Bitcoin (BTC) and Ethereum (ETH) are currently the best two assets for investment in the cryptocurrency space. They are the number one and two most valuable cryptocurrencies in the market, and oftentimes, they’re being compared against one another.
Ethereum and bitcoin are a bit similar to each other. They’re all digital currencies that are being traded through online exchanges and can be stored in different types of crypto wallets. But these Cryptocurrencies have significant differences. These are what we will be looking at in this article.
Bitcoin Explained
Bitcoin happens to be a decentralized digital cash system that is designed to enable peer-to-peer transactions that don’t rely on a trusted third party. Another thing is that it has a finite supply, which means that there won’t be more than 21 million supply of bitcoin.
However, due to the decentralization nature of Bitcoin, it is censorship-resistant. This simply means when there’s any transaction done that is valid according to the rules of the network, it can be included in a block. This is what makes Bitcoin the ultimate coin to become the reserve currency of the world.
Ethereum explained
Ethereum on the other hand is an alternative cryptocurrency that contains different goals and features that are more than Bitcoin (BTC). It is more accurately viewed by many as a platform for executing financial smart contracts in the crypto world. Many times, Ethereum has often been described as a distributed world computer.
Its platform helps in hosting a large number of tokens, even though its native token is called ether (ETH). You can use Ethereum to pay transaction fees for different smart contracts executed on the Ethereum platform.
Most Important Differences
Bitcoin and Ethereum operate in networks that are designed by the principle of distributed ledgers and cryptography, but they still differ technically in many ways. Transactions on the Ethereum Network come with executable code. While in the Bitcoin network, data transactions are only used to record transaction information.
However, other differences may include block time. Block time means any Ethereum transaction will be confirmed in seconds, while Bitcoin is in minutes. Also, Bitcoin and Ethereum consensus algorithms are different. Bitcoin makes use of SHA-256, while Ethereum makes use of LMDGhost.
Bitcoin and Ethereum Pros and Cons
Both BTC and ETH are blockchains, but they can be used for different purposes, and each of them has its benefits and drawbacks. So let’s look at them.
BTC pros and cons
BTC has a narrow purpose, it is offered as an alternative to fiat money and a system for processing transactions.
Pros
- BTC happens to be the first cryptocurrency on the market.
- BTC has the most recognition in the market and has the most liquidity, which has made it the world’s most accepted cryptocurrency.
- BTC has the potential for future growth.
- It makes use of blockchain technology which helps in protecting it against fraud or identity theft.
- Supply and demand make the coin more valuable
Cons
- The price of BTC is highly volatile.
- The functionality of BTC is limited
- BTC does not offer 100% anonymity.
Ethereum pros and cons
Pros
- The ETH leverages blockchain technology
- ETH technology allows the functionalities of both decentralization and smart contracts.
- ETH has one of the largest developers’ community
- ETH platform processes faster transactions than BTC.
Cons
- ETH isn’t as popular as bitcoin
- ETH platform transaction fees are a bit higher than BTC platforms.
- ETH is slow
- ETH has an unlimited sup supply coin.
Which Is Right for You?
Currently, both BTC and ETH have increased in value ever since they were released. But you need to know that they are all decentralized blockchains, which means that whenever something goes wrong, there’s no one to turn to. Another thing is that transactions are a bit more expensive on a blockchain than through a bank or debit or credit card.
However, if you have an interest in investing in a blockchain, then you should consider buying the two. But to determine which one is right for you will depend on your needs and goals. BTC happens to be the most popular crypto in the market and has commercial value. So if you’re in search of a crypto alternative to fiat currency, then BTC should be a good choice for you.
However, ETH is more than a cryptocurrency. It has a network that acts as a marketplace for many to buy and sell goods in decentralized applications. So if you’re in search of a coin that’s more than a digital currency, then there should be a good choice for you.
Conclusion
Bitcoin and Ethereum are similar in many ways, and both are traded on online exchanges and can be stored in wallets meant for cryptocurrencies. While BTC is developed as a currency and has more value, the ETH network is designed for complex smart contracts and decentralized applications. Another interesting thing is that both are decentralized, which means they are not regulated by any government-owned financial authority.
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