If you’ve begun to dabble in crypto, you’ll have heard of Bitcoin and Ethereum—in fact, both are probably the best-known names in the cryptocurrency world.
Bitcoin and Ethereum’s native token ether are both decentralised forms of crypto, which means they operate outside the control of the traditional regulators of currency such as banks and governments.
Each transaction is recorded on the blockchain, providing a digital, tamper-proof and permanent record.
Financial transactions versus a broader ecosystem
In 2008, Bitcoin entered the digital market as the world’s first-ever cryptocurrency. It has since become synonymous with digital currency and the blockchain itself.
Bitcoin’s decentralised status means that peer-to-peer, trusted financial transactions take place with no concept of international borders, politics or government intervention. However, its blockchain is restricted to transactions of Bitcoin.
Ethereum, on the other hand, is a broader ecosystem which enables more than peer-to-peer transactions of ether. Developers can use the Ethereum blockchain to build decentralised applications (dApps) powered by ether, which can be used to create and implement smart contracts.
Smart contracts are essentially self-executing business automation applications. They can facilitate many different types of transactions, agreements and even processes, running automatically when pre-determined conditions are met. Once the transaction is complete, the blockchain is updated and the transaction can’t be altered.
In addition, developers are using Ethereum for operating decentralised autonomous organisations (DAOs)—an online alternative to companies which are viewed by many as the building blocks to Web 3.0, the next phase of the internet.
The open-source platform can also be used to host streaming apps, video games and shared computing power services, as well as decentralised finance (DeFI) applications.
Other differences between the two include speed of transactions (Ethereum’s block time is measured in seconds as opposed to minutes for Bitcoin) and supply. There’s no cap on ether production, but there is a finite amount of Bitcoin available.
How does the value compare?
It is fair to say that Bitcoin dominates the market and is the most valuable form of cryptocurrency, due in part to its scarcity and status as the world’s first crypto. However, it would be incorrect to suggest that Ethereum is a poor contender. It’s six years younger than Bitcoin, but ether’s value, while volatile like any crypto, has been on the rise this year.
Photo by Pierre Borthiry on Unsplash
