If you’re new to cryptocurrency investment, you’ve probably heard of Bitcoin and Ethereum, two of the most valuable and influential blockchains.
You’ve undoubtedly come across this website in the hopes of gaining a better knowledge of what distinguishes ETH and BTC. Comparing Ethereum versus Bitcoin is a terrific approach to learn not only that but also about crypto assets in general.
Let’s start with a bird’s-eye view.
Bitcoin
Bitcoin was founded in response to government monetary manipulation, and it aspires to be a viable alternative to traditional government currencies.
While this is an oversimplification of how these two immensely complicated networks operate, the purpose of this post is to provide you with a side-by-side comparison of Bitcoin and Ethereum so you can begin to grasp and appreciate the differences for yourself.
DATE CREATED
On October 31, 2008, the Bitcoin white paper was published on the cryptography mailing list. On January 9, 2009, the software became live.
The white paper for Ethereum was released in late 2013, and the program became live in July 2015. The network is slated to complete a substantial software revamp in 2021, bringing it closer to the end of its vision.
CREATOR
Bitcoin was invented by a pseudonymous person or group known as Satoshi Nakamoto. Bitcoin's originator is still unknown to this day.
Vitalik Buterin, a 19-year-old entrepreneur, founded Ethereum (with many others contributing to its code). Buterin was previously a co-founder of Bitcoin Magazine and a 2014 Theil Fellow.
TICKER
BTC (or XBT on other platforms)
ETH (or ETC on other platforms)
VISION
Bitcoin is open-source software that enables its global user base to manage a digital money supply independent of any government or central bank.
It was designed as a strategy of combating inflation in the aftermath of the 2008 global economic crisis. The first mined block, in fact, carried the message: "The Times 03/Jan/2009 Chancellor on brink of second bailout for banks," which many believe represents the project's revolutionary goal.
By enforcing a set of rules, the Bitcoin software allows machines running it to keep a ledger (the blockchain) that accounts for all transactions involving its money (BTC).
The Bitcoin blockchain is a complete record of the network's transaction history that is validated by nodes, or users who run its software. This assures that no BTC may be duplicated or modified, and that bitcoins cannot be created or used in an illegal manner.
Bitcoins are a useful alternative currency because they are rare, divisible, and transferrable.
Ethereum was designed to become a global, open-source platform for unique assets and new types of economic applications.
Ethereum, widely regarded as one of the most ambitious blockchain initiatives to date, aims to use blockchain technology to decentralize products and services in a wide range of applications other than money.
To date, Ethereum has gone through several unique periods that have highlighted various parts of its capabilities.
In 2020, a new phase of Ethereum known as decentralized finance (DeFi) began to gain traction. This movement resulted in the development of decentralized applications (dapps) aimed at automating financial activities such as lending and borrowing without the use of a traditional bank or intermediary.
LAUNCH & ISSUANCE
Satoshi Nakamoto published the white paper "Bitcoin: A Peer-to-Peer Electronic Cash System" in 2008.
When the software was released, the first 50 bitcoins were mined, allowing a decentralized network of computers to run a digital economy that is still functioning today.
Satoshi Nakamoto famously departed the project in 2011 and hasn't been heard from since, however you may learn more about his (or her) views on the technology in different emails and forum posts.
Since then, hundreds of developers have contributed to the enhancement of Bitcoin's code, whether through normal bug fixes or significant performance improvements.
Ethereum, according to Vitalik Buterin, is a "global computer" on which anyone can launch and operate an application.
The Ethereum Foundation, a non-profit, pushed this notion further by selling 72 million ETH, Ethereum's cryptocurrency, in a crowdsale to raise $18 million at the time.
However, what set Ethereum apart early on was the thriving developer community that sprang up around the project.
Developers such as Gavin Wood, Jeff Wilke, Joseph Lubin, and Charles Hoskinson would make significant contributions to its technology and go on to become major voices in the blockchain community.
NETWORK DESIGN
The capacity for two users to send BTC to each other from anywhere in the globe, without the need for an intermediary, is key to Bitcoin's design.
Bitcoin employs a technique known as "mining" to make its network safe and decentralized while also limiting the flow of new money released into its economy.
In this mechanism, known as Proof of Work (PoW), miners compete to solve cryptographic puzzles in order to submit blocks that comprise the Bitcoin network.
When a miner discovers a block, it is announced to the network, and when it is verified by every node, the miner is rewarded in newly minted BTC.
Developers create dapps by writing programs known as smart contracts and deploying them to the Ethereum network. These dapps are essentially big smart contract structures that may be set in motion if and when certain conditions are satisfied.
Ethereum, like Bitcoin, uses Proof of Work (PoW) mining to power its blockchain.
However, the network is in the process of transitioning to Ethereum 2.0, at which point it intends to change its consensus mechanism to an alternative known as Proof of Stake (PoS)
According to this approach, any user with a minimum of 32 ETH can lock those money in a contract and earn incentives for doing calculations required to add new blocks to the blockchain.
It's worth noting that participants who stake less than 32 ETH can do so using Kraken's staking platform and get a portion of the staking rewards.
MONETARY POLICY
One of Bitcoin's most significant value propositions is its monetary policy: only 21 million BTC will ever be put into the network's economy.
When the first block was mined in 2009, 50 BTC was released, a block reward that is generally halved in half every four years. This is referred to as the halved, or halvening.
As of 2020, more than 18 million BTC have been made available through this technique. The last bitcoin will be mined in 2140, according to projections.
Ether (ETH) is the primary coin that powers Ethereum. ETH, like Bitcoin, is minted in each block and allocated to miners.
Unlike Bitcoin, which has a limited supply, Ethereum does not have a cap on the amount of ETH that may be created, and its supply is set to expand by 4.5 percent per year.
Notably, modifications to the monetary policy are proposed by developers and voted on by the software's nodes and miners.
The Ethereum blockchain is also powered by a different cryptographic function known as "gas," which is a particular computing unit utilized for computation fees. It should be noted that the more complicated the computation, the more gas a specific program will take.
