Are you in the process of investing in cryptocurrencies? Probably, you have heard about Ethereum and Bitcoins among other altcoins. The two virtual coins are renown to many people. However, like you, a large population cannot tell the difference between them. To some, they are digital currencies generated through blockchain that people can use to pay for goods and services or exchange them with fiat currency. This information is a tool.
In contrary, others think Ethereum is another name for Bitcoins. Or maybe it’s a scientific name or a quantitative measure of Bitcoins. Others have no idea at all. They only hear about cryptocurrency, and the names being mentioned via social and mainstream media. If you fall in either of the categories, this article is for you.
What are similarities between Ethereum and Bitcoins?
Before dipping into the differences between the two digital currencies, it is essential to consider the similarities. The first common fact about the two virtual currencies is that they are products of blockchain mining. Also, they can be used for transferring money without necessarily requiring financial intermediaries. Here are the differences between Ethereum and Bitcoins:
Same mining process, different purposes
While both Ethereum and Bitcoins are generated through mining, they serve different purposes. Bitcoins were generated as an alternative form of money to enhance peer to peer payments. The aim was to replace the fiat currency. On the other hand, Ethereum serves a different purpose.
Unlike Bitcoins, it is a platform that enables organizations and developers to create and run decentralized applications. In simple language, the ultimate goal of Bitcoin creation was to introduce a decentralized currency that will replace the governmental legal tenders. In contrary, Ethereum creation aimed at providing a programming platform for developing decentralized apps and smart contracts.
Different blockchain technology
lthough both use the blockchain concept, their generation process is different. Bitcoin follows the Proof of Work approach. This means that only 3 transactions are processed in 10 minutes. Also, one Bitcoin blockchain block is 1MB. On the other hand, Ether generation uses the Proof of Stake concept on its blockchain. Here, it is possible to process 25 transactions per second. The size of one blockchain block does not have a definite size. As such, Ethereum transactions are faster than those of Bitcoins.
Different coding language
The two cryptocurrencies have different dialects of computation. The Bitcoins use the C++ programming language. The Bitcoin Core is code in the C++. Also, most Bitcoin Wallets are also coded in the same language. In the Ethereum case, it is core written in Turing Complete Language. For this reason, the platform allows for writing and execution of rules using codes.
Smart contract creation
Ethereum is a platform that allows the creation of smart contracts. Here, you can create automated contracts and agreements as well as execute them without the need of a third party. As such, you can automate assigning and release of funds upon completion of a job. Also, the platform enables the creation of tokens that can be distributed as shares, proof of identity or voting rights in organizations. These abilities are not possible with the Bitcoins blockchain.
Bitcoins are generated in the form of coins that you can store and use to pay for products and services. On the other hand, Ethereum is produced in Ethers which are used to pay for CPU power applied in computer computations. Hence, Bitcoins are a form of currency while Ether is like a crypto-fuel token for blockchain.
As you can see, Bitcoins and Ethereum differ both in purpose and use. Hence, if you want to invest in cryptocurrencies as a Canadian, you can choose one of them.