Blockchain as an emerging technology has been creating quite an impact, in recent years, especially in the fintech & crypto world. However, despite Bitcoin and Ethereum topping the list of cryptos, in popularity, the enormous trading & capitalization potential they hold can be exciting yet daunting for the uninitiated. Let us start with the basics before diving into the difference between the two. Bitcoin and Ethereum are both a form of digital, or what we call, a crypto asset that essentially means verified records maintained using cryptography by a decentralized authority – they are digital money, to put it simply.
Now, let us understand specific vital differences between Bitcoin and Ethereum:
Bitcoin was the pioneer in crypto-assets and first came into existence in 2009, while you can compare Ethereum to a new-age or hybrid version of the same that emerged in 2015.
· Coin Values:
Each has its coin value for transactions. With Bitcoins, you can purchase ‘Tokens,’ while with Ethereum, you can purchase ‘Ether.’
Bitcoin is built with blockchain as a substitute to conventional currency (like USD, EUR, INR, and other physical money) and hence has similar properties like storing a particular value while also being an instrument of exchange. Ethereum, on the other hand, is built on programmed blockchain, having applications beyond being a currency and across non-fungible tokens, smart contracts, and decentralized finance.
Bitcoin is limited to being a form of digital currency, albeit without all the formal regulations enforced by traditional banks. Ethereum applies itself to a broader field, as beyond being a crypto asset, it also assists companies in building innovative programs based on ledger technology.
· Speed, Security, and Innovation:
As Ethereum is a more recent creation, it provides faster and more secure transactions with a higher level of anonymity due to more sophisticated technology. Bitcoin lags by a margin here, with transactions taking minutes rather than seconds. As an example of the throughput, Ethereum can provide up to 30 transactions per second, while Bitcoin can only go up to 10 transactions per second.
Bitcoins were created with the intent and technology to make only a finite amount available as the scarcity it is designed to develop will only add to its value. Ethereum, on the other hand, allows for more and more tokens to be made over time, with the provision of newer crypto assets to emerge from it, as well.
Whether Bitcoin or Ethereum tops the list for investors and consumers is debatable. However, as you can see from the above differences and applications, Bitcoin and Ethereum do not provide an apple-to-apple comparison. Interchangeably, the pros of one outweigh the limitations of the other based purely on the user’s intent and need for the crypto asset.