At the beginning of last year, Bitcoin was worth slightly more than $1,000 per unit; by the time 2017 came to a close, the price of the world’s first cryptocurrency had peaked at roughly $19,600. Without question, the popularity of Bitcoin, other cryptocurrencies, tokens, and coins had quickly risen to levels never before seen since the still-anonymous Satoshi Nakamoto created the encrypted digital currency in early 2009.
Today, Bitcoin is still the priciest cryptocurrency. It also holds the largest market capitalization of all digital currencies at $127-odd billion. While its also-popular counterpart Ethereum is worth roughly $500 – a far cry from the price of Bitcoin – it boasts a market capitalization of nearly $51 billion, effectively making it the second-most valuable cryptocurrency available.
Many people aren’t familiar with the differences between Bitcoin and Ethereum; a vast majority of people can’t explain how either of them works, even – but that’s OK. Let’s uncover the basic concepts behind both Ethereum and Bitcoin followed by a comparison of the two popular cryptocurrencies.
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What is Bitcoin?
This digital currency was the very first cryptocurrency to be thought of and come into existence. While some people believe they have solid ideas of who Satoshi Nakamoto actually is, the pseudonymous figure still hasn’t come forth with his or her identity. This isn’t important, however – the cryptocurrency will be continually manufactured digitally until 2140; until that time – and even after humanity reaches the year 2140 – whoever is behind Bitcoin (BTC) cannot pull everyone’s coins or otherwise steal their value. As such, BTC will be used indefinitely.
The technology behind Bitcoin is known as a blockchain. Without getting into an extensive explanation of what a blockchain is and how it works, Nakamoto’s blockchain is a list of all transactions ever made with BTC. Each and every transaction adds one block to the blockchain. Blocks use complex mathematical formulas to authenticate transactions. As transactions grow, the blockchain grows longer, effectively securing it can’t be manipulated.
What is Ethereum?
Ethereum (ETH) was created in 2015 by Vitalik Buterin; unlike the anonymous Satoshi Nakamoto, Buterin is a real person who regularly speaks about Ethereum and digital currencies.
The blockchain that powers ETH is more complex than that of BTC. The former’s blocks use ether, a digital currency separate from Ethereum, that can be purchased to operate mobile applications or intranets.
Similarities
Both of these popular digital currencies can be used – in most part, at least – anonymously. No centralized group, company, or government controls either BTC or ETH, meaning the inventor of either one cannot steal people’s coins for their own gain.
Blocks on Nakamoto’s blockchain take about 10 minutes to be constructed; Ethereum’s blocks usually take about 10 seconds. This means transactions of the latter cryptocurrency don’t take as long as the former to clear. As such, the user experience is typically greater with Ethereum; after all, Ethereum is more capable of being used like a currency like it’s intended to be used.
Differences
Other cryptocurrencies can use the same protocol that ETH utilizes on its network. The newer cryptocurrency’s blockchain also employs the use of smart contracts, or ways of locking promises in escrow until both parties fulfill their respective sides of the deal. Payment networks will likely rely on the system in the future, giving the cryptocurrency the edge over BTC in the grand scheme of things.
Bitcoin and Ethereum are both popular cryptocurrencies. Although they’re both traded on the same exchanges, the underlying technology behind the two are inherently different. This difference is important to understand for everybody that considers themselves to be connossuirs of cryptocurrencies.
