5 Major Differences Between Bitcoin and Ethereum

5 Major Differences Between Bitcoin and Ethereum

For a person who is relatively new to the cryptocurrency industry, it can be a challenge to tell what difference exists between Bitcoin and Ethereum or even make a connection with both terms.

In this article, we try to establish a link between these earliest versions of blockchain networks as well as some significant differences.

To begin, here is the simplest definition of the two:

Bitcoin? A decentralized network that facilitates payment across borders among parties who connect to the network.

Ethereum? A decentralized network that allows developers to create decentralized applications (software that is not managed by a single entity but by a pool of users)

From the above definitions, we notice that both Bitcoin and Ethereum are decentralized networks, meaning that no central entity controls its activity.

In other words, the efficiency of both networks relies on contributions made by several global computer users who are using it.

Now that we have established a link between Bitcoin and Ethereum, we’ll now go over the differences.

5 Major Differences Between Bitcoin and Ethereum

1. Bitcoin Came First

The Bitcoin network was invented in 2008 shortly after the global financial crisis in 2007. Its anonymous founder, Satoshi Nakamoto created the system using a technology known as blockchain, with the purpose of allowing people from any part of the world to send payments directly.

The Ethereum network, on the other hand, was invented in 2014 by a group of developers led by a Russian-Canadian programmer, Vitalik Buterin. These developers borrowed the blockchain technology first demonstrated with the Bitcoin network, to create a decentralized platform that allowed other developers to create decentralized applications like theirs more easily.

In a nutshell, there were five years apart between the creation of the Bitcoin network and the Ethereum network.

2. Bitcoin and Ether are the cryptocurrencies

A blockchain network allows the creation of virtual currencies that serve as a unit of payment between members of the network.

In the case of the Bitcoin network, the bitcoin cryptocurrency was designed for this purpose while on the Ethereum network, a cryptocurrency called, ether was created.

The Bitcoin cryptocurrency facilitates only payments while Ether supports payment for services offered to users of the network.

It is these cryptocurrencies that are transacted on cryptocurrency exchanges such as www.addisonchurchill.io. Bitcoin has the ticker (BTC) while Ether has the ticker (ETH).

3. Bitcoin is the largest and most widely used cryptocurrency

Since Bitcoin was the first kind of cryptocurrency, it has the largest user base with a market cap of $63 billion at the time of writing this article. The ether cryptocurrency, on the other hand, has a market cap of $12 billion.

The wide adoption of Bitcoin also means that it is becoming an asset class among investors, more than Ether or any other cryptocurrency. Bitcoin is also the most traded cryptocurrency on www.addisonchurchill.io

4. Ethereum transactions are faster than Bitcoin’s

Being the first cryptocurrency broadly helped the adoption of Bitcoin, but also means that there was always going to be an improvement to it.

When developers launched the Ethereum network, they improved on Bitcoin's scalability by making their platform more faster for transactions.

So while it takes roughly ten minutes for a block of Bitcoin transaction to be added to the blockchain, Ethereum transactions are complete within a lesser amount of time (21 seconds).

It is also important to note that new protocols such as the Bitcoin Lightning Network have since come into existence to make Bitcoin transactions faster.

5. Bitcoin has a limited total supply

Bitcoin leaves up the billing of money since it has limited supply. So, while governments could print money at their demand, there will only ever be 21,000,000 Bitcoins.

So, there would be no need to bring money in or out of circulation to tackle inflation as with fiat currencies.

On the part of Ether, the cryptocurrency has no limited supply and had 104,832,837 tokens in circulation at the time of writing this article. The cryptocurrency also had a value of $123 according to price charts on www.addisonchurchill.io

Final Words

As the cryptocurrency industry continues to evolve, many experts are tipping the Bitcoin and Ethereum networks to last for a long time because of their significance in the early stage of the digital asset space.

For this reason, your newly found understanding of the differences between the duo will serve you well in the long run, whether you're investing or simply acquiring knowledge about cryptocurrencies.

Unless you're a crypto newbie, you already know that there are thousands of cryptocurrencies out there that you can buy. So, how do you figure out which ones have the potential to succeed in the long-term?