Ethereum and Bitcoin seem to be on everyone’s tongue lately. However, not many people, even investors, understand the principal difference between them. Back in 2008 when Bitcoin was introduced by Satoshi Nakamoto, it was viewed as a new mean of transaction with lower fees. It also granted anonymity to its users due to blockchain technology. Therefore, bitcoin is cryptocurrency, which has the possibility to compete with fiat money to become a global mean of exchange.
The Key Differences
While bitcoin is a cryptocurrency, Ethereum network is represented by a token called Ether (ETH). It was introduced to the public much later than bitcoin, in 2014. The main purpose of Euthereim is smart contact writing. It allows to make legal agreements without fraud, or interference from various third parties. You clearly state the terms and conditions, as well as externalities and make it a deal. With the help of Ethereum, you know that if something happens the outcome will be exactly as stated in the contract. Here are some more properties of Ethereum that make it different from Bitcoin:
- It is inflationary. There is a finite number of bitcoins, and in some time the mining will stop. Ethereum has a number of its tokens growing with each year.
- Used for Apps. Ethereum technology provides a safe way to make contracts and agreements, while the primary purpose of Bitcoin is to serve as a payment method.
- Not a popular payment method. You will not easily find websites where you can pay with ether. However, its value is likely to grow as more app developers and individuals use Ethereum.
- The new token is issued every 10-20 seconds (10 minutes for bitcoin).
- The smallest unit is 1 Wei = 0.000000000000000001 ETH. 1 Satoshi = 0.00000001 BTC for bitcoin owners.
Application of BTC and ETH
If you are a trader, there might be no difference to you what to trade with – Bitcoin or Ethereum. However, if you are a serious investor and thinking what electronic currency to invest in, you have to know the purpose of each. In case you seek something to invest in with the purpose of its value increase over time, both BTC and ETH will work, with the former possibly being riskier due to higher price and its fluctuation. If you are planning to buy virtual cryptocurrency to make payments, bitcoin will surely work better. BTC and ETH can be bought and sold in online cryptocurrency exchanges. It is possible to buy small parts of any token or cryptocurrency, no need to buy the whole thing. Therefore, it is up to you to decide but consider your needs before investing in any of the two.