For those who think that Ethereum and Bitcoin are both cryptocurrencies and have a similar use, it is not true. Bitcoin is digital gold and Ethereum is a multi-faceted platform. Ethereum’s price is up over 530 % over the last year and this growth was because of several reasons, one of them being the explosive rise in decentralized finance also knowns as DeFi, where the entrepreneurs are building automated trading and landing systems that do not require any third party involvement like banks or brokers. At a glance, those coins are both the largest cryptocurrencies but if you examine them closer, it is vivid that they have completely different purposes.
Main differences between Bitcoin and Ethereum
There are several major differences between bitcoin and Ethereum that anyone interested in the financial market, especially in the crypto-industry, should have information about. First, bitcoin is a cryptocurrency, unlike ethereum which is used to serve as a platform. Secondly, there is a difference between the transaction ways in each case, if bitcoin transactions are happening monetary, ethereum transactions may be executable instructions. And last but not least, bitcoins are a store of value and medium of exchange, which ethereum is not.
Bitcoin was created by an enigmatic figure, known as Satoshi Nakamoto, who wanted to create a peer-to-peer electronic cash system that would have the possibility of operating without a central authority. This is often described as the idea of money without any physical form. It was giving us the alternative for using traditional fiat currencies, that were supported or imposed by the different countries.
However, ethereum is simply more than cryptocurrency and was launched in 2015. The blockchain on which ethereum is based can be used for different purposes, such as paying computational services on the blockchain. It is a programming language and a decentralized software platform. The program automatically executes the actions which do not require any high authority involvement and makes agreements between several parties. The system is unique as it gives many industries the possibility to use this platform to their advantage, for example, it has changed the gaming industry and entertainment field, generally. For example, decentral and is built on the ethereum platform and gives many gaming companies the possibility to implement video games in the crypto-industry. The possibility of decentralization also creates the possibility of using Ethereum for gambling online. This is very convenient for those who are involved in this field to enjoy the process without being worried about security issues as it guarantees the anonymity of the process and makes it even more convenient and efficient during the gaming process.
Comparing Bitcoin and Ethereum
The accounts of the total market cap of all cryptocurrencies are divided between bitcoin and ethereum, by 72% and 15 %, respectively.
The purpose of bitcoin was to help people transfer their value from one to another account without a difficult banking system and is seen as a store of value. There are almost two million bitcoins left to be mined.
Unlike bitcoin, ethereum does not have a hard cap, which means that several coins are issued every year, which prevents it from inflation. The main advantage of ethereum is that it is built on the idea of a general multi-purpose blockchain. As a result, Ethereum can do many things well instead of just serve as a payment system. Ether can be used as a digital currency, but that is not its primary purpose. The Ethereum platform was built primarily to monetize operations of Ethereum smart contracts and dApps.
Finally, to sum up, there are a lot of reasons mentioned above, that make up sure that in general, ethereum is outperforming bitcoin. Even though bitcoin’s price is several times more than Ethereum’s it does not mean that it has more advantages. The main value of ethereum is considered to be its ability to use in multiple ways not only as a payment system or completing transactions. Ethereum is a whole system or software that gives the industry many opportunities to digitize and suggest to clients the services that were impossible before. As we have seen, it has affected the gaming industry and it is expected to influence many other fields as well, everything else is just a matter of time.