We all have been hearing a lot about digital currency and how it is contributing towards changing the world. Since 2009, Bitcoin has been altering the way banking system works.
The current system of Internet works on the basis of a centralized server which acts as a dictator. Looking at this, an unidentified person or a group named Satoshi Nakamoto brought into existence the bitcoin blockchain. A decentralized technology, which no one owns, thus eradicating the need for middlemen. A group of developers and a core team are constantly working all around the world to make this disruptive technology work. Soon the same concept was taken over by other cryptocurrencies. But there is one which has given a strong competition to Bitcoin, it is named Ethereum.
Ethereum works on the same concept as Bitcoin but still differs a lot from it. With Bitcoin, there is an issue of scalability, speed of transaction that Ethereum can overcome.
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How Ethereum Came into Existence?
Unlike Bitcoin, Ethereum is a cryptocurrency developed by someone we can identify. It has been founded by Vitalik Burean, a 19-year who has immense knowledge about the industry since he worked at a bitcoin magazine. He could envision the opportunity to expand original blockchain technology bitcoin to Ether.
What Is Ethereum?
Ethereum is a blockchain which has its own currency known as Ether. It was created in 2014 and in 2015 a yellow paper was published with all the technical details. Since then it has been giving a tough competition to Bitcoin. Ethereum is a decentralized computer system, which works as slow as dial-up Internet from the 90’s. It uses a peer to peer network of virtual machines that any developer can use to run distributed applications (dApps).
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Ethereum works on the same basis, but uses the concept for application whereas Bitcoin uses it for money. It not only stores transaction information in blocks, but also the code snippets known as smart contracts. These smart contracts provide security and a decentralized way to enforce blockchain.
What Are Smart Contracts?
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Smart contracts or you can just call them contracts are used to execute, implement an agreement between 2 parties. They are executed by Ethereum Virtual Machine required to sync all the shared data and code.
Why Is Ethereum Better Than Bitcoin?
Ethereum is more than just a currency. It is a block based platform for Internet apps with smart contracts and (EVM) Ethereum Virtual Machine as its backbone. It has its own currency named Ether and uses peer to peer contact to make it secure. Ethereum will soon work on proof of stake virtual mining in as opposed to proof of work used by Bitcoin.
What Is Proof of Work Technology?
A technology created to distribute trustless consensus and solve mathematical problem. It is not something new but the way it is used by Satoshi makes it innovative.
Bitcoin V/S Ethereum
Bitcoin and Ethereum both are built on Blockchain, where every transaction is stored publicly. Let’s look at some of the differences:
|Bitcoin is a currency running on Blockchain||Ethereum has its own currency named Ether to aid smart contracts.|
|Used for simple transactions designed for financial dealings.||Utilizes a different protocol.|
|Founded by anonymous person or group Satoshi Nakamoto.||Created by a Canadian developer Vitalik Buterin.|
|Bitcoin is written in C++||Ethereum uses dedicated language Solidity and is written in 7 different language. Go is the most popular amongst them.|
|Bitcoin is limited only to financial transaction.||Uses Smart Contract to automatically execute pre-defined terms used for different purposes like legal, business, insurance and other.|
|Uses the same Blockchain.||Uses a new Blockchain version 2.0 that is separate from Bitcoin.|
|Blockchain decentralized digital currency.||Ethereum decentralized computing platform.|
|Will work on proof of work technology.||Future virtual mining proof of stake.|
|Bitcoin processes less than 3 transaction a sec 4 is its max capacity.||Ethereum processes 5 transactions in a sec and it can even go to 6.|
|Average Bitcoin’s block time is about 10 minutes.||Ethereum aims to be 12 seconds via its GHOST protocol.|
|2/3rd of Bitcoins are already mined and remaining are going to early miners.||By Ethereum fifth year only half of its coins will be mined.|
|Limited transaction size by the block size.||In Ethereum costing of transaction depends upon storage needs, complexity and bandwidth.|
|Bitcoin lacks this capability.||Ethereum can calculate almost anything as it has enough computing power and time.|
|Bitcoin has maximum supply of 21 million (16.24 already mined).||Ethers are rolled out every year with no upper limit.|
|Released via early mining.||Presale raised $ 18M in bitcoin.|
How Beneficial Are Cryptocurrencies?
- As digital currency has no government backing, they can’t be frozen or controlled.
- Cryptocurrencies are decentralized, that is there are systems spread across the world that are synched. This means even if anything happens to any system on the network, the others will still work without any hindrance. The system is resilient.
Bitcoin and Ethereum both are alike in many ways but still different. Both work on peer to peer decentralized digital currency and can store and transfer a value. But what makes it different are the smart contracts, a code stored in Ethereum blockchain which has the address of the Ethereum. We cannot vouch for anyone as none have a backing by the government but as Bitcoin has been in the market for longer time, it is more stable. While many cryptocurrencies have been introduced since then, however, Bitcoin still seems to be leading the race.