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The two most widely used coins in the cryptocurrency market are Bitcoin (BTC) and Ether (ETH), the native cryptocurrency of the Ethereum blockchain platform.
Which is a better investment – Bitcoin or Ethereum – remains a persistent concern for many investors.
Each is a digital currency that can be exchanged through online marketplaces and is kept in different kinds of cryptocurrency wallets. There are several significant changes, though.
Bitcoin: What Is It?
This cryptocurrency was introduced in January 2009. This is originally an alternative form of money. The difference between Bitcoin and government-issued currencies is that it is secured without any central authority.
You won’t find physical bitcoins, as this is only digital currency. Consequently, the decentralized online currency became accepted among government bodies and regulators.
Digital currency has managed to become really popular among consumers and still exists in our financial system though it isn’t a formally recognized store of value or means of payment.
Bitcoin’s popularity rose dramatically in 2017 when its market value accounted for nearly 87% of the overall digital currency market. The market share of Bitcoin had lowered to 39.6% by August 2022.
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Overview of Ethereum
Ethereum is a platform for building applications, which works similarly to Android or iOS.
This software platform was launched in 2015 and became the largest open-ended platform so far. This is beyond just being money.
Ethereum might develop and become a decentralized operating system. Similarly to Uber which changed the world of the transport and taxi industry, Ethereum has enough potential to change many industries.
How is Ethereum beneficial? It allows deploying and building decentralized applications and smart contracts without control, fraud, or downtime so that third parties don’t interfere in this process.
Its programming language is utilized on this platform, which runs on a blockchain. This platform launched a presale for its cryptographic token, ether, in 2014.
It was a major success as ether can be used as investment, digital currency, or for purchasing services and products.
What Contrasts Exist Between Ethereum and Bitcoin?
Apart from certain similarities, there are some differences between these digital currencies. One of them occurred once Ethereum completed “Merge” last month.
Before that, both Ethereum and Bitcoin utilized the PoW or proof-of-work mechanism to secure the blockchain and validate transactions.
Nowadays, Ethereum started using PoS or proof-of-stake mechanism with the development of Merge. The energy usage of Ethereum is supposed to lower by over 99% after the shift to PoS.
Another difference is that Bitcoin hasn’t addressed one of the major criticisms of digital currency concerning high energy demand and large carbon footprint, while Ethereum solved this issue with the help of PoS.
Furthermore, transactions using the Bitcoin network are used just to record transaction data while data through the Ethereum platform might include executable code.
According to Statista, Bitcoin price reached an all-time high in 2021, when values exceeded over 65,000 USD in November 2021.
Bitcoin (BTC) price per day from October 2013 to October 20, 2022
(in U.S. dollars)
Unlike flat currency like the American dollar, Bitcoin’s supply is finite. It is believed that Bitcoin will run out by 2040 as mining becomes exponentially harder every four years.
Block time is another difference. A BTC transaction will be confirmed within several minutes compared with a few seconds for an ETH.
Apart from that, Bitcoin and Ethereum utilize different consensus algorithms: Ethereum utilizes LMDGhost, while Bitcoin utilizes SHA-256.
Which Bitcoin and Ethereum Aspects Are Similar?
Bitcoin and Ethereum are similar in many aspects. They are both cryptocurrencies that can be traded in digital currency wallets and online exchanges. Do you have additional questions on virtual currency?
You may find answers and the difference between digital currency and traditional fiat currency here. Both types of digital currency are decentralized. What does it mean?
It means government authority or central bank doesn’t regulate or issue these digital currencies. Besides, both of them utilized blockchain technology.
Both Bitcoin and Ethereum strive to offer quick and secure transactions. However, the second digital currency concentrates on even more aspects.
The profitability and popularity of Ethereum keep on increasing due to additional decentralized applications and smart contracts.
Both cryptocurrencies are volatile for now, so it can be challenging to predict how they will change and evolve. Hopefully, they both will keep on going forward and will notice an increase.
Bitcoin continues to attempt to become an accepted currency in many countries around the globe. The first Bitcoin debit card was introduced to meet consumer demands in being able to spend digital currency easily.
This debit card was introduced in 2016, and over 7,500 consumers signed up to obtain this card just within the first two months of its launch.
Thus, more and more ventures will accept this digital currency and it will be easier to spend it.
Speaking of Ethereum, its currency ether depends on it. This type of digital currency provides extensibility and flexibility many clients were searching for. There are many uses of Ethereum in the financial services industry too.
SWIFT transactions conducted in local banks may become old-fashioned as Ethereum launched its smart contracts.
In the future, Bitcoin and Ethereum can keep on becoming more popular, increasing their potential gains.
The Bottom Line
We have reviewed Bitcoin and Ethereum, which are two digital currencies. They have some similarities as well as differences.
While Bitcoin was launched first and is considered to be more stable, Ethereum offers more benefits and prospective gains to consumers in the future.
It’s impossible to say now which digital currency will outshine the competition or how long it will keep on being popular.
They both have enough potential, that’s for sure. If you are planning to start investing in cryptocurrency, you may decide to build a diversified portfolio so that you increase your chances of success.
Author bio
I am Emily Morgan, I write for Fit My Money. I am a financial writer and I want to educate people on how to better manage their expenses, how to earn, borrow, lend, save, invest and get emergency money. If you want to learn more, just visit the Fit My Money blog.
Disclaimer
The views and opinions expressed in this article are solely those of the authors and do not reflect the views of Bitcoin Insider. Every investment and trading move involves risk - this is especially true for cryptocurrencies given their volatility. We strongly advise our readers to conduct their own research when making a decision.