Ethereum vs bitcoin. How Ehereum is better than bitcoin ?
When we talk about cryptocurrencies, it is natural to think of the two most valuable and, consequently, the most famous: Bitcoin and Ethereum.
Although they have the highest market value today, they are quite prestigious, both in the purpose of their manufacture and in their functioning.
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For those who wish to invest in the cryptocurrency sector, a better understanding of these assets, their differences, proximity, advantages and disadvantages, is essential for a better choice.
Want to understand better about Bitcoin and Ethereum? Follow Reading!
understand bitcoin
Bitcoin is the largest cryptocurrency by market cap today. It was created in 2008 by Satoshi Nakamoto and was a pioneer in this universe.
Its revolutionary technology, called blockchain, is helping to innovate in various fields, not just digital currencies.
Blockchain is a technology in which all transactions done with bitcoin are registered, it is like a big cashbook.
The difference with standard technologies is that these records are included in the block chain and for each transaction, network nodes (composed of several connected computers) are required to register new blocks in the chain to approve the transaction.
These nodes do not know each other and each keeps its own records. The information entered into the blockchain is all encrypted.
All this provides a very high level of security. After all, to be able to attack the blockchain, it is necessary to have access to all nodes in the network, which is practically impossible.
Understanding Ethereum
A wallet with cryptocurrency and money,
Both Bitcoin and Ethereum use blockchain technology, which provides a lot of data security.
Ethereum was created in 2013 by 8 people. Although the platform also incorporates blockchain technology, its uses are quite different.
The core component of Ethereum is smart contracts, so Ethereum is not a cryptocurrency, but a programming platform – although it also has its own cryptocurrency, Ether.
Smart contracts are responsible for facilitating, verifying and putting into practice the pre-determined terms of the contract digitally and autonomously.
This is possible only because of the characteristics of blockchain, which are: security, immutability and transparency.
For example, if you want to buy a house. The entire transaction can be done through smart contracts. All you have to do is set the terms of the contract and link it to payment with cryptocurrencies, in this case Ether.
There is a computer code who will analyze the terms of the contract and see if all the clauses were met.
If all is well, it releases buyer's money to the seller, bringing more agility and security.
Thus, the main feature of an intelligent contract is that it has an execution that does not depend on trust between the parties.
That is, there is no need to rely on third parties to execute the conditions - everything is done through code.
While it is also possible (but less common) to do smart contracts in the bitcoin blockchain, the difference is that the ethereum platform uses a language called Solidity, which allows for more complex contracts – which can be more difficult to machine. . Analysis.
This is why many consider the Ethereum platform to be wider than Bitcoin, as its use goes far beyond cryptocurrency, creating smart contracts for a variety of fields and applications.
The fact of being widespread, the Ethereum platform, can be quite revolutionary, allowing the creation of contracts without the need for notary offices and other bureaucracy, being able to securely perform multiple transactions over the Internet (even that unknown people or even from other countries).
In general, Ethereum smart contracts can:
functions as multiple subscription accounts, so that a certain amount of funds, for example, can be spent only when a certain number of people agree;
management of agreements between users, for example in the case of the sale of insurance;
providing utilities for other contracts;
Store information for an application, such as domain registration or user registry information.
In addition to smart contracts, the Ethereum platform allows decentralized application programming, Ether cryptocurrency transactions, and various tokens.
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Bitcoin and Ethereum: main differences
a hundred dollar bill and cryptocurrencies.
The upper limit is something that differentiates bitcoin and ethereum, in bitcoin you can have up to 21 million.
Bitcoin and Ethereum are different in the initial proposal for the emergence of each of them. Bitcoin was created with the goal of being a digital currency, while Ethereum's mission was to become a kind of decentralized supercomputer.
That's why they use two very different blockchains . Ethereum, in fact, is a technological platform founded on Blockchain and the power of this system is carried out by the cryptocurrency Ether (which, in a short time, became the second main cryptocurrency in the world).
Both currencies, both Bitcoin and Ether, were created from a complex program that can encrypt transaction data and protect transactions and the amounts invested against hacker attacks.
However, there are significant differences in how each of them works. Let's see in detail.
Goals
As you've seen in our previous threads, the first central difference between Bitcoin and Ethereum is in the goals of each.
Bitcoin was created to be a decentralized digital currency , while Ethereum is a decentralized application programming and smart contracts platform – which also has its own currency, Ether.
As Ethereum also uses Blockchain technology, many consider it a kind of “ evolution ” of Bitcoin.
transaction time
Another point that distinguishes currencies is the transaction time. While with Bitcoin, this period is, on average, 10 minutes, transactions with Ethereum only take 20 seconds!
Maximum limit
Another difference is in the conception of the idea. Bitcoin has a maximum limit of 21 million units . When this number is reached, the system itself will prevent new coins from being mined. On the other hand, Ethereum doesn't have this limit.
Those who purchase the Ethereum currency are allowed to create their own cryptocurrency or token – a strategy that has attracted more and more interested users, increasing the currency's appreciation.
Projections for the future
As we said, Bitcoin has a maximum currency limit, which means that users still do not know exactly how the asset will behave in the future, when this value is reached.
What is expected is that there will be an even greater appreciation , considering that it will become a scarcer asset .
However, as Ethereum does not have this limit, it is more difficult to predict what will happen to the cryptoactive in the coming years and, mainly, if it will continue to appreciate as much as we have seen lately.
The expectation , however, is for this rising appreciation to continue, mainly thanks to transaction speed and lower costs for users, who should popularize the currency even more.
Mining
Bitcoin coins buried in the sand.
Bitcoin and ethereum are also different in terms of remuneration, in ethereum it is given as proof of participation.
Bitcoin mining occurs when a node on the network manages to “ solve ” a mathematical problem that allows it to include a new block in the chain and, thus, record a transaction.
Thus, Bitcoin mining aims to:
ensure network security , as it is through mining that cryptography is implemented and verified;
generate new cryptocurrencies , as new Bitcoins are generated for each solved block and these new cryptocurrencies are used to reward the miners.
On the Ethereum platform, mining also takes place to add information to the network, ensure security, and generate new Ether tokens. However, remuneration is based on proof of participation and not on proof of work .
In the proof-of-work method, used in Bitcoin, the device needs to prove that it worked to get the result. In proof of participation, one of the miners must prove that he has a number of coins.
Thus, an amount of coins is reserved (and it cannot be moved). They keep being sent to the same address. The number of coins defines the participation of the miner in the information validation process.
The more cryptocurrencies separated for the process, the greater the participation of the miner. Then, there is a random selection of which miner will be elected to validate the next block.
Another point that influences, in addition to the amount of coins, is the time that the user keeps the cryptocurrencies . But there may be other variables, depending on the participation proof algorithm.
In the proof of participation, the new blocks are not mined, but forged , which means that no new cryptocurrencies are generated – and the miners are rewarded for the transaction fees paid.
In addition to these differences, the mining time on Ethereum is less. In general, the average time to mine a Bitcoin block is 10 minutes, while on Ethereum, the process takes around 15 seconds.
internal code
Ethereum uses “ Complete Turing ” as its internal code – a very versatile programming code, allowing for the various applications of the platform. Bitcoin code is simpler, called stack-based , with more limited applications.
transaction cost
The costs in Ethereum depend on the complexity of executing the contract, while in Bitcoin the costs vary according to the space that the transaction will occupy in the block. In general, costs on Ethereum are usually lower.
Conclusion
As you saw in this content, both Bitcoin and Ethereum use Blockchain technology, but they have numerous differences. Considered as the “ gold type l”, Bitcoin is a cryptocurrency and was born aimed at this utility.
Ethereum is a programming platform that allows the creation of smart contracts, decentralized applications and also transactions with Ether (the cryptocurrency related to the platform). Thus, one of the main differences is in the purpose and usefulness of each of these technologies.
They also have other distinct points, such as: transaction time, mining method, total limit number of new cryptocurrencies and internal code.
Despite these differences, both Bitcoin and Ether are cryptocurrencies with a high market value and great appreciation, so they are excellent investments for those who want to build their digital currency portfolio.
