Today’s era is of cryptocurrencies as they have taken over the whole world with a storm. Everyone is talking about digital currencies, and they are now preferred fiat currencies. There are several cryptocurrencies floating in the market, but two of the most popular and widely-used digital currencies are Bitcoin and Ethereum. If you want to start your bitcoin trading journey, you can visit the online platform and get more details . Ether was launched later than bitcoin, but it is giving tough competition to it. Most people are confused between both of them as they don’t know which one is better. You can read the following paragraphs to learn the major differences between bitcoin and Ethereum.
History and origin
The origin and history of Ethereum and Bitcoin differ a lot. If we talk about the origin, bitcoin was launched in 2009, whereas Ethereum was launched in 2015. Satoshi Nakamoto is the creator of bitcoin, and Ethereum was founded by Vitalik Buterin, who is a programmer and researcher by profession. Bitcoin was the first-ever cryptocurrency introduced to the world and became an example for all other currencies in the market. Ethereum was created after taking inspiration from bitcoin and using blockchain technology to create a platform with better functionality than bitcoin. Ethereum was mainly designed for smart contracts and distributed applications.
Another significant difference between bitcoin and Ether is their work and the concepts on which both of them work. Both of the currencies work on the blockchain technology by bitcoin mainly focuses on facilitating peer-to-peer transactions. It is used as an alternative to fiat currencies as it resolves all the issues that you get to face while using traditional currencies. It is a decentralised cryptocurrency that allows you to make transactions at a minimum cost. Moreover, there are no rules and regulations imposed on the working of bitcoins which provides excellent freedom to the users to make transactions anywhere and anytime.
Ethereum also works with peer-to-peer transactions, but it offers the users a platform where they can build applications and smart contracts. The smart contract is a modern technology that allows the users to exchange anything of value over the decentralised platform. You can exchange anything, starting from stocks to property, with smart contracts.
The transactions of bitcoin, as well as Ethereum both, are validated through bitcoin mining. In bitcoins, the miners verify the transactions and add them to the block, and the method of doing it is termed as proof of work. Mining involves solving complex mathematical problems and the miner who does it in the minimum time and adds the block to the blockchain gets the reward. With Ethereum, mining can only be done with proof of stake. A person cannot validate Ethereum transactions without proof of stake. It refers to the number of coins he owns, as the more coins he will hold, the higher mining power he will have.
The mining process is quicker in Ethereum as it takes only a few seconds to validate a transaction, whereas, in bitcoin, it takes several minutes. A bitcoin miner receives around 12.5 bitcoins for adding a block to the blockchain. The reward amount is decreased by half after every four years, and it is known as halving. If we talk about Ethereum, a miner gets rewards with three Ether for adding a single block to the blockchain. The best part about Ether is that the reward amount will never be halved.
Bitcoin is a decentralised cryptocurrency that allows users to make transactions at minimum fees. There are no charges imposed on bitcoin transactions. However, if you want the miners to pay special attention to your transaction and get it approved quickly, you can pay them some money. With Ethereum, you need to pay a certain amount in Ethereum to get your transaction approved. The amount paid by you is termed gas, and it is vital for your transaction to be added to the blockchain. It is one of the top reasons that bitcoin is preferred over Ethereum as it is more affordable and economical.
The hashing algorithm is the system used by cryptocurrencies to keep the transactions encrypted and maintain the privacy and security of the users. Both of these cryptocurrencies use different algorithms, as Bitcoin uses a hashing algorithm named SHA-256. On the other hand, Ethereum uses Ethash, which is a cryptographic algorithm.