There is no doubting it – cryptocurrecy has become really popular in the recent years. And two major players in the field are Bitcoin and Ethereum. For beginners in the crypto world, knowing what sets these two digital currencies apart in important for making the best investment decisions.
If you fall into these category, you will want to read this post to the end. Here, we will provide a simple and easy-to-understand comparison of Bitcoin and Ethereum. Don’t worry; we won’t go into any technicalities that might confuse you.
Bitcoin: The Pioneer Cryptocurrency
Bitcoin is the first and most well-known cryptocurrency. The asset was created in 2009 by – well, some unknown individuals. Bitcoin is a decentralized digital currency, and one way it is able to secure transactions on its network is through cryptography.
That’s what it also uses to control the creation of new units. Unlike traditional currencies, Bitcoin operations don’t, in any way, depend on any government or central bank.
One of the key features of Bitcoin is its limited supply. You can find only 21 million of the coins in circulation. This means that Bitcoin is deflationary – its value may increase over time due to its scarcity. Bitcoin transactions are also anonymous, making it an attractive option for those who value privacy and security.
Ethereum: More than Just a Cryptocurrency
Unlike Bitcoin, we could trace the origin of Ethereum to a person — Vitalik Buterin. That was the guy that created Ethereum in 2015. It made it as a decentralized platform for building decentralized applications (dApps) and smart contracts.
While Bitcoin is known to be primarily a currency, Ethereum has a wider range of use cases beyond just being a digital currency.
Ethereum’s smart contract capabilities enable developers to create self-executing contracts that can automate various processes. The Ethereum Virtual Machine (EVM) makes it possible for developers to build dApps on the Ethereum blockchain.
Wondering what these apps are used for? dApps can be used for a variety of purposes, including decentralized finance (DeFi), gaming, and social networking.
Differences Between Bitcoin and Ethereum
Although the two crypsots have some things in common, there are also some key features that set them apart. And if you will be choosing one of them to add to your portfolio, you need to understand these differences. Let’s take a quick look at them.
#1: Transaction speed
When it comes to transaction speed, Ethereum seems to be faster. While Bitcoin transactions can take several minutes to process, in just a matter of seconds, Ethereum transactions can be processed.
#2: Mining process
Ethereum also wins in this regard. Bitcoin uses a proof-of-work (PoW) as its mining algorithm. And this algorithm is known to require miners to solve complex mathematical problems to validate transactions and earn new Bitcoins.
Ethereum is currently transitioning to a proof-of-stake (PoS) mining algorithm. This type requires validators to hold a certain amount of Ethereum and vote on the validity of transactions. Ethereum PoS has several advantages over PoW.
Scalability refers to the efficiency of each network. With Bitcoin’s blockchain, you can see about 7 transactions being processed per second. But with Ethereum, up to 15 transactions can happen in one second. However, both blockchains are facing scalability challenges as they become more widely adopted.
#4: Development roadmap
Bitcoin’s development roadmap is focused primarily on improving its scalability and transaction processing speed. Ethereum’s roadmap is more focused on expanding its use cases beyond just being a digital currency, with a focus on DeFi and dApps.
Which is Better for a Beginner?
The decision of which cryptocurrency to invest in will depend on your individual preferences and investment goals.
If you’re looking for a more established and well-known digital currency, Bitcoin may be a better option for you. Bitcoin has a limited supply and a focus on privacy and security, making it an attractive option for those who value these features.
On the other hand, if you’re interested in the broader potential of blockchain technology and want to explore a wider range of use cases, you may want to buy Ethereum instead.
Is Bitcoin more popular than Ethereum?
Yes, Bitcoin is currently more popular than Ethereum. Bitcoin has a larger market capitalization and is more widely known and accepted as a digital currency. However, Ethereum has been gaining popularity in recent years, particularly with the rise of DeFi and dApps built on the Ethereum blockchain.
It’s possible that Ethereum’s popularity could eventually surpass that of Bitcoin, but for now, Bitcoin remains the more popular of the two cryptocurrencies.
Can Bitcoin reach 100K soon?
Well, it’s impossible to say for certain whether Bitcoin will reach $100,000 in the near future. However, it’s worth noting that Bitcoin’s price has experienced significant volatility in the past, with dramatic price swings in both directions.
Some analysts and investors believe that Bitcoin could reach $100,000 or even higher in the future, while others are more cautious in their predictions.
Understanding the differences between Bitcoin and Ethereum is crucial for anyone interested in investing in cryptocurrencies or learning more about the crypto world. The two cryptos has many features that set them apart.
We have taken our time to discuss some of these in this post. We believe understanding these will help you make a more informed decision about your investment.