BTC vs ETH: WHAT’S THE MAIN DIFFERENCE?
BTC and ETH are two biggest whales of the cryptocurrency world. Bitcoin (BTC) is a forefather of all coins and Ethereum (ETH) is on the second place success last years.
There are a lot of similarities and differences between them. Ethereum creation was a “hard fork” of bitcoin, so its programming is almost the same. The main difference is that ETH has a built-in “smart contract” technology which BTC hasn’t.
Bitcoin, the first digital currency, was born ten years ago in far 2008. The main idea of mysterious Satoshi Nakamoto is that Bitcoin provides lower transaction fees than a traditional financial system and has a decentralized authority on its base instead of government-issued currencies. So using Bitcoin allows everybody to:
- Operate money more easily
- Get lower transaction fees for money transfer all over the world
- In countries with galloping inflation, receive financial stability thanks to BTC.
Furthermore, two-thirds of the global population do not have access to bank services at all — Bitcoin aims to revolutionize this.
As we can see, the acceptance of the concept of a digital cryptocurrency is debated fiercely among regulators and governments all over the world. Although cryptocurrency is not formally recognized as a store of value or a payment unit, it keeps on managing a new alternative financial system sector despite exhausting debates.
Blockchain database technology is being used to create applications which could be used wider than for just supporting a digital currency.
Ethereum is the largest open-ended decentralized platform for programming that enables Smart Contracts and Decentralized Apps to be built and run easily without third-party intervention. Ethereum, launched in 2015, implements a Turing-complete programming language running on the blockchain, helping developers to launch Decentralized Apps.
The potential of Ethereum applications is already widely used. Each Ethereum application implements its own payment token which can be used to pay for services inside the app and can be traded on crypto exchanges. The most popular use of tokens is ICOs.
Ethereum is used for two purposes: it is traded on exchanges as a digital currency and is used inside the network for running applications and smart contracts. Ethereum’s revolution is that it allows you to write your own smart contracts using basically some kind of digital agreements in the format of “If this then that”.
Bitcoin & Ethereum similarities
- Both coins are valuable: they are on the first and the second places accordingly in terms of market cap. They’re the two world’s largest and most precious cryptocurrencies.
- Both coins are sought-after: while hundreds of other cryptocurrencies proceed to launch, Bitcoin and Ethereum remain widely used.
- Both coins are trustworthy: some of the newer coins outperform Bitcoin and Ethereum in various ways, but in terms of reliability Bitcoin and Ethereum are easily the top pick.
- Both coins use proof-of-work consensus: to process transactions on the network, special high-performance computing equipment is used. Another method of processing transactions is, for example, proof-of-stake consensus which does not require high-end equipment and relies on coin holders that have significant amounts of coin to verify transactions.
Bitcoin vs Ethereum
Both coins are powered by principles of cryptography and decentralization, but they differ a lot in the underlying technologies:
- the programming language used by Ethereum is Turing-complete (anything can be done) while Bitcoin’s one is a stack-based language and highly limited
- time between blocks is different (Ethereum blocks appear every few seconds compared to 10 minutes for Bitcoin).
- hashing algorithms are different (Ethereum uses Ethash while Bitcoin uses secure hash algorithm SHA-256).
- total supply cap for Bitcoin is limited and set at 21 million. Current supply is somewhere around 18 million BTC. And there is no set cap for the total Ethereum supply.
- their purpose is different. Bitcoin is created to replace the dominant financial system as a new-age store of value and payment unit, while Ethereum is developed as a platform which allows launching P2P smart contracts easily and Decentralized Apps powered by their own currency.
While Bitcoin and Ethereum are both digital currencies, the main purpose of Ethereum is not to represent itself as a payment alternative for Bitcoin, but to help developers monetize their apps and services by the use of Ethereum network and tokens.