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Gate Blog
Your Gateway to crypto news and insights
Difference between Bitcoin and Ethereum
04 June 14:23
Introduction
The rise of cryptocurrencies has turned many-a-head towards the market. While thousand such currencies exist, two, in particular, control two-thirds of the market share and are generally in limelight the most. These are Bitcoin and Ethereum.
Bitcoin, first introduced in 2009, is the brainchild of an unidentified creator named Satoshi Nakamoto. He is also the maker of the blockchain protocol, which forms the basis for most cryptocurrencies in circulation today.
Ethereum is the work of three people, but primarily Vitalik Buterin, who created the project in 2013 as an all-around improvement over Bitcoin. Ethereum is a technology in and of itself, that allows for the creation of many crypto-based applications, whereas Bitcoin is mostly useful only as a peer-to-peer payment system and an asset.
Difference between Bitcoin and Ethereum
The contrast between Bitcoin and ethereum is easy to see for people who are into cryptocurrencies but it could be a little opaque for outsiders. Simply put, Bitcoin’s value stems not from its usability, but more from its status as the first decentralized currency. Bitcoin is like digital gold, an asset prized for its ability to store value like that of a precious metal. It interests investors as a hedge against inflation because it is a deflationary asset with a fixed supply that is limited by underlying protocols. Bitcoin is also useful as an asset free from diversification, as it has nothing to do with traditional stocks or bonds.
Broadly speaking, Bitcoin is the first currency of its kind that is able to sustain its value and enable transactions outside the control of centralized institutions like governments and banks.
Ethereum is everything Bitcoin is and then some. Bitcoin’s underlying protocol makes it very difficult to scale and inconvenient for day-to-day usage. For instance, the time taken for a block to be added to the Bitcoin blockchain is about 10 minutes. That means every transaction takes ten minutes to process. In contrast, an Ethereum transaction takes seconds.
Ethereum is within itself a ledger technology that enables the creation of smart contracts, decentralized finance (DeFi) applications, as well as other coins with slight modifications to the Ether protocol.
Smart contracts are self-executing agreements, with the terms and conditions embedded into the code. They enable the creation of Non-Fungible Tokens or NFTs, using which a person can actually “own” a digital asset like a song or a video, without fear of duplication or loss of value. NFTs, by themselves, have become a multi-billion dollar market within a few months, offering much-needed liquidity to the crypto ecosystem.
Ethereum is also useful as a decentralized exchange protocol, whereby people can create Decentralised Exchanges or DeXs to swap between the thousands of cryptocurrencies that are in circulation.
Conclusion
While the two giants trade blows, Bitcoin has remained dominant in terms of value, while Ethereum is the frontrunner for crypto coin-applications. Both these currencies are good investments although Ethereum has more room to grow than Bitcoin at the moment. Regardless of differences, these two cryptos are leaps and bounds ahead of all competition.
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