What Is The Difference Between Ethereum And Bitcoin?

Ultimately, what distinguishes Ethereum from the rest is its ability to allow developers to write code that controls digital value, runs exactly as programmed. This decentralized network introduced the world to smart contract scripting functionality. These protocols allowed anyone to build decentralized applications and expand the use cases for cryptocurrencies.

Ethereum vs Bitcoin

Unlike Bitcoin, literally anyone can code a smart contract which runs on top of Ethereum. Certain estimates put the number of bugs per line of contract code at 1 in 10. Ethereum is the brainchild of Vitalik Buterin, who handled its initial development along with 3 other skilled developers. They were able to pick and choose ideas from the development of Bitcoin and altcoins and introduce new ideas of their own. Bitcoin has a codebase that benefits from 99 Core contributors and several alternative implementations.

Ethereum can decentralized computing networks and make them cheaper and reliable, as there will be no single server failure. All nodes are independent and have a copy of the Blockchain database. Smart contracts are self-executing contracts that are agreed by buyer and seller and directly written into the lines of code. He had a front row seat when Ethereum Classic split off from the main Ethereum chain after the infamous DAO hack triggered a contentious hard fork in 2016. Indeed, Ethereum Classic has mostly floundered since then and currently sits at roughly $5 billion market capitalization, approximately 2.5% of Ethereum’s market capitalization. I'm pretty skeptical overall of the flippening happening,” Miller said, in an interview with CoinDesk.

Some countries will classify crypto investment profits as taxable income. With crypto values dropping, this question is more important than ever in order for these tradable assets to stay afloat. Check out the tastyworks coin Bible to learn the basics of the cryptocurrencies offered on tastyworks including Bitcoin and Ethereum.

Shortly after the bubble popped in Bitcoin, the SEC began going after ICOs, and Ethereum’s value collapsed. The information provided is not meant to provide investment or financial advice. If you’re ready to start trading crypto, it’s easy when you open an Active Invest account with SoFi Invest®. SoFi doesn’t offer staking or a crypto wallet, but you can trade dozens of crypto 24/7 from SoFi’s secure platform. As of March 16, 2022, one BTC was worth $39,615 and one ETH was worth $2,679. Although BTC is worth more than ETH, the two cryptocurrencies follow a very similar price trajectory.

Block Times

Bitcoin is primarily designed to be an alternative to traditional currencies and hence a medium of exchange and store of value. Ethereum is a programmable blockchain that finds application in numerous areas, including DeFi, smart contracts, and NFTs. Thousands of cryptocurrencies exist, and literally any number could be created using similar blockchain technology.

The fundamental distinction between Ethereum and Bitcoin, however, is that Ethereum is programmable. Ethereum’s reach is broadened by this functionality, making it more than just a digital currency. It transforms Ethereum into a platform for financial services, gaming, and applications.

Ethereum Eth Vs Bitcoin Btc: What Are The Differences?

As many investors see the great potential of the project, they continue supporting it. Now that Ethereum has switched to theProof of Stake consensus algorithm. Thus, its maximum supply is no longer limited by the mining processes. The total supply of Ethereum is equal to itscirculating supplyand is continuously changing as block producers release the new coins. The ICO boom in 2017 revealed the lack of scalability as the main problem of Ethereum. That prompted Vitalik Buterin to set a new goal to switch Ethereum from PoW to PoS consensus.

Ethereum Improvement Proposal 1559, which alters Ethereum’s monetary policy. These features make Bitcoin the prime candidate to become the reserve currency of the world. Once Ethereum 2.0 launches, it's likely that the supply of Ether will become deflationary, that is, it will decrease over time. Ethereum 2.0 will decrease issuance from 4% annually to around 0.5%. Transactions are faster on the Ethereum network than on Bitcoin’s.

  • While each transaction can be traced and identified, the identifying info entails the public keys for both the sender and recipient.
  • For example, both coins utilize a Proof-of-Work algorithm to validate the state of the network.
  • Some countries will classify crypto investment profits as taxable income.
  • Learn more by reading our articles on how to buy cryptocurrency and check out our list of the best cryptocurrency exchanges.
  • The same cannot be said for the total supply of Ether, which is calculated differently by different members of the Ethereum network.

Overall, a long-term investment in either represents the hope that their underlying technology will achieve worldwide use, increasing the demand for the limited supply of their cryptocurrency. Whether to buy either — or both — depends on your market analysis. Bitcoin has over 18 million bitcoins currently in existence, and Ethereum has 118 million ether. Now even though Ethereum has easily crossed the 100 million mark, the market capitalization for Bitcoin is $781 billion, whereas for Ethereum it’s only $368 billion.

Though it’s been a rough 2022 for cryptocurrency, these digital currencies remain a popular investing option, as traders speculate that cryptocurrency is the “must catch” wave of the future. Some of the most popular digital currencies include Bitcoin, Ethereum and Dogecoin. Bitcoin is the most popular cryptocurrency, while ethereum is a global computing platform powered by its native cryptocurrency, ether, which is the second most popular. Most people think that Bitcoin and Ethereum are competitors in the market which is not true. Because if you make deep research on these cryptocurrencies, you will come to know about what this blockchain technology is and how it affected our lives since its development. It is a virtual currency that acts just like money or other forms of money used to buy something or to make payments.

Bitcore: An Innovative Blockchain

With first to market advantage, Bitcoin continues to hold the largest share of the cryptocurrency market. There is something to be said for brand recognition and reputation. However, that doesn’t mean that Bitcoin necessarily has the best technology, that it will prevail in the long run, or that it’s the only cryptocurrency you might purchase. With PoS, users can validate blocks of transactions based on how many coins they hold. The more ETH you hold as a miner, the greater your mining control. Launched in 2015 by Vitalik Buterin, Ethereum is also built using blockchain technology, but as an open-sourced computing platform.

Ethereum was built as a general purpose blockchain, allowing for limitless functions through its smart contracts. As a result, Ethereum is able to do many things well instead of serving solely as a store of value. Blockchain” technology, and they appeal to many of the same investors. They are widely available on cryptocurrency exchanges, and many people still buy both for their perceived investment value rather than their current utility.

Bitcoin allows users to manage a currency outside the control of any government, bank, or financial institution. Instead, it relies on a decentralized network of users running the Bitcoin blockchain software with a set of rules every network participant agrees to. The rules determined by the software determine how transactions work, the https://xcritical.com/ time transactions take to settle, a 21 million BTC supply limit and more. There are notably crucial differences between both cryptocurrencies. These differences set them apart and have led to various debates in which some argue BTC and ETH are competitors. In reality, they may complement each other because they serve different purposes.

While we strive to provide a wide range offers, Bankrate does not include information about every financial or credit product or service. There are some similarities between Ethereum and Bitcoin like both these cryptocurrencies use blockchains as proof Ethereum vs Bitcoin of work for the validation of transactions. If you are looking for a long-term investment, Ethereum is definitely a better option. With all the benefits that Ethereum 2.0 will provide developers, it has a much better chance for future growth.

Ethereum vs Bitcoin

To eliminate the central authority or a central server system peer-to-peer networking system was invented. In peer-to-peer computing, each participating party acts as a node and sends/receives data. There is no central administration to block or hold transactions. Bitcoin’s network can only execute 7 to 10 transactions per second, which makes it slower than the bulk of other blockchain networks, including Ethereum. This is because Bitcoin blocks are only produced every 10 minutes on average, and each block can only contain a restricted number of transactions. Bitcoin was not the first time that a decentralized, nonphysical form of money was proposed, but it was the first time that the concept was successfully realized.


Taking a closer dive on the difference between Ethereum vs Ethereum Classic does protrude a difference. Having emerged as a hard fork of Ethereum, its classic version has inherited its weaknesses. As the community runs the project, the chances for any significant improvements are minimal. Hence, making Ethereum a much better option for long-term investors.

Ethereum vs Bitcoin

This process also helps boost the value of Bitcoin as an investment. Ethereum produces a token called Ether, which powers the decentralized apps on the Ethereum blockchain. In this lottery system, validators are chosen at random to verify transactions and validate blocks. If a validator's computer is chosen to solve the cryptographic puzzle to help secure and advance the network, the validator earns a reward. Proof-of-stake blockchains pay validators a reward for staking their ether. This compliance may help governments to look more favorably upon blockchain, and this favorability may even give public officials the push they need to step in and regulate cryptocurrencies.

Future Of Work

This is the much-promised moment when the Ethereum blockchain finally converts from a proof-of-work to a proof-of-stake consensus mechanism. In layman's terms, it means that Ethereum will soon be running on a superior technology that will make it possible to do everything on the Ethereum blockchain faster, cheaper, and better. Bitcoin is not only the best-known and most popular crypto but also often the benchmark to which all other cryptos are compared. In terms of market capitalization, Bitcoin has always loomed far above its rivals.

Most Popular Types Of Cryptocurrency

If you’re interested in adding them to your portfolio, do your research and consider your long-term goals and risk tolerance. Avoid putting more money into a cryptocurrency than you can afford to lose. Additionally, Ethereum is used for decentralized applications that operate on peer-to-peer networks, such as games and virtual worlds without a central authority. It’s even possible for developers to create their own blockchains and cryptocurrencies using the underlying platform.

So, it can be a better choice to invest in Ethereum in June 2022. As of now, the Market Capitalization of Bitcoin for June 2022 is less than $600 Billion with a volume of $44.8 Million bitcoins mined. However, In April 2021 the market cap of Bitcoin was around $1000 Billion. Both the cryptocurrencies have limited supply where bitcoin has no more than 21 million coins and Ether comes with an inflation rate of 4%. Ethereum is designed in such a way that it can be scaled, decentralized, and programmable too. It allows the creation of applications and deployments on its network.

Its purpose is to help people send money peer to peer without involving any third parties. Bitcoin removes the need for banks or any other payment processors. Ether can also be used as a currency like Bitcoin, although the demand for the Ether token is not as substantial. There are no limits to how many tokens people can produce during its lifetime, however the blockchain has a cap of 18 million per year.

Follow Bloomberg Technology

“Code is law” – this is the motto that ETC creators kept in mind. In 2016, DAO was one of the most popular Ethereum-based hedge funds that attracted numerous investors and startups thanks to the ease of use. In comparison, Ethereum entered the market with much more fanfare. Ethereum continued this momentum into the launch of the first DAO . The launch of the DAO boosted Ethereum’s status and helped the network to secure $150 million in its public ICO.

Ethereum can be considered to be a single-threaded machine, which is limited by the capacity of that machine. In another word, it uses vertical scaling, which is fundamentally flawed for any system designed to support millions of users. Bitstamp – Founded in 2011, Bitstamp is one of the oldest & most trusted exchanges in the world. This exchange currently accepts Canada, UK & USA residents excluding the states of Alabama, Hawaii, Idaho, Louisiana, Nevada, & New Jersey.

Many ERC-20 tokens are designed to mirror the price of existing assets. For instance, wrapped Bitcoin is an ERC-20 token that matches Bitcoin’s price, while wETH fulfills the same function for Ethereum. USDT_ETH and USDC_ETH match the price of the stablecoins Tether and USDC respectively, which in turn are pegged to the U.S. dollar.

Leave a Reply

Your email address will not be published. Required fields are marked *