After Bitcoin, Ethereum (ETH) is the second most popular cryptocurrency in the crypto world. Ethereum was founded in 2015 by Vitalik Buterin and Gavin Wood, and its market value now accounts for more than 17% of the $1.2 trillion global crypto market.
There are several critical distinctions between Ethereum and the original cryptocurrency. In contrast to Bitcoin (BTC), Ethereum is designed to be much more than a means of trade or a store of wealth.
The Rise of Ethereum
The blockchain underlying the second-largest crypto, Ether, will eventually undergo a widely awaited update, which may result in more institutional investors investing money into the network and helping Ether’s price rise.
The objective is to make Ethereum, the blockchain, more scalable, safe and long-lasting. Among other things, the update would render crypto mining obsolete, decreasing the massive amount of energy necessary to generate new tokens—a subject of intense criticism.
At approximately $804 billion in market value, Bitcoin is now the most valuable cryptocurrency. However, Ether, with a current market valuation of more than $360 billion, has the potential to become the top after the infrastructure update known as the “merge.”
Observers in the sector believe the “merge” will occur over the summer. Investors are already betting on it, and a lot of money is at risk.
Ethereum vs. Bitcoin: Similarities
No governing body regulates Bitcoin or Ethereum. Instead, they function on the premise of a peer-to-peer network. Both systems use a public ledger protected cryptographically to verify and store the transactions on the web.
Since peers must reach a consensus on transactions’ sequences and outcomes, it is challenging to commit fraud or tamper with the ledger. Therefore, Bitcoin and Ethereum are very safe cryptographic technologies due to both systems’ built-in cryptography.
Users of Ethereum and Bitcoin can access their cryptocurrency tokens from inside a safe and reliable digital wallet.
Both Ethereum and Bitcoin have seen a meteoric price surge, raising the issue of whether cryptocurrency would be a better investment in terms of long-term capital appreciation.
The Proof-of-Work (PoW) paradigm stipulates that Bitcoin or Ethereum will be distributed consistently as rewards to peers on the network that process transactions (miners). As forms of virtual money, Bitcoins (BTC) and Ether (ETH) are both capable of being bought, sold, traded, and even swapped for products.
Ethereum vs. Bitcoin: Key Differences
The key distinction between Bitcoin and Ethereum is in the applications each one is best suited for. Bitcoin was developed exclusively to serve as a digital currency and a store of value, analogous to the traditional currencies used today. Bitcoin believers have high hopes that the digital currency will one day be widely recognised worldwide, allowing users to purchase things, trade Bitcoin for other currencies and many more.
On the other hand, Ethereum has a far more far-reaching impact on the landscape of blockchain technology. In addition to its usage as a cryptocurrency, like Bitcoin, ETH has other applications, such as developing quicker and more secure business apps. One can use these applications in a range of markets. The Ethereum open-source community is also actively fixing bugs, adding new features and refining existing ones.
Also, unlike Bitcoin transactions that take minutes, transactions using Ether are completed in seconds, making them much quicker. In addition, Ether transactions use several encryption methods while Bitcoin only utilises the SHA-256 hashing algorithm.
Mining Bitcoin and Ethereum may look quite different soon, despite the processes being the same. The Ethereum network is moving toward a concept called proof-of-stake, the goal of which is to prevent a small number of entities from controlling the mining of Ethereum to make a profit. Individuals who do not have specialist equipment will have a more significant opportunity to profit from mining depending on the quantity of Ethereum they own if they stake it on the blockchain. Thanks to the proof-of-stake paradigm, this is now possible.
In terms of how widely Bitcoin has been used as a payment method, it is well ahead of any other payment system. Additionally, Bitcoin has a market valuation that is more than twice as high as Ethereum. However, Ethereum is by far the most similar cryptocurrency to Bitcoin. However, since one can use it in various contexts, Ethereum is now the blockchain with the most users worldwide.
Although Ethereum’s developer has floated the possibility of imposing a supply cap, the cryptocurrency does not have one today.