Is Bitcoin (BTC) different from Ethereum (ETH)?

Bitcoin (BTC) and EthereumEthereum (ETH). Two cryptocurrencies, different stories. If the first is considered the king of cryptocurrencies, the second could be designated as the prince. For good reason, one hardly goes without the other, and the two digital assets are among the top cryptocurrencies on the market. They may be similar in one respect – they are electronic currencies – but the differences are legion.

Where do Bitcoin (BTC) and Ethereum (ETH) come from?

Before looking at the similarities and dissimilarities between the BitcoinBitcoin (BTC) and Ethereum (ETH), we think it is good to give a brief history of the two digital assets.

Bitcoin (BTC) is a cryptocurrency launched in 2009 by Satoshi Nakamoto, a pseudonym. It is true that the concept of electronic money existed for years before 2009, but Bitcoin (BTC) remains and remains the first cryptocurrency in the world.

Interesting detail: since its launch, it has risen to the top of the chain of electronic currencies. In mattermatter of capitalization, it has the highest amount. At the end of July 2020 alone, its market capitalization was around $200 billion and at the time of writing, 1 BTC is worth $50,227.

If Satoshi Nakamoto is the father of Bitcoin (BTC), in the case of Ethereum (ETH), we speak rather of the genius of Vitalik Buterin. At 27, the computer scientist, entrepreneur and cryptophilanthropist became a billionaire thanks to his invention: Ethereum (ETH). With a market capitalization of $35 billion, its product ranks second in the ranking of cryptocurrencies. At the time of writing this article, the price of ETH is $3,317.

What are the similarities between BTC and ETH?

Even though they have different histories, Bitcoin (BTC) and Ethereum (ETH) have common characteristics. In fact, these characteristics are common to all cryptocurrencies. Let’s review them.

The first point of similarity between the two digital assets is that they operate on the basis of a decentralized system. This means that they depend neither on a central authority nor on a government. As a result, they offer absolute freedom to their users who can carry out transactions without complying with the same rules accepted for fiduciary money.

On the other hand, BTC and ETH operate on the basis of a blockchainblockchain. The role of the blockchain is to group, order and protect the transactions that are carried out by users. The latter perform cryptocurrency mining using their computers and thus contribute to the development and security of the blockchain or block chain.

Currently, Bitcoin (BTC) and Ethereum (ETH) rely on the Proof of Work system. It allows you to validate a block of transactions and offer a reward to the fastest miners. Admittedly, the hash function differs between the two cryptocurrencies (Keccak-256 for ETH and SHA-256 for BTC). However, in both cases, the function is based on a 256-bit hash and the principle of mining remains the same.

One last point of similarity: BTC and ETH are available on several exchange platforms. Binance, Coinbase, Kraken, Gemini, Bittrex… Almost all cryptocurrency exchanges offer trading using Bitcoin (BTC) and Ethereum (ETH). Moreover, the modes of acquisition of these assets are generally the same. It is possible to opt for peer-to-peer exchange or to deposit money liquidliquid from distributors.

What are the differences between BTC and ETH?

As we have seen, similarities between Bitcoin (BTC) and Ethereum (ETH) abound. However, there are fundamental differences between these cryptocurrencies.

First difference: Transaction fees

Transaction fees define the speed of processing by miners. For Bitcoin (BTC), when the amount is high, the miners are stimulated and process the transaction faster. Conversely, if the fees are relatively low, the processing may take longer, because it will be necessary to wait for the arrival of a few blocks before the integration of the transaction.

With Ethereum (ETH), the principle differs. Everything is based on a system of gasgas “. Each transaction corresponds to a calculation cost which is defined in “gas”. To illustrate, we can compare the “gas” of ETH to the gasoline that is inserted into the tank of a carcar to move it forward. So to speak, “gas” makes Ethereum (ETH) work. The amount of gas an operation requires defines the fees to be paid to miners.

Second difference: Block size

For Bitcoin (BTC), the block size is limited to 1 MB. However, for scalability reasons, there has been an update which increased the block size. This operation made it possible to launch a new cryptocurrency derived from Bitcoin (BTC): Bitcoin Cash (BCH).

For Ethereum (ETH), the block size is determined based on the maximum allowable amount of gas. A block cannot admit more than 6.7 million gases.

Third difference: The token limit

The Bitcoin (BTC) network predicts a circulation of 21 million tokenstokens in total. According to analysts, the last token will be issued in 2140. Once this is done, no more tokens will be launched, which is what gives cryptocurrency a rare character. Currently, according to specialists, 88% of tokens have already been mined. Note that to handle theemissionemission of BTC, the network uses a Halving system. Every 210,000 blocks, a Halving takes place, which halves the remuneration of miners.

Ethereum (ETH) follows a different mode of operation than Bitcoin (BTC). With it, there is no limit of tokens in circulation. In other words, there is no risk of ETH disappearing, even in 2140! However, the reward for ETH miners is much less attractive than for BTC miners. They only charge 2 ETH.

Fourth difference: the objective

The purpose of creating the two cryptocurrencies is arguably the biggest difference between them. Although we mention it last, it is no less important.

Strictly speaking, Bitcoin (BTC) is pure electronic money. It is thought and designed by Satoshi Nakamoto with the aim of allowing its users to carry out transactions. Thus, it was made in order to become a direct and perfect alternative to fiat currency and the traditional banking system. Clearly, the BTC was created to replace the dollar ($), the euro (€), etc.

Conversely, still in the strict sense, Ethereum (ETH) is not a cryptocurrency. In truth, the name of electronic money is Ether. Ethereum is the name of the process that supports Ether. Like Bitcoin (BTC), Ether exists to provide the ability to do peer-to-peer transactions. However, Ethereum (ETH) goes beyond the concept of simple cryptocurrency.

The perspective in which Vitalik Buterin created Ethereum is to facilitate the development of appsapps decentralized (DAppDApp) from “smart contracts”. So the process is made to accommodate applications. Moreover, because they are seduced by the characteristics of Ethereum, several professionals use it in various fields: banking, industry, hosting, art, finance, data storage, etc.

Bitcoin (BTC) and Ethereum (ETH) are digital assets with different purposes. The mode of operation is also not the same. Above all, while the first is created to allow transactions to be carried out without the constraints of fiat currency, the second is designed above all to host applications.

We wish to give thanks to the writer of this write-up for this awesome material

Is Bitcoin (BTC) different from Ethereum (ETH)?

Find here our social media profiles and other pages that are related to them.