Many who are familiar with cryptocurrencies will know the differences between Bitcoin and Ethereum but… Do you know them all? In this video I want to show you the most important differences and characteristics of each of these two cryptocurrencies, which are, without a doubt, the most popular in the crypto ecosystem.
While Bitcoin acts as a digital currency, Ethereum focuses on providing a platform for the creation of smart contracts and decentralized applications, or dApps.
On the other hand, we know that Bitcoin is mined through POW just like Ethereum, although the latter intends to switch to POS in its Ethereum 2.0 update. I recommend the video where I talk about the different ways of mining and validating cryptocurrencies.
Both are decentralized projects that run on their own blockchain.
Transactions made by participants are also traceable, but the names of those participants will not appear. In this way there is anonymity and traceability at the same time. This would be called pseudonymous transactions, something that both Ethereum and Bitcoin share.
And after this short introduction, we are going to see more complex issues about each of these cryptocurrencies, which are not only the best known, but also the ones with the highest trading volume.
Price and capitalization
Bitcoin has reached approximately $69,000, while Ethereum has reached $4,800.
As for the market cap, Bitcoins is over $900 billion right now, while Ethereum is $400 billion, less than half. Bitcoin has surpassed a trillion dollars at its peak, while Ethereum has reached 506 billion dollars.
Regarding mining, as I have mentioned, Bitcoin uses the proof of work that requires the hardware to solve a mathematical puzzle. Those who belong to this process struggle to solve it and thus earn a Bitcoin. But this has 2 basic problems, the excessive use of energy and the monopolization of mining. This means that if 51% of the nodes created in Bitcoin belong to the same person or project, they could take control. This is known as the 51% attack. If you want me to talk to you about this, let me know in the comments.
The same thing happens in Ethereum since it currently uses the POW validation system, something that will be changed in version 2.0.
Both Ethereum and Bitcoin, like the rest of cryptocurrencies, are subject to government regulations. As I have mentioned, both currencies are decentralized and are based on the blockchain (Blockchain). This allows them to function without being controlled or intervened by governments.
Something important is also that all transactions need to be validated, be it with the POW, POS, POW or any validation test, but they need to be validated. And the transactions are recorded, thus guaranteeing that nothing disappears in the process.
In all cryptocurrencies, there are pseudonymous transactions, this means that the transactions can be traced and identified, but the information that is included does not expose the personal information of the user who performs the transaction.
Other interesting facts about Bitcoin and Ethereum
Ethereum was created in 2015 while Bitcoin in 2009.
As I have mentioned, the main purpose of Ethereum is to offer a platform that supports smart contracts and dApps, while Bitcoin is a digital currency. Although the Ethereum currency can be used to purchase goods and services, its main purpose is to monetize smart contracts and dApps. That is, being necessary for transactions, allowing smart contracts to take place, etc. Instead, Bitcoin is decentralized digital money.
On the theory, in principle, that the value of Ethereum increases will depend on the demand of its network, that is, of the new projects that are created, of the new dApps, etc, and the value of Bitcoin will depend on its number of tokens , regulations, etc. The reality is that, as we have been able to see in the previous graphs, its behavior is practically the same, except for a few short-term moments.
Bitcoin and Ethereum supply
Something important and that makes the difference is the supply. Bitcoins is 21 million in total, when all the blocks are mine around 2140. On the other hand, Ethereum has no supply limit. The only limit that Ethereum has is that of being able to mine a maximum of 18 million per year.
This issue is very important; since it may make Bitcoin, due to its scarcity, tend to increase its value in the future.
In the end, it is about the two great cryptocurrencies of the market. Bitcoin is undoubtedly the largest overall, but Ethereum is the largest in terms of Blockchain with utility. Many other very interesting Blockchain have come out, with lower commissions, faster, etc. that even many have conjectured that they would be the ones that would dethrone Ethereum, but the reality is that Ethereum is still the King in terms of Blockchain for the creation of dApps and contracts. Intelligent, and the deficiencies that it has, will surely be solved with the implementation of the Ethereum 2.0 update.