Ethereum vs. Bitcoin: What’s The Main Difference?

Ethereum vs. Bitcoin: What’s The Main Difference?

Bitcoin, no doubt, has triggered the hype in cryptocurency. It all started from bitcoin but its success was heightened with the introduction of ethereum. Bitcoin is the first ever blockchain-based currency and is considered as the largest virtual currency to date. However, other cryptocurrencies are quickly coping up with the pace, like ethereum.

While the purpose and function of these two virtual currencies are the same, these two operate on different infrastructures.

While ethereum runs on the same technology, it has amplified features and add-ons to it.

Core Differences Between Bitcoin And Ethereum

  • Bitcoin is a digital currency while ethereum is more than that.

Ethereum is a blockchain-based currency that enables peer-to-peer contracts, the Ethereum Virtual Machine (EVM), and smart contracts so it basically allows additional commands. The decentralized system enables a secure layer that is fraud-proof. These smart contracts can also bring down the costs and can provide amplified security levels as compared to traditional contracts. These smart contracts are powered by Ethereum’s currency, ether which are stored in an Ethereum wallet.

Ethereum allows users to create digital tokens which are used to incentivize members. This represents assets or virtual shares. You can use these tokens for voting or fundraising purposes. These smart contracts are compatible with any exchanges and any wallet. There are no fixed amounts of token with ether. It’s flexible and can fluctuate.

Unlike bitcoin, ethereum data blocks do not contain transaction information but can also use ether in creating open contracts that can be completed right away or the soonest that requirements are met and will then be verified and added to the blockchain.

  • Bitcoin and ethereum uses different mining techniques and hardware requirements.

With mining bitcoin, you would need a specialized computer hardware which is not profitable for someone who uses just one computer. You would need a sizeable investment to earn more with Bitcoin mining. On the flipside, ethereum would only require consumer GPUs which encourages a stronger network of miners. Both bitcoin and ethereum miners have to use up computing power in solving math or proof of work problems which will then be added to the blockchain. Miners are able to earn rewards apart from receiving fees for the blockchain transactions. Another difference is that Ethereum transactions or transfers get completed faster or would just take three minutes while bitcoin transactions would take an hour to complete. Both transaction fees for ethereum and bitcoin are minimal.

  • Ethereum has an added layer of security apart from having a decentralized network.

Both bitcoin and ethereum exist in a decentralized system but ethereum encourages miners to use graphic cards which prevent around 51% of attacks and collusion. The first security solution in place with blockchain technology was the proof-of-work system and then now Ethereum developers propose a new method or proof-of-stake system that replaces mining with staking to validate further whether a block should really be added to the blockchain. With bitcoin, the blockchain nodes are segregated into pools which have aggravated potential for collusion. This new method can lower the costs for computing power and also boost decentralization efforts.

While these two blockchain technologies are all too often compared and contrasted. Ethereum and bitcoin are two entirely different projects with ether’s smart contracts and bitcoin being a stable and powerful digital currency.

 

 

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