What Makes Bitcoin Different From Ethereum?
Among the thousands of cryptocurrencies that are in circulation in the market today, some did not take much time to make their mark and are still among the frontrunners of all the digital currencies that exist. The two most popular cryptos in today’s market are bitcoin and Ethereum. Combined, the value of these two coins makes up more than half of the overall market cap of all the cryptocurrencies that exist. That is the power of these top cryptos and the appeal that they continue to create among the investors does not seem to die down.
However, there are a few significant differences among these two currencies that lead to the investors deciding to buy one over the other, sometimes maybe both. Here is how bitcoin is different from Ethereum:
Launch and basics –
- Bitcoin – Launched in 2009 by a mysterious person by the name of Satoshi Nakamoto, it is an online currency that can be used to make payments, buy, and sell goods and services online. By converting the value of BTC to INR, citizens of India can easily make this purchase.
- Ethereum – This crypto was launched in 2015 and it is not just a cryptocurrency but is also a blockchain technology that can be used to generate applications – smart contracts and decentralized applications.
Transaction time –
- Bitcoin – The overall time taken by this server technology to make transactions is usually in minutes.
- Ethereum – Ethereum has a faster time for transactions with the ability to confirm it in seconds.
- Bitcoin – The consensus protocol used by Bitcoin is Proof-of-Work (PoW). The specialty of this protocol is that the nodes of the networks in use record all the information on the blockchains to prevent any kind of hacking or attack on the servers.
- Ethereum – Up until now, Ethereum also used the same protocol, however, the developers realized the dangers this could cause to the environment as the energy consumption because of the power required to run the complex mathematical equations on the high-end computer systems could cause permanent damage. Therefore, in 2022, with the launch of Ethereum 2.0 will be upgraded to a Proof-of-Stake (PoS) network which will be more sustainable. This shift is also predicted to change the value of ETH to INR since it is bound to attract more users.
Main purpose –
- Bitcoin – Primarily, bitcoin was designed to be an effective alternative to fiat currencies and would be used extensively as a digital currency utilized for payments and as a medium of exchange of goods and services. It is decentralized like every other crypto and is not controlled by any authority body.
- Ethereum – While Ethereum is also a cryptocurrency, it is much more than that. It was also created to be a program that poses as a platform for creating several applications in various areas like DeFi, Smart contracts, NFTs, etc. It is considered to be the silver to Bitcoin’s gold.
Which cryptocurrency should you choose for investing?
Essentially, the answer to this question is highly subjective as there are several things to consider including the differences mentioned above. Another factor would be risk tolerance. Bitcoin is known to attract more investors owing to the immense growth it has seen since its inception along with the acceptance it has received from larger companies and business tycoons. Being more utility-based, Ethereum supports smart contracts and allows a lot more freedom to the users on the network. If your risk tolerance is low, it would be potent to invest in a more diverse portfolio. Experts suggest that you can invest 5-7% of your overall amount into crypto to start with.
Investing in cryptocurrencies need not be as daunting as you think. Keeping up to date with the new and relevant information along with following the guidance from people in the field would lead you to where you would like to be.
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