Ethereum is not just a digital currency; it is a blockchain based platform with many characteristics. It is another cryptocurrency, open source, public and a computing platform featuring smart contract functionality. It enables the software developers to create decentralized applications. Bitcoin and Ethereum are two cryptocurrencies that are both Blockchain based technologies and needs no introduction for people active in cryptosphere.
Ethereum was launched in 2015, and since then it is a largest and well-established decentralized platform which enables smart contracts and DAPPs (Distributed Applications). Ethereum features smart contracts and a digital currency used for peer-to-peer contracts known as Ether, which can be mined similar to Bitcoin. A smart contract is a code that allows operation to be performed over previously determined conditions. With Ethereum, developers can develop a Smart Contract for variety of operations.
While Bitcoin aims at disrupting online Banking and Paypal, ethereum focuses on using Blockchain to trade internet third parties that hoard data, keep track of financial instruments and shift mortgages. The difference between Ethereum and Bitcoin is the reality that Bitcoin is nothing more than just a currency whereas Ethereum is a technology that many companies have opted to build new programs. There are a lot more differences between Ethereum and Bitcoins which we all need to know.
Difference between Ethereum and Bitcoin
Both Ethereum and Bitcoin both blockchain based technologies and motorized by distributed ledgers and cryptography, they differ in other aspects and purpose.
1.) The difference between Ethereum blockchain and Bitcoin blockchain is of Smart-Contracts. Ehereum allows developers to build a smart contract for different operations but for Bitcoin, smart contracts limit themselves in receiving and sending payments.
2.) Bitcoin has come forward as a firm digital currency, while on the other hand Ethereum intends to take in more, with ether mainly a module of its smart contract applications.
3.) Both Ethereum and Bitcoin are Blockchain based technologies but still they differ in their facets. Bitcoin’s average block time is about 10 mins, while Ethereum’s is 12 seconds, enabled by Ethereum’s Ghost protocol.
4.) Bitcoin and Ethereum have different methods of costing their transactions. Ethereum’s costing iof transactions considers complexity, storage needs and bandwidth usage. On the other side in Bitcoin, block size limits the costing of transactions and compete uniformly with each other.
5.) Another difference between them is of financial supply. More than two-third of Bitcoions are already mined out of which greater part is going to early miners. Ethereum on the other side lifted its launch capital and only half of its coins will have mined by its fifth year of existence.
6.) Both differ in their economic models. Ethereum to some extent differs in its economic model from Bitcoin. Ethereum releases the same amount of ether every year ad infinitum regardless Bitcoin block rewards divides every 4 years. This allows for continued succession on Ethereum network as compared to Bitcoin.
7.) The Bitcoin blockchain has a limit of 1 MB, which means number of transactions fitting into a single block cannot exceed 1 MB. On the other hand, Ethereum doesn’t have any block limit. The numbers of transactions that are put into a block are decided by miners.
8.) Ethash, a memory hard hashing algorithm used in Ethereum, alleviates against the use of ASICS and supports decentralized mining by individuals using GPU’s.
Ethereum is an advancement based on the Blockchain principle supporting Bitcoin with a purpose, that doesn’t compete with Bitcoin. They coexist and solve different types of problems in the real world and open up an opportunity for a great future.