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The difference between Bitcoin and Ethereum

 


Bitcoin and Ethereum - Overview:

Ethereum, the cryptocurrency for the Ethereum network and blockchain, is the second most popular digital currency after Bitcoin (BTC).

In fact, as the second largest cryptocurrency by market capitalization, the comparisons between Bitcoin and Ethereum are very natural.

Ethereum and Bitcoin are similar in many ways:

Both are digital currencies that are traded via online trading platforms such as Binance.

They are also stored in different types of cryptocurrency wallets.

Both of these digital currencies are decentralized, which means that they are not issued or regulated by a central bank or other authority.

Both use a distributed ledger technology known as the blockchain.

However, there are also several important differences between the two most popular cryptocurrencies by market capitalization.

Below, we'll take a closer look at the similarities and differences between Bitcoin and Ethereum.

Bitcoin was launched in January of 2009.

It has presented a new idea laid out in a white paper by the mysterious "Satoshi Nakamoto".

Bitcoin offers the promise of an online currency that is secured without any central authority, unlike government-issued currencies.

There are no physical bitcoins, just balances linked to a crypto-secured public ledger.

Although Bitcoin was not the first attempts at a currency of this type online, it was the most successful in its early efforts, becoming known as the predecessor in some form to all cryptocurrencies that have been developed over the past decade.

Over the years, the concept of a decentralized digital currency has gained acceptance among regulators and government agencies.

Although it is not an officially recognized means of payment or a store of value, nevertheless it has begun to be officially recognized in El Salvador recently, where the cryptocurrency has managed to establish a niche for itself and has continued to coexist with the financial system despite being subject to regular scrutiny and discussion .

Blockchain technology is used to create applications that go beyond simply enabling digital currency payments.

Launched in July of 2015, Ethereum is the largest and most established open source decentralized software platform.

Ethereum enables the deployment of smart contracts and decentralized applications (dapps) to be built and run without any downtime, fraud, control or third party interference.

Ethereum comes complete with its own programming language that runs on the blockchain, enabling developers to create and run distributed applications.

The potential applications of Ethereum are extensive and are powered by the original Ethereum cryptocurrency.

Ethereum (commonly referred to as ETH).

In 2014, Ethereum launched an initial offer, which received an overwhelming response.

Ethereum is the fuel for running commands on the Ethereum platform and developers use it to create and run applications on the platform.

Ethereum is mainly used for two main purposes, it is traded as a digital currency in exchanges in the same way as other cryptocurrencies, and it is used on the Ethereum network to run applications.

According to the Ethereum website:

People all over the world use ETH to make payments, as a store of value, or as collateral.

While both the Bitcoin and Ethereum networks are powered by the principle of distributed ledgers and cryptography, the two differ technically in many ways.

For example, transactions on the Ethereum network may contain executable code, while the data affixed to Bitcoin transactions is generally for note keeping only.

Other differences include the block time (an ether transaction is confirmed in seconds compared to minutes for bitcoin) and the algorithms that run on it (ethereum uses ethash while bitcoin uses SHA-256).

More importantly, the Bitcoin and Ethereum networks differ with respect to their overall objectives. While Bitcoin was created as an alternative to fiat currencies and thus aspires to be a medium of exchange and store of value, Ethereum was intended to be a platform to facilitate immutable contracts and applications and programming through its own currency.

Both Bitcoin and Ethereum are digital currencies, but the primary purpose of Ethereum is not to establish itself as an alternative cash system, but instead to facilitate and monetize the operation of the Ethereum smart contract and decentralized application platform (dapp).

Ethereum is another use case for the blockchain that powers the Bitcoin network, and in theory it shouldn't compete with Bitcoin.

However, the popularity of ether has pushed it to compete with all cryptocurrencies, especially from the perspective of traders.

For most of its history since its launch in mid-2015, Ethereum has been close to Bitcoin in the rankings of the best cryptocurrencies by market capitalization.

However, it is important to keep in mind that the Ethereum ecosystem is much smaller than Bitcoin, yet some argue that it is only a matter of time for Ethereum to surpass Bitcoin.

Ethereum is currently in great vogue.

The smart contract platform offers many possibilities to be on the radar for a potential investment.

This is the view of analysts at Goldman Sachs and that of other institutional investors, who are now allocating some of their funds to Ethereum.

With the increasing number of applications on the Ethereum decentralized network, more and more funds are flowing into DeFi.

Whether it's decentralized trading or short-term loans, investors are currently putting their money to work for them on several DeFi platforms.

In addition, the operations and potential evaluation of various DeFi protocols are more traceable to traditional investors.

Uniswap, for example, generatesapproximately $10 million in trading fees per day and returns it to the liquidity providers.

This means that the decentralized application is already generating real revenue that can be used to value UNI's native cryptocurrency.

In the eyes of top investors, Ethereum has a much greater benefit than Bitcoin.

Furthermore, Ethereum is undergoing a major transformation and will move from Proof of Work to Proof of Stake over the coming months and years.

Meanwhile, investors can expect an update of “EIP-1559” in July 2021, which could make ETH downturn.

It is expected that the demand for Ethereum will continue to rise.

It is not the attractive returns in DeFi that are driving more and more investors into the Ethereum network.

But also the fact that the available supply of Ethereum will decrease over the next few months.

This is partly due to the upgrade to the EIP-1559, whereby 50% of all transaction fees paid in ETH will be eliminated forever.

Previously, 50% went to Ethereum miners.

This currently equates to between 6000-6500 ETH being removed from the circulating supply each day.

This would cause Ethereum to shrink in one fell swoop, making investors optimistic about it.

At the time of writing this article, the market value of Bitcoin is estimated at 651 billion dollars, while the total market value of Ethereum is estimated at 258 billion dollars, meaning that Bitcoin is still three times far from Ethereum.

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