So Bitcoin is the first ever cryptocurrency of the digital age. Ever since its inception in 2009 by mysterious Satoshi Nakamoto, it has taken the world by storm. Its market value recently reached $22,000— until it fell down to $11303– as of today. The market capitalization of this crypto currency stands at 33% as compared to 20% of the Ethereum.
Ethereum on the other hand was introduced to the world recently in 2015, by Vitalik Buterin. Its current market value stands for $1033.
In this blog, I aim to differentiate between the two digital currency as simply as possible. To begin with, I must say there are two types of digital currency. One is crypto currencies which include likes of bitcoin, litecoin, rapid, dodge coin etc. The other one is Token which has ethereum, storj, filecoin etc.this main summary of whole bitcoin vs ethereum.
The first difference between Bitcoin and Etheruem is in their agenda and intention. Bitcoin was made to replace all known paper currency and become one and only global currency of the world. Ethereum does not aim for that. Ethereum works on tokens called ether, which is fuel of everything on the Ethereum network. The token technology aims to make viable smart contracts and decentralized application.
Smart contracts aredigital contracts between buyer and seller without an intermediary. Normal contracts have signatures while smart contracts are bonded on the block chain of Ethereum. Examples of smart contract include purchase of property, lawyer contracts, and transactions.
Decentralized applications are the software packages made by developers on Ethereum network. They have no downtime, frauds etc. Developers use ether to develop and fund new viable projects. They also use applications through ether in the Ethereum community.
Storage of Value
Bitcoin is the gold of all crypto currencies. The reason being is; it is the oldest of all altcoins. The bitcoin builds on revolutionary technology of blockchain. Blockchain is the decentralized public ledger which shows transaction history of all bitcoins since its initial mining date.
There are limited numbers of bitcoins that can be mined. The maximum limit stands at 21 million. No more bitcoins can be mined than that. This gives bitcoin huge advantage in terms of supply and demand curve. As the bitcoin mining process approaches its max limit, its available limit decreases which increase its demand. This subsequently increases bitcoins market value.
This property of bitcoin make it modern day gold. As people invest in gold and reap benefits in the future. Cyber investors are investing in bitcoin as it is viable storage of value.
The Ethereum on the other hand does not have fixed mining limit. Every year, 18 million new ether enters the Ethereum market. This makes Ethereum more speculative and hence its value of storage is less as compared to Bitcoin.
The other point here to note is that, induction of new ether every year would drastically disturb the supply, resulting in excess of ether in the market.This would cause ether to lose the market value in the longterm.
As a Transactional Medium
This property of Ethereum brings us to our next point, i.e. digital currency as a transactional medium.Bitcoin is notorious for long transaction time of about 10 minutes. This makes its less in demand for transactional purposes. The merchants for example prefer crypto with less transaction time.
Ether has low transactional time ranging from 10 to 20 seconds. Currently, litecoins are used by merchants to settle low value buying and selling of goods. However, ether has same potential to even surpass litecoin, which has transaction time of 2.5 minutes.
Confusion in Terms
Bitcoin is the name of the currency and the block chain technology. Bitcoin with capital ‘B’ is used for refer to Block Chain interchangeably. Whereas, bit coin with small ‘b’ is used for the currency. The symbol BTH is also used to denote bitcoin currency
ETH is used for ether, the token of ethereum. Etheruem is the network of blockchain. However, it is used to denote ether interchangeably.
It is clear from above discussion that bitcoin and ethereum are digital currencies build on same block chain technology with different purposes and goals. Bitcoin is great for investment as it offers excellent storage value whereas Ethereum is great for transactions, smart contract and decentralized applications.