The crypto craze has spread like wildfire among investors and traders alike. From its infancy in 2009, the crypto market has come to disrupt traditional finance and dominate media attention. While there are many new opportunities for investment, most people still prefer the biggest coins on the market. Bitcoin, the oldest crypto token along with Ethereum are at the top of most investors’ lists. But which one is the better choice?
What is Bitcoin (BTC)?
Bitcoin was created to be a digital form of money. It allows for peer-to-peer transactions without a central authority, like a bank. It was launched in 2009 by an unknown person or group called Satoshi Nakamoto.
Bitcoin transactions are recorded on a public ledger called the blockchain, which uses complex cryptography to ensure that the transactions are secure and transparent. Since there is no central authority, transactions must be verified by the blockchain’s users. This process is known as mining, and miners are rewarded with new Bitcoins. The supply of bitcoin is limited to 21 million, which acts as a deflationary measure on its economy.
Bitcoin is often referred to as a crypto token since it uses cryptography to secure transactions and control the creation of new units. It can be used to buy goods and services from merchants who accept it as payment, and it has also become a popular investment due to its astronomical returns.
Read more: Bitcoin Price Prediction
What is Ethereum (ETH)?
Ethereum is an open-source, decentralized blockchain platform created in 2015 by Vitalik Buterin. It was the first platform to implement smart contracts, which have become the most essential features in the crypto world.
A smart contract is a self-executing program that automatically forms an agreement between parties. This can range from simple transactions, like sending crypto, to more complex use cases like decentralized finance (DeFi), digital identity, and supply chain management.
Ethereum has its native crypto assets, Ether (ETH), which is used to pay for transactions and smart contract execution fees on the Ethereum network. Additionally, Ethereum has its programming language, Solidity, which developers can use to write smart contracts.
One of the key features of Ethereum is its ability to support a wide range of tokens, including stablecoins and alternate crypto tokens that can be used within the Ethereum ecosystem. This has made it a popular platform for DeFi projects, which use smart contracts to create decentralized financial products and services.
Bitcoin VS Ethereum: What are the Similarities?
Bitcoin and Ethereum are both decentralized digital tokens that operate on blockchain technology. Here are some of the similarities between Bitcoin and Ethereum:
- Decentralisation: Bitcoin and Ethereum are decentralised, meaning they are not controlled by any single entity, such as a government or financial institution. Transactions on both networks are processed by a network of computers that validate and record transactions on a distributed ledger called the blockchain.
- Digital money: Bitcoin and Ethereum are crypto tokens that can be used as a medium of exchange for goods and services. They both use digital wallets to store and send funds and are divisible to many decimal places.
- Volatility: Both Bitcoin and Ethereum are volatile and can experience fluctuations in their price. Their value can be influenced by a wide range of factors, including market demand, regulatory changes, and investor sentiment.
- Investment: BTC and ETH are both very popular investment options, with rapid price movements and high liquidity. You can purchase them on any centralised or decentralised crypto exchange.
Read more: Crypto Investing vs Crypto Trading
What is the Difference Between Bitcoin and Ethereum?
While they may both be popular crypto tokens, there are many key differences between Ethereum and Bitcoin.
- Mining vs Staking: Bitcoin uses a process called crypto mining to create more tokens, which involves complex computations and a lot of energy usage. On the other hand, Ethereum uses a process called staking, in which you must only “lock in” your tokens to be able to participate in the validation process.
- Supply: Bitcoin has a finite supply of tokens, with only 21 million BTC that will ever be distributed. Ethereum does not have a cap on the total number of tokens, but it does have a limit on the tokens released in a single year, at 18 million ETH.
- Smart Contract Support: One of the most crucial differences between Bitcoin and Ethereum is that Ethereum offers smart contract support while Bitcoin does not. Today, all applications and experiences built on blockchains function on smart contracts, which makes this the main driver of Ethereum’s growth.
Ethereum VS Bitcoin: Scaling Solutions
Traditional payment platforms like Visa and Mastercard can handle thousands of transactions each second. However, older blockchains like Bitcoin and Ethereum are limited to just 7 and 30 respectively. There is thus a need for scalability for these networks to service the demands of users.
Bitcoin’s scalability comes from the implementation of a platform called the Lightning Network. This is a layer 2 solution built on top of the base Bitcoin blockchain. It enables fast transactions at significantly lower costs as payments are sent through user-generated channels.
On the other hand, Ethereum has several scaling solutions in place. It has dedicated layer 2 scaling solutions like Loopring and sidechains like Polygon that help it reach much higher transaction speeds. Additionally, the Ethereum developer team is currently working on multiple upgrades that will help the platform service significantly higher volumes of users.
Bitcoin VS Ethereum: Which One is Better?
There is no definitive answer on whether Bitcoin or Ethereum is better. This is because the two projects are not direct competitors. While BTC can be used for transactions and as a store of value, Ethereum was created mainly to power the smart contract and dApp economy of the platform.
Thus, there is no direct comparison to be drawn between the two. If you want to choose a token for transactions or long-term storage, Bitcoin is your best option. But if you want to use the plethora of dApps offered by the Ethereum network, then ETH is what you need to own.
In the world of crypto assets, Bitcoin and Ethereum are the two most popular tokens. While they share some similarities, they are different in many ways. Bitcoin is primarily used for transactions and storing value, while Ethereum forms the backbone of many dApps. Therefore, there is no definitive answer on which is better. Your choice depends on what you want to use your crypto tokens for.
You can now buy Bitcoin and Ethereum on ZebPay Australia.
FAQs on Ethereum VS Bitcoin
Is Bitcoin Better than Ethereum?
Bitcoin has a cap on the maximum number of tokens that can be created. Thus, it is a better store of value than Ethereum. It may also be a stronger option for transacting in crypto tokens. However, Ethereum has its own set of benefits that make it a compelling choice. Thus, the decision between the two is not simple.