Differences between Bitcoin and Ethereum

You are in the right place if you are looking for an article that talks about the differences between bitcoin and Ethereum, two most valued cryptocurrencies in the world as we speak, bitcoin ranking first and the latter following suit. Although Bitcoin has dominated the cryptocurrency world for a long time, things are gradually changing as Ethereum is beginning to attract a lot of hype because of its additional features and applications.

If you need to know more about the history and evolution of these cryptocurrencies, you can check out this post. Now without further digression, the question of the day should be addressed, i.e. are there any differences between Bitcoin and Ethereum?

Differences between Bitcoin and Ethereum

Although these two altcoins have some similarities, they, however, differ in a good number of ways.

Transaction confirmation speed

Bitcoin’s time for confirmation is one of the slowest ones with an average of 10 minutes per transaction while Ethereum works in around 12 seconds owing to its GHOST protocol.

Upon its creation, Bitcoin was designed to function as a secure, P2P, decentralized payment system, with all transactions available for the world to see on the public ledger. Ethereum instead, wasn’t really designed to be a payment system, but rather much more. To be exact, it represents a decentralized platform, which is capable of running smart contracts. These are applications that operate exactly as they have been coded while minimizing risks such as fraud, downtime, third party interference or censorship.

The methods of costing transactions

In Ether, it depends on the complexity of computation, the storage needs as well as the bandwidth usage. However, in Bitcoin, there are no such factors affecting the costing as all transactions compete with each other equally. This is what is known as Gas (in Ethereum), limited to each block while for Bitcoin, the limiter is the block size.

The supply of money

Approximately two-thirds of all available Bitcoins have been mined to date, with the majority being awarded to early miners. However, Ethereum raised their capital at launch with a presale and only half of its coins are expected to be mined by its fifth year of existence. For Bitcoin, the reward for mining coins halves every four years, but Ethereum rewards miners based on its proof-of-work algorithm called “Ethash,” where five Ether are provided for each block — and it doesn’t have a cap like Bitcoin.

Difference in Economic Model

In Bitcoin, the rewards are halved after every 4 years, while there is no such thing in Ethereum; the same amount of Ether are released each year.

Where these cryptocurrencies have as a matter of time increased in their global economic value, it is evident that the competitive nature of the transactions they are engaged in is gradually making their developers think about better ways of approaching their dealings, so as to make their investors build more trust in them. This has however resulted in the differences between Bitcoin, Ethereum and other cryptocurrencies.

Posted by cryptoblogng

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