What is the difference between Bitcoin and Ethereum?

At one time, it seemed that cryptocurrencies were something fashionable and fleeting. Someone invested in them and managed to get rich, but many bite their elbows, suffering a financial collapse. However, today we can state that this phenomenon has already become an integral part of life. Cryptocurrencies earn money, it pays with them, and someone is trying to play on the exchange rate difference.

For a long time, Bitcoin was considered the precise king of the world of cryptocurrencies. Reports of Bitcoin’s successes and failures are often related to the perception of Blockchain technology in general. However, as in all empires, there is always someone who claims to be the undisputed leader. In recent years, new and fast technologies have expanded the capabilities of Blockchain’s and related with its technologies.

Blockchain (English block chain – blocks) is a continuous sequential chain containing information built according to specific rules. The connection between blocks is ensured not only by numbering but also by each block’s hash-sum and hash-sum of the previous block.

This article will focus on the modern place of Bitcoin in the cryptocurrency world and on the role of Ethereum, which can become both the main ally and the opponent of the “older brother”.

Bitcoin vs Ethereum: A History of Two Technologies

When discussing the differences between Bitcoin and Ethereum, it is essential to understand that they are similar but not completely identical. For example, Bitcoin and Ethereum are using as fast and secure p2p payments (direct from person to person), methods of protecting and preserving information, diversifying funds and paying retailers in exchange for products or services.

But initially, these cryptocurrencies were created for entirely different purposes.

For example, the creator of Bitcoin, Satoshi Nakamoto, conceived this tool as a digital form of currency and payment technology for goods and services. And also – for making transactions without intermediaries to reduce the transactions cost and time. On the other hand, Ethereum, Ethereum’s cryptocurrency (authored by Russian developer Vitalik Buterin), supports many other blockchain capabilities.

How BTC and ETH work. What they have created for and how they have used it today.

Bitcoin as a currency

In 2008, a technical document, “Bitcoin: A Peer-to-Peer Electronic Monetary System”, was published on behalf of the mysterious figure Satoshi Nakamoto. However, the true identity of Satoshi Nakamoto has always been and remains a mystery to this day. Still not installed – this is a pseudonym or a cover for a larger organized group of people.

Released as open-source software, Bitcoin has become the original cryptocurrency created during the mining process.

Bitcoin mining is a process by which powerful computers solve complex mathematical problems to create new coins.

Digital money

Initially, Bitcoin was like digital money – anonymous, secure, and fast. Because of this, cryptocurrency has acquired a long and complex history, especially in criminal circles and the Darknet. However, before becoming mainstream, Bitcoin was already the preferred payment method in the underground internet economy.

The combination of an anonymous creator and a general lack of understanding of how it works was the reason why Bitcoin fought for its legitimacy in its early years. However, despite its dubious start, Bitcoin has been able to change its image over time.

Wide use

Eventually, Bitcoin managed to become mainstream and widely accepted by people and organizations around the world. As a result, Bitcoin is the most recognizable and accessible cryptocurrency today, used by many, including tech companies, auction houses, fast food chains, and small local businesses.

There are over 46 million Americans who own bitcoin in 2021, as reported Nasdaq. In addition, over 15,000 retailers currently accept bitcoin as a payment method. So it’s safe to say that the number of Bitcoin users and retailers is growing exponentially every year.

Digital gold

According to the original design, we will have ever created a finite number of bitcoins. It is necessary primarily to maintain the anti-inflationary properties from which fiat currencies suffer. Thus, only 21 million bitcoins will ever exist, although millions of coins have already been considered lost.

In addition, the limited supply of bitcoins has led to unexpected consequences. Although the tool was developed primarily as a currency, many users now use BTC as a store of value. Invented as digital gold, Bitcoin acts more as an investment vehicle than an everyday means of payment.

However, many cryptocurrency enthusiasts believe that the history of Bitcoin shaped in such a way that Blockchain could exist.

At the same time, it is a fact that one of the rising stars of the Blockchain has been operating for quite a long time and is stable – this is Ethereum.

Ethereum as a network

Ethereum, launched in 2015, is an open-source, community-driven computing platform. Ethereum is currently the largest and most advanced decentralized software platform. By using smart contracts, Ethereum avoids downtime, fraud or third-party interference, effectively putting control of the currency back into the hands of users.

The Ethereum Virtual Machine (EVM) helps ensure that these transactions or smart contracts comply with network rules. For these actions to work, customers need to use Ether, the network’s token. As a result, the Ethereum blockchain stores the entire history of all transactions and smart contracts on the web.

In many ways, Ethereum has opened gateways for the next generation of blockchain-enabled technologies. Therefore, the platform is often called the world computer.

Here are some examples of numerous applications.

Decentralized applications

Decentralized applications, better known as dApps, are applications that run on the Ethereum blockchain. dApps are, by and large, the same as most other applications that are widely using. However, in this case, user interactions and transactions are recorded on the Ethereum blockchain.

Since dApps run on the Ethereum blockchain, they use the same decentralized distributed model, which means dApps are nearly impossible to restrict or censor.

Many dApps are financial in nature, but there are also games, marketplaces, shops, others.

DeFi (Decentralized Finance)

DeFi (Decentralized Finance) – a financial system that does not discriminate against anyone and does not allow its downtime, is one of the most practical and popular ways to use the Ethereum network.

Using DeFi, Ethereum allows you to send, receive, borrow and receive interest from anywhere in the world.

To opt-out of using the traditional banking system, users only need an Ethereum wallet and the Internet.

This tool helps people living in areas with no access to financial services and helps reduce the enormous costs associated with transactions.

NFT (Non-fungible tokens)

Apart from this, Ethereum also allows the use of non-fungible tokens (NFT). NFTs are revolutionizing online proof of ownership and helping creators tokenize their art by automatically earning royalties every time creation has resold.

For this reason, authors can find fraud protection, proper compensation, and even use their tokens as collateral for financial services. In addition, NFTs help protects users from others who profit from their work without their consent.

It is investing in a cryptocurrency that is convenient for you.

Just over a decade after the launch of the first cryptocurrency, the doors to this technology continue to open. Bitcoin and Ethereum compete in some ways, but in other ways, they also complement each other. Only time will tell which technology ultimately remains the leader. Apart from Bitcoin and Ethereum, many promising cryptocurrencies claim to be even better than both significant players.

In many ways, investing in cryptocurrencies is like voting for the world you want to see in the future. When you buy BTC or ETH, you are essentially saying that you believe in their ability to solve the problems of the classical financial system.

Since developers are still trying to understand what Blockchain is capable of, it is not easy to predict which currencies will ultimately come out on top and for which specific application. At the same time, both Bitcoin and Ethereum have reasons why they claim to be the leader. Fortunately, nothing prevents you from using both.

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