Ethereum and Bitcoin are among the top-rated currencies in the crypto world. Apart from these, hundreds of new currencies have been discovered. This immense collection of coins makes it harder for investors to choose the best one in terms of price surge, stability, legitimacy, and several other factors. The article aims to highlight the two best currencies of the digital market, their similarities, and potential return after investment. Let’s have a sneak peek into their similarities and differences.

Bitcoin

 

Bitcoin is the first cryptocurrency, officially created by an anonymous person under the pseudonym Satoshi Nakamoto. Its value, in the beginning, was equivalent to a few cents back in 2009. However, the most attractive feature of digital money for investors, volatility, spiked it to skyrocketing values, and in 2021, one bitcoin was equivalent to USD 69,000.

Ethereum

 

Ethereum was the second well-reputed currency after Bitcoin. It used Ether (ETH) as its native coin. Vitalik Buterin created it in 2015.  Ethereum network provides a system based on distributed ledger technology to build decentralized apps. It trades in its native currency, which is the second-largest cryptocurrency after Bitcoin.

Bitcoin vs Ether. What is similar?

 

Healthy competition always exists between the top-rated business entities’. It leads to improved functionalities and a better user experience. This is the primary reason why bitcoin is always compared to Ethereum. Let us discuss some of the things they both share in common.

  1. Both exist in virtual form.

  2. They both are traded online via software like Bitcoin Trading Software.

  3. They both are stored in digital wallets.

  4. They are unregulated, which means any central authority does not operate them.

  5. Both work on a distributed ledger technology or a blockchain network.

  6. Both reward their miners with native coins.

What are the key differences?


Undoubtedly, both currencies share various properties. At the same time, they differ from each other in several ways. These include the following ones:

  1. Purpose of existence: Bitcoin was designed to provide a substitute for fiat money and act as a store of value for investors. In contrast, the Ethereum platform was designed to provide a blockchain-based application system to create dApps, non-fungible tokens, smart contracts, etc.

  2. Gas fees: The transactions carried out via the Ethereum network charge considerably low prices compared to bitcoin.

  3. Consensus Protocol: Bitcoin uses a proof of work consensus mechanism, which means that all the node operators in the entire network validate transactions. It costs a lot of energy and is relatively time-consuming. On the other hand, an updated version of Ethereum, Ethereum 2.0, has shifted its consensus mechanism to the proof of stake method, which verifies the transactions by the largest stakeholder.

  4. Transaction time: Bitcoin takes at least ten minutes to verify transactions by validating them from the whole network, whereas Ethereum processes the transactions within a few seconds.

  5. Hashing: Both use different hashing algorithms. BTC is operated via the SHA-256 algorithm while ether uses Ethash algorithms.

  6. Coin Market Cap: The market cap of bitcoin is around $906 billion, whereas that of Ethereum is $406 billion.

  7. Hard cap: Hard cap refers to the limited number of coins issued by any currency. BTC cannot exceed the limit of 21 million coins, and ETH is limited to 18 million per year.

Which one is better for investment purposes?

 

The aim of both software is entirely different from each other. Bitcoin is just an alternative to fiat currency and can be regarded as a store of value. In comparison, Ethereum is  software based on multiple dynamics to create applications on a blockchain network.

It also provides its digital currency, ETH. Investing your money in the right option totally depends on your financial goals. It is suggested to opt for Bitcoin for short-term goals. At the same time, for long-term investment purposes, it is recommended to go for Ethereum as it offers various services and can be seen as a shining star in the future.

Final words

 

Investing in crypto is always risky because of its high volatility. However, you must play safely in the crypto sphere to save yourself from significant losses.

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