Bitcoin Vs. Ethereum - What's The Difference?
Those interested in learning more about cryptocurrency may find that much of the web is divided into two camps: those who are loyal to Bitcoin and those loyal to Ethereum. We'll explain how these two currencies differ and what makes each one valuable to investors. If you're interested in purchasing crypto assets but don't know where to start, try this tutorial for MetaMask. This video was made with Ezvid Wikimaker.
What Is The Biggest Difference Between Bitcoin and Ethereum?
While both are useful as digital currencies and can be used to trade coins, Ethereum allows for the development of decentralized applications, or dapps, which can be viewed on sites like DappRadar. These range from fungible tokens like PoWH3D and Gandhiji to unique assets like Factbar and games like CryptoCities. These unique assets, known as crypto collectibles, have led to an explosion of new dapps as users have seen the value of their assets grow quickly.
Ethereum Vs. Bitcoin - What Sets Them Apart?
Who Invented Cryptocurrency?
Bitcoin, and the blockchain technology behind it, was first proposed by Satoshi Nakamoto in 2008 in a document known as the Bitcoin White Paper. The creators have remained largely anonymous as the usage of Bitcoin has spread. Ethereum was created by Vitalik Buterin along with his co-founders Joseph Lubin and Anthony Diiorio. These two blockchains are used to trade many other coins and digital assets.
What is Bitcoin Mining?
There's been a lot in the news lately about Bitcoin, the cryptocurrency that some think is the way of the future, and whose value has made some early investors a hefty profit. There's also a lot of buzz around Ethereum, the blockchain that has attracted heavy speculative investing and the development of decentralized applications. Let's examine these two virtual currencies and why people are so hot on them.
Bitcoin was first released as an open-source software in 2009 by a person or group that went by the name Satoshi Nakamoto. Bitcoin is a cryptocurrency, a digital form of money that relies on blockchain technology. By using a decentralized ledger, users can verify transactions without the need for a central authority. This could be useful for anyone doing business online or dealing with customers in another nation.
Bitcoin rewarded users for their computing power through "Mining," which added new currency to the market. As its popularity has grown, the value of each Bitcoin has gone up, trading at a significant price.
As its popularity has grown, the value of each Bitcoin has gone up, trading at a significant price.
This concept excited pioneers in the space who saw the potential of a system where a powerful institution could not manipulate the marketplace because any user can view and audit transaction records. Vitalik Buterin eventually created Ethereum, which took the principles of blockchain from Bitcoin and expanded upon them to involve the storing of programs, not just data. Ethereum incorporates "Smart contracts" to allow for the development of applications that take advantage of its blockchain.
Beyond Bitcoin and Ethereum, there are many different types of crypto coins available. Often companies will issue an "I.C.O.," where they sell tokens that represent a stake in their company, or use those tokens as currency to participate in that company's business. You can use Ether and Bitcoin to buy and sell these tokens, depending on the blockchain they employ. Many companies are attracted to Ethereum because of its ability to incorporate smart contracts through a set of principles called ERC20.
When you make a transaction on the Ethereum network, no person is verifying your payment. Instead, it goes through a smart contract for the asset that you're buying or selling. ERC20 is a set of six functions for these smart contracts to ensure integration with the blockchain, and most digital wallets that accept Ethereum will also accept ERC20 tokens. You pay a small bit of Ether for every transaction, it goes through the company's smart contract, and is recorded on Ethereum's blockchain.
Instead, it goes through a smart contract for the asset that you're buying or selling.
ERC20 tokens are like Bitcoin and Ether in that they are fungible, meaning all coins of a certain currency are the same. If you have two Bitcoins, and you plan to sell one, it doesn't matter which one you sell because they are worth the same amount. You can also deal in fractions of a coin in the same way you can deal in dollars and cents. But some assets are unique, or non-fungible. Ethereum has led the way in using its blockchain for unique digital assets, also known as crypto collectibles.
To handle unique assets, ERC721 was created. This is a standard for smart contracts dealing in digital assets that are not all the same. One popular example is Factbar, online representations of facts that are researched and verified. If you own a Factbar, you are the only person who owns it at that time, and every Factbar has its own unique value. Highly-desirable Factbars are therefore very valuable because they are rare.
The ability to employ these smart contracts has led to an explosion in dapps, applications where users can buy and sell tokens. These include fungible tokens issued by companies, crypto collectibles like Factbar, and games like CryptoCountries, where individual tokens are sold for high amounts if they have desirable traits.
The ability to employ these smart contracts has led to an explosion in dapps, applications where users can buy and sell tokens.
The major difference between Bitcoin and Ethereum is the variety of uses. Bitcoin is mainly used to buy and sell alt coins or transferred between users as a currency. Ethereum has that use as well, and both Bitcoin and Ethereum are often held by investors who believe their value will continue to rise as they become accepted all over the world. In fact, some ATMs are being rolled out that deal in Bitcoin and Ethereum.
But Ethereum also allows developers to try their hand at decentralized applications quickly and easily. That's why so many games and virtual assets are flocking to the network. There are also companies like ConsenSys that are hoping to use the blockchain for things like green energy, connecting users directly to savings by cutting out the middleman. Pioneers like ConsenSys founder Joseph Lubin believe blockchain is not just a new type of money, but a new method of social organization that can change all variety of societal structures.
It's unclear what the future holds for cryptocurrency. For now, these are the two most popular coins because of their wide acceptance. Bitcoin, being first out of the gate, has the largest profile, but don't count Ethereum out. We haven't seen the end of what this blockchain can do, and those who predict big things for the network may be as prophetic as those who invested in the Internet back in the 1990s. Only time will tell.