Both the networks of Bitcoin and Ethereum work by the principle of distributed ledgers and cryptography and have fundamental similarities but they differ in many ways. It is one of the frequently asked questions that is somehow very difficult to answer for laymen. However, it is very easy to understand the difference if you even have a little knowledge about cryptocurrency and blockchain.
In this article, we’ll uncover the main differences between Bitcoin and Ethereum.
Let’s get started!
How Bitcoin and Ethereum Differ?
A true first cryptocurrency, Bitcoin started to circulate in 2009 while Ethereum is quite a recent development, going live and began to circulate in 2015.
Bitcoin is currently considered especially as an international cryptocurrency and is more widely accepted and compatible. On the other hand, Ethereum is accepted only for transactions Digital Applications that specifically run on the Ethereum network.
The network of Ethereum is much more sophisticatedly constructed as compared to that of Bitcoin. The Bitcoin Blockchain is simply capable of capturing a base of accounts/wallets with an amount of currency stored in each. On the contrary, Ethereum has the ability to store computer code or applications and can use the CPU power going into the network to execute.
The processing is not related to each other since Bitcoin and Ethereum work on entirely different protocols. Different protocols depict that some transactions that may be accepted on a platform may not be allowed on another.
Bitcoin and Ethereum also differ in block time. It is confirmed that an ether transaction can be done in a few seconds compared to some minutes for a Bitcoin transaction. So, this makes Ethereum much faster than Bitcoin.
The digital currencies also differ in terms of their purpose and aim. It is known that Bitcoin was created especially as an alternative to the national or real-world currencies. But, Ethereum was created with the intention of providing a platform to facilitate immutable, programmatic contracts, and applications through its own currency. The primary purpose of Ethereum is not to make itself as an alternative currency, but rather to facilitate and monetize the operation of the Ethereum smart contract and decentralized application platform running on the Ethereum networks. However, Ethereum is another blockchain use case that supports the Bitcoin network but it does not compete with the Bitcoin network.
Since both the digital currencies are different so they also run on different algorithms as Bitcoin uses SHA-256 and Ethereum uses ethash. From the perspective of traders, Ethereum has pushed it into competition with all cryptocurrencies.
Between the time when Bitcoin and Ethereum were created, there were lots of other cryptocurrencies emerging. Most of those currencies were created to try to improve on aspects of Bitcoin’s performance. However, none can compete with these two giants in the cryptocurrency market in terms of market cap and worldwide acceptance.