Ethereum and Bitcoin are similar in many ways. Both are digital currencies that are used as a medium of exchange and stored in various crypto wallets. There is no doubt that Bitcoin is by far the most popular crypto in existence. However, Ethereum has also gained a massive following and for many investors is the right option in terms of investments.
While Ethereum is a platform that runs on smart contracts, which is a decentralized open-source blockchain, this virtual currency was designed to be much more than a payment system. It also utilizes blockchain to store computer code that can be used to power tamper-proof decentralized monetary applications and contracts.
Moreover, all the applications and contracts of Ethereum are powered by Ether. Both cryptocurrencies are unique in their own way. Today, most investors are showing their interest in virtual currencies due to its several benefits. Many experts have also estimated that cryptocurrencies can become the future of finance.
However, if you are a new investor in the field of cryptocurrencies, then you must know everything in detail about these digital currencies.
What Is Bitcoin?
Bitcoin is an internet currency that allows people all over the world to receive and send money. Basically, it acts as a medium of exchange between users. You can also call Bitcoin a decentralized currency because it eliminates the need for any physical barriers such as central authority.
Also, keep in mind, no third parties are involved in transactions, except a sender and a receiver. This digital currency is completely based on a network known as blockchain technology. It keeps every transaction safe and secure from hackers.
Blockchain technology keeps your data protected because it does not allow any modification once the information is stored. Thus, you can check your transaction details via this network.
What is Ethereum?
Ethereum is also a digital currency, used as a medium of exchange. This platform was proposed by Vitalik Buterin in 2013. He is a programmer, as well as a cryptocurrency researcher.
In simple terms, Ethereum is one of the most well-established and the largest decentralized software platforms. This digital software platform is also popular worldwide, like other digital currencies.
On the other hand, Etherium is very similar to Bitcoin and can also be used to pay for services. Before the invention of this software platform, Vitalik argued that Bitcoin needed a scripting language for the development of applications. After losing the argument, he decided to create a new platform with a general scripting language, and thus he succeeded in creating Ethereum.
Bitcoin Versus Ethereum
Recently, the argument of Bitcoin versus Ethereum has gained huge publicity. Bitcoin has the highest market cap over all other cryptocurrencies that are available in the market.
On the other hand, Ethereum is not as popular as Bitcoin, but its creators discovered Bitcoin loopholes and created more functionalities based on Bitcoin’s theories. This made Ethereum known as the second most valuable digital currency right now.
Bitcoin was mainly designed for peer to peer transactions, but Ethereum focuses mainly on smart contracts and distributed applications. Both these digital currencies act as a replacement for traditional currencies and provide more functionalities for the same.
Another key difference is that the algorithm of Bitcoin uses SHA-256, while Ethereum uses ‘ethash’. Also, the transaction of Bitcoin is confirmed in minutes, while Ethereum’s transaction is confirmed in seconds.
To know the key difference between Ethereum and Bitcoin, you need to understand the concepts of each initially. Ethereum also uses blockchain technology and supports the concept of a Bitcoin network. Online trading of both currencies is also becoming popular according to the Bitcoin trading app and is one of the best ways to execute your trading process efficiently.
The popularity of Ethereum is also increasing and giving tough competition to other digital currencies in the market. So, if you are willing to invest in cryptocurrencies other than Bitcoin, then Ethereum can be your best option. Read the above-described features of Ethereum and know in which aspects this virtual currency differs actually from Bitcoin.
Note: This article originally appeared at MoneyMiniBlog.