Since the growing demand for digital currencies has increased within the last few years, names like Bitcoin, Litecoin, and now Ethereum have started to come forward. Ethereum was announced at the North American Bitcoin Conference in 2014. Since Bitcoin was the first virtual currency, there is always constant comparison between Bitcoin and any other new and emerging digital currency. Before you start investing your time, money, and energy into Ethereum it is essential to know the differences and similarities between Ethereum and Bitcoin.
Bitcoin was created in 2009, by an innovative yet mysterious programmer, Satoshi Nakamoto. The first virtual currency brings users several benefits. Bitcoin offers lower transaction fees compared to tradition online payment systems and is completely decentralized. This means that there is no third party or central bank controlling the happenings of Bitcoin. There is also no physical Bitcoin, users can store, send, and receive bitcoins using digital wallets.
In the last few years, acceptance of virtual currencies is increasing among government bodies and regulators. Although, tt is still not recognized as a mode of payment with value, but it has been successful enough to gain the attention from people all around the world and many online stores accept digital currency for their goods and services. Despite being debated about and scrutinized regularly, Bitcoin has managed to survive and continues to thrive.
Another popular digital currency, Ethereum launched in 2015 and is considered to be one of the most well established largest decentralized software platform. This allows distributed applications to be run and without fraud, downtime, interference, or control from a third party. Ethereum is not just a platform, but it is also a language that is running on the blockchain. It helps developers to build and publish several different distributed applications.
Application potential of Ethereum is wide ranging and it runs on a platform specific token named Ether. In 2014, Ethereum launched a pre-sale for Ether that garnered a huge response from the public. Ether is like a car that moves around the Ethereum platform. It is sought after by developers who are looking to develop as well as, run application within Ethereum.
Ether is used for two purposes. It can be used inside Ethereum to run several applications and is traded on a cryptocurrency exchange (Bitcoin, Litecoin, etc). According to experts, Ethereum can be used to trade, secure, code, and decentralize almost anything.
From a general point of view, Bitcoin and Ethereum serve different purposes. Bitcoin is considered to an alternative to traditional money, it is a medium of transactions and stored value. Ethereum, on the other hand, is a platform that facilitates peer to peer contracts, as well as, applications using its own currency. Both Bitcoin and Ethereum are digital currencies, however, the primary purpose of Ethereum is not to establish itself as a payment alternative like Bitcoin. Ether’s main purpose is to monetize and facilitate the working of Ethereum to help developers build and run applications.
Bitcoin and Ethereum are both powered by the principle of cryptography and distributed ledgers and that’s about where their similarities end. For example, the programming language used by Ethereum is turning complete, while Bitcoin uses stack based language. Another big difference is the block time and basic builds. Ethereum transactions are confirmed within seconds, while Bitcoin transactions can take almost nine minutes to complete! Not to mention, both systems use completely different algorithms, Bitcoin uses SHA-256 ( a secure hash alorithing) and Ethereum uses ethash.
Ethereum is a new concept based on the blockchain that supports and doesn’t compete with Bitcoin. However, with time and rising popularity, Ether is beginning to compete with other cryptocurrencies.