hand, is a cryptocurrency that has been around since 2009. The two systems have some similarities and differences, but they are unique from one another as well. Let us explore some of the key differences between Bitcoin and ether in more detail below.

 

An Overview of Bitcoin

Bitcoin is a digital currency, which was conceptualized in 2008 and introduced to the world in 2009. Today (October 2017), over 17 million bitcoins are in circulation, with one Bitcoin equal to $5000. The creators remain anonymous to date; however, they could mine approximately 20% of all existing bitcoins that will ever be available on earth through an innovative process called "mining". 

Unlike paper currency, Bitcoin do not exist physically or even digitally but only as records in blockchain, i.e., ledger maintained by participants known as miners who use high-end computing power for encryption purposes. These transactions are completely transparent and visible everywhere throughout their network yet still maintain anonymity so no one can track back identities attached to those Bitcoin addresses.

Bitcoin is decentralized, i.e., it does not have a central authority or government backing to control its flow as opposed to regular currencies like dollars, euros etc. Also, Bitcoin are incredibly secure and nearly impossible for thieves to steal your money since no one can find out the private keys that match up with public ids associated with your bitcoins unless you give away those keys voluntarily, which will lead them straight into your bank account.

 

Benefits of Investing in Bitcoin

In the case of Bitcoin, there are transparent, neutral and decentralized currency transactions. This means that no third party has control over your money beyond the initial transaction fee charged by any wallet you use. Transactions are quickly confirmed, with a few minutes needed for it to be finalized on the network. Bitcoin is pseudonymous, which means they can't track or link transactions back to specific individuals or IP addresses without additional information being used as evidence in an investigation. 

All wallets have public keys attached, so there's no need for email verification. The blockchain also makes it extremely difficult to create counterfeit bitcoins, making them one of the most secure investments currently available online.

 

An Overview Of Ethereum

Ethereum is an open software platform based on blockchain technology. It allows developers to build and deploy decentralized applications that can run without interference from a third party or censorship while still being auditable. It has its currency called Ether, whose value spiked in 2017 but later dropped significantly. Ethereum's aim was more ambitious than Bitcoins - it aimed to allow people to create any kind of decentralized application on top of the platform instead of just creating another cryptocurrency. 

Unlike Bitcoin which had no further plans after acting as a digital currency, where you could send money around the world instantly with minimal transaction fees through cryptography rather than through intermediaries like, banks thus disrupting the finance industry by removing costs associated with traditional banking systems such as bank tellers etc.

 

Advantages of Investing in Ethereum

Ethereum is a platform on which other coins can be built upon. The Ethereum blockchain was designed to create cheaper, faster, and more secure applications than those on the Bitcoin blockchain. Some of the most popular are Augur, Ripple and Gnosis. These applications allow users to make predictions, share news or trade currencies on their blockchain without paying transaction fees. This makes it an ideal use case for building decentralized apps. The proof of stake algorithm also makes it an ideal use case for building decentralized apps.

 

Ethereum vs Bitcoin

Ether & Bitcoin are equivalent in many respects: both are digital currencies that are exchanged on internet exchanges and held in different kinds of cryptocurrency wallets. These coins are decentralized, which means they aren't issued or governed by a banking system or other governing body. They make more use of blockchain, a distributed ledger technology. But, there are several key differences between the two biggest prominent cryptocurrencies in terms of market capitalization.

Ether, or ETH (the native cryptocurrency of Ethereum), differs greatly from Bitcoin in terms of use and purpose. The language it uses to do this is called Solidity, which the creator of Ethereum invented at least in part to help developers create secure applications on his platform more easily than they were able with languages like C++ or Python.

Bitcoins value proposition stems largely from its lack of ties to any central bank, whereas ether is required for access and interactions on the app-enabled network known as Ethereum. Ether has a different objective than bitcoins: instead of acting merely as a peer-to-peer digital currency that can be exchanged between users without their involvement, Ethereum itself serves as fuel — gas — for powering smart contracts and apps built on its blockchain.

Although distributed ledgers or cryptography are now at the heart of both the Bitcoin blockchain networks and Ethereum, the two are vastly different in technology. Transfers on the Ethereum platform, for instance, may include executable code, but data attached to Bitcoin network transactions are often used merely to keep track of transactions. Further differences comprise block time (an ether transfer is verified in seconds, whereas a Bitcoin transaction takes minutes) and the methods used (Ethereum uses ethos whereas Bitcoin uses SHA-256).

But, more crucially, the Bitcoin and Ethereum systems are not the same in terms of their overarching goals. Though Bitcoin was founded as a substitute for the monetary system and so seeks to be a means of exchange for goods and services of value, Ethereum was designed as a framework for immutable, programmable contracts and applications using its currencies.

Although BTC and ETH are also both currencies, the fundamental goal of ether is to make the Ethereum smart agreement and decentralized application (app) platform easier to use and commercialize.

Ethereum is yet another application for a blockchain that complements the Bitcoin network; however, it should not be considered a direct competitor to Bitcoin. Ever since its debut in mid-2015, ether consistently ranked second to Bitcoin in terms of market capitalization for the majority of its existence. 

But, Ethereums success has forced it to compete with all cryptocurrencies, particularly from the standpoint of traders. However, it's crucial to remember that the ether network is considerably smaller than bitcoins: market worth with just under $16 billion by January 2020, whereas bitcoins, was over ten times larger, at much more than $147 billion.

 

The Bottom Line

Bitcoin gained popularity to send money around the world with near-instant speed and very little, if any, fees. It uses blockchain technology to keep records of all transactions, which is transparent - so everyone can see what is happening at every moment in time - and anonymous since no names are attached to it. 

But there are some drawbacks: for example, Bitcoin doesn't allow users to program their own rules into the system (such as when or how much you'll be paid). These decisions need centralized approval by someone who knows more than everybody else; that is where Ethereum comes in. To know more about the differences between the two, make sure to go through the above post.

vig-What is Ethereum and how is it different from bitcoin
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