Ethereum vs Bitcoin: Is Ethereum a Better Bitcoin Alternative?
Spil you inject the fresh and arousing world of crypto, one of the very first things you will ask yourself will be about the differences inbetween Ethereum vs Bitcoin. It’s fairly baffling, right?
You may think of Bitcoin and Ethereum, spil a loterijlot of us do, spil the Apple and Microsoft of crypto. However, unlike Apple and Microsoft, they are fully different from one another. Both have very different objectives te mind.
Te fact, other cryptocurrencies compare a lotsbestemming closer to Bitcoin and Ethereum than Bitcoin and Ethereum compare to each other. For example, Litecoin is a loterijlot more like Bitcoin than Ethereum is, and NEO is a lotsbestemming more like Ethereum than Bitcoin is.
I’ll get to that te another article, however.
For now, let’s concentrate on Ethereum vs Bitcoin.
Table of Contents
Researching cryptocurrencies and the technologies behind them can be very confusing, which is why I built this guide. We’re all beginners at some point.
Surplus assured, by the end of this guide, you’ll have a strong understanding of what Bitcoin and Ethereum are, what they do, and how they differ from one another and who wins the Ethereum vs Bitcoin battle. You’ll also be able to make an educated decision spil to whether you choose Bitcoin or Ethereum.
I’ll do this by comparing them, highlighting their differences and looking at the uses and advantages of each. Let’s begin, shall wij?
When you look at Ethereum vs Bitcoin, you can see that their goals are largely different. When you look at their market statistics, tho’, the difference is rather petite — Bitcoin’s market capitalization is $147.3b while Ethereum’s market capitalization is 84.2b .
Note: market capitalization (often referred to spil “market cap” is the total value of all coins ter existence. For example, Bitcoin’s $147.3b market cap means the value of all Bitcoins together is $147.3b).
So, besides statistics, how exactly do Bitcoin and Ethereum match up?
Many beginners te cryptocurrency believe that Ethereum is only spil a financial currency, like Bitcoin. This is wrong for many reasons, let’s look at the basics.
Ethereum vs Bitcoin: The basics
Here I will look at some of the features and facts of Bitcoin and Ethereum.
- Launched te 2009, Bitcoin wasgoed the very first cryptocurrency and the very first use of blockchain technology
- Bitcoin is a digital currency
- It aims to fix the problems te global finance, often referred to spil the “bank of the people”
- Bitcoin does not require a third party, such spil PayPal or a handelsbank
- Created spil an alternative to regular/fiat currencies (i.e. USD, EUR, JPY etc.)
- Used for manual transactions, like purchasing goods/services or receiving money
- It is very liquid (its trading volume is $8.9m te the last 24 hours), which means you can lightly convert Bitcoin into specie
- It takes minutes to accomplish Bitcoin transactions
- Launched ter 2015, Ethereum’s blockchain widely known synonym is “Blockchain Two.0”
- Wise contracts program the transactions (which I will explain further ter this guide)
- Its brainy contracts eliminate the need for third parties ter many systems, not just financial systems
- It provides a podium to build smart-contract apps (known spil dApps)
- It provides a programming language, called Solidity, to build the dApps with
- Ether is its currency, it powers transactions on the Ethereum blockchain
- Ether is very liquid (its trading volume is $Two.4m te the last 24 hours)
- Ethereum’s transactions take seconds to finish
Let’s look at the main differences inbetween Ethereum vs Bitcoin, some of which you can see by comparing the basics I just mentioned!
Bitcoin is a store of value and a way to send money to someone. Ethereum is also a way to send money to someone but only when certain things toebijten.
Ethereum also differs by serving spil a building verhoging for dApps/clever contracts, which permit it to send tokens that represent values. Thesis values can be things other than digital currencies, making it different to Bitcoin.
Jade sends Ten BTC (Bitcoins) to Pete.
Ethereum’s transactions run on clever contracts and look like this:
Send Ten ETH (Ether) from Jade to Pete if Jade’s balance is 15 ETH and the date is 12.01.2019.
So, Bitcoin’s transactions are manual and Ethereum’s transactions are automatic/programmable!
The speed of the transactions
- Ether is designed to fuel the Ethereum network and power transactions — think of it spil gas.
- Bitcoin is used to be the value of real-world transactions — think of it spil money .
Their coin supply
Ethereum, however, is not limited. The production of Ether is continuous. The supply of Ether will slow down a loterijlot overheen time tho’.
Ethereum is 6 years newer than Bitcoin and is further advanced.
It’s difficult to make sense of the differences inbetween Bitcoin and Ethereum if you aren’t familiar with all the fancy, technical words that crypto geeks use.
Let’s pauze down some of the vaktaal, shall wij?
If something is decentralized, it is not te one central position. Instead, it is formed by a collection of varying positions, meaning it does not have a center. That’s where the word “decentralized” comes from!
To apply this to a network, think about Facebook’s servers for a uur. They run via Facebook and Facebook only. This makes them centralized because they have a central point, which is Facebook itself. If Facebook’s cybersecurity wasgoed hacked, their entire server and the gegevens it holds become at risk.
This is one of many reasons centralized networks can become a major kwestie. Spil you could imagine, right?
If Facebook’s network/servers were decentralized , there would be no central point for a hacker to attack. Ter a decentralized network, the server is built and maintained by a collection of computers that are wielded by many different people/companies instead of being at a central point. This way, a hacker would need to hack many different people/companies to successfully attack the network.
Ter brief: decentralization means there is no central point of failure, no central point of control and no central point of trust. This is why many agree that decentralized networks are the future!
Even if you’re brand fresh to crypto, I’m going to take a guess you’ve already heard about blockchain technology. It’s a bit of a trending topic.
A blockchain is a public, distributed ledger — just imagine an Excel spreadsheet te which each of the blocks contains transactional gegevens and share an equal, immobile capacity.
The ledger proceeds to grow and grow spil more blocks add. The blocks add up chronologically by using cryptographic technics. Cryptographic technologies that ensure that blocks cannot switch roles. Sorry hackers…
Te a blockchain, the ledger is “distributed”. A distributed ledger means many individual rekentuig systems (knots) that work together. The knots process the gegevens te the ledger and verify it, working spil one big team.
This way, it is unlikely for a fake transaction to be verified, spil it would need the overeenstemming (the group agreement) of the blockchain. So, the more knots/computers, the more secure the blockchain is!
Distributed ledger stores the verified blocks. It is shareable and downloadable by all other knots on the network. This verification process is known spil mining and it requests electric current and maintenance. Because of thesis requests, the miners get prizes with the blockchain’s native currency. This is the foundation of a typical cryptocurrency ecosystem.
The precies number of Bitcoin knots is unknown, but some sources estimate it to be upwards of 100,000! Imagine attempting to hack half of that!
For more on blockchain technology, check out our Blockchain Explained guide .
Wise contracts are a decentralized device. Ethereum introduced clever contracts to the world. With brainy contracts, you can set conditions that trigger a transaction when they toebijten.
Spil the clever contracts on Ethereum are powered by the blockchain, developers can create applications that never go offline and cannot be edited by third parties .
Imagine if wij had this power with the regular contracts wij presently use spil part of our everyday lives! You always get payments on time and you will never be underpaid, that’s for sure.
Thesis are just two of uncountable examples, tho’.
A good way to think of clever contracts is to imagine purchasing a house. Usually, this process requires third parties, such spil a lawyer and a broker. With a wise contract, the ownership of the house is sent automatically once a condition is met.
It looks something like this: John transfers 200 ETH. The payment gets verified and he gets the ownership of the house.
This is applicable to many different scripts. Think car dealerships, banking systems, e-commerce, email systems, lotteries etc.
This is why the possibilities with building on Ethereum are endless.
Bitcoin and Ethereum have very different purposes!
Ethereum ’s purpose is to suggest and run decentralized smart-contract applications powered by blockchain technology that do not go offline and cannot be altered. It provides users with a verhoging and programming language to build the applications on.
Bitcoin ’s purpose, however, is largely different. It serves spil a decentralized store of value — a peer-to-peer digital currency, used for financial transactions. It eliminates the need for third parties ter payment technology.
Te conclusion, the primary differences that separate Bitcoin and Ethereum are their purposes and their concepts. Also, Ethereum’s blockchain runs clever contracts Bitcoin doesn’t and instead only concentrates on manual payment technology.
Is Ethereum better than Bitcoin?
It’s clear that there are benefits to using both Bitcoin and Ethereum. Bitcoin has a lower coin supply and is more liquid than Ethereum, but Ethereum has better technology and provides more uses than Bitcoin does.
Based on the fact Ethereum has more use cases than Bitcoin — and therefore serves a fatter purpose — I can say that it is indeed an overall better Bitcoin alternative.
It perhaps isn’t the best Bitcoin alternative, however, spil there are other cryptocurrencies that have the same purpose spil Bitcoin and run on newer technology and protocols.
That’s not to say that thesis other alternatives are better than Ethereum. It just means that because they are more similar to Bitcoin, one of them may be the best Bitcoin alternative. It doesn’t necessarily mean they’re a better Ethereum alternative!
Which has the better technology?
Blockchain technology is still ter its early years. That’s why Ethereum and Bitcoin get continuous updates. However, Ethereum is presently the clear winner. Here’s why:
- Ethereum uses wise contracts. You can use brainy contacts for many more things than you can use Bitcoin for.
- The Ethereum’s blockchain wasgoed released te 2015. It is 6 years newer and further developed compared to the Bitcoin blockchain (released te 2009).
- Ethereum’s blockchain is a further advanced version of Bitcoin’s blockchain. It fixes some of its issues and introduces fresh features such spil brainy contracts.
- Ethereum’s transaction fees are cheaper than Bitcoin’s transaction fees.
- Not only do the transactions cost less, but spil I stated earlier, they’re much quicker too.
Can Bitcoin and Ethereum live side by side?
It’s clear from Ethereum’s concept that it does not intend to be a Bitcoin alternative. Instead, it runs alongside it spil it pursues a different objective.
With all this said, it is significant to reminisce that even tho’ Ether is not intended to be a store of value, it has certainly become one. Here are some examples from everyday life:
- Tradable just spil all other cryptocurrencies are.
- Mining Ethereum vs Bitcoin has become a much closer competition. Ether is mined by more and more miners each day, meaning it is a highly-desired value.
- Businesses are using it to pay their staff.
- Some companies are accepting Ether spil a form of payment, including the likes of Microsoft and Intel!
So spil the market presently stands, yes, there is undoubtedly slagroom for both to live side by side. Albeit, if there wasgoed only slagroom for one, Ethereum would likely predominate the market because it provides clever contracts spil well spil a store of value.
So, which one? Bitcoin or Ethereum?
Ter Ethereum vs Bitcoin battle, if I had to choose one, it’d be Ethereum! This is because it has unlimited use cases, whereas Bitcoin only tackles payment and banking issues. Bitcoin may have a better position ter the market, but Ethereum has better technology and a thicker potential.
What do you think? Let us know!
A joy fact and an extra (albeit minor) Ethereum vs Bitcoin difference:
Bitcoin’s founder remains anonymous to this day. Instead of using a real name, the founder used the pseudonym “Satoshi Nakamoto” when founding the project, so that’s how the crypto community refers to the Bitcoin founder. It’s also how the term “Satoshi” (a denomination of Bitcoin) came to be.
Ethereum’s founder, however, is the 24-year-old “crypto-prodigy”, Vitalik Buterin, whom you can read more about here .