In 2017, the price of 1 BTC increased from 963 to 19 694 dollars. Similarly, the price of 1 ETH increased from 8 to 747 dollars. Since then, the price of Bitcoin and Ethereum has dropped significantly, but at the time, potential investors and enthusiasts were passionate about cryptography.
What is the difference between these two? And why is there still so much interest after the massive price cuts? This article will answer all these questions and more.
How Bitcoin Works
Bitcoin is a digital currency that wants to be:
Decentralized (no organization controls the creation or flow of currency)
Anonymous (the ability to make transactions is not related to identity)
Transparent (all transactions can be viewed by anybody at any time)
All this is possible thanks to the blockchain and to the peer-to-peer networking .
The Bitcoin blockchain is just a file that keeps track of all Bitcoin Transactions ever made. Every 10 minutes, all new transactions are saved together in a block and added at the end of the file. Therefore, blockchain.
This means that a certain database value does not determine your current Bitcoin balance. Instead, your current balance is simply tracing all past transactions. The currency never really trades in the hands.
Bitcoin does not reside on a single server or cluster of servers. It is rather distributed on thousands and thousands of computers in the world (called nodes) and anyone can join this network whenever it wishes.
Whenever a transaction is performed, it is distributed to all nodes of the network and each node exists to verify that the transaction is valid. That is Bitcoin mining is: you spend the computing power of your machine so that the blockchain remains validated and you can earn Bitcoins in return.
To send or receive transactions, you need a wallet Bitcoin . A wallet is simply a public key (the address that others use to send you Bitcoins) and a private key (essentially a signature that authenticates transactions made from your wallet). Anyone can create a new wallet at any time, making Bitcoin an anonymous currency.
The chain of blocks being distributed on all the nodes, it is entirely public and transparent. Everyone can see the entire block chain and see each transaction performed.
How It Works Ethereum
Ethereum is a vast global network distributed on thousands of computers around the world. fashion. The Ethereum platform incorporates blockchain technology in the same way as Bitcoin, but develops it in a number of ways.
The key element of Ethereum is the intelligent contract .
The Ethereum platform has its own programming language, called Solidity, which allows users to write Ethereum scripts, called smart scripts. Smart contracts are distributed over the network and, on demand, are executed on all Ethereum nodes.
Ethereum also involves a digital currency called Ether . Since the execution of smart contracts costs computing resources, node owners are compensated by Ether. The cleverer the clever contract is, the more it costs to run it. If it costs too much, it will not be allowed. This encourages the creation of effective smart contracts.
The Ethereum blockchain is similar to the Bitcoin blockchain, but it also contains the results of smart contracts executed instead of containing only Ether transactions.
Each node of the Ethereum network retains a copy of the chain of blocks, as does Bitcoin, and the verification process calls Ethereum mining . Miners spend IT resources to verify that each Ether transaction and smart contract result is valid. In exchange for their efforts, they win Ether.
You can also send and receive Ether directly from a wallet to a wallet.
Ethereum is proof that the concept of the blockchain. Because of this, Ethereum is often called "programmable money". Yes, it is a digital currency, but money that can execute code.
Bitcoin vs. Ethereum in Brief
While Bitcoin is only a digital currency, Ethereum is much more than that. Bitcoin and Ethereum have fundamental differences in their long-term goals, as well as differences in their underlying technology, which influence their value and perceived usage around the world. For example:
The average Bitcoin blocking time is 10 minutes, while the average Ethereum blocking time is 15 seconds. Ethereum transactions can be confirmed much faster.
The amount of Bitcoin payable as mining reward is reduced by half every four years. The total number of lousy Bitcoin is set at 21 million. When the miners reach this number, the mining of the new Bitcoin will cease. The amount of ether that can be released through mining is capped at 18 million per year, so there is always new Ether entering the circulation.
Better to extract bitcoin with ASICs Dedicated equipment far superior to standard equipment. The need for specialized equipment pushes miners into the major mining basins that consolidate mining energy, while at the same time consolidating the benefits of Bitcoin extraction to the "mining cartels" that dominate the market. Ethereum, however, is better exploited using GPUs, which are more readily available and arguably more equal, even with the GPU price increase due to Ethereum extraction .
Bitcoin is often called "digital gold" because it has a conservation value and many other crypto-currencies are "linked" to the Bitcoin price. Ethereum is more often considered a "digital currency" because it has an expense value and a lower entry point.
However, the main difference between the two cryptocurrencies lies in the ease of creating programmable smart contracts on the Ethereum blockchain. Initially, the Bitcoin network was unable to process smart contracts. As Bitcoin and its blockchain evolved, support for smart deals was added, though Bitcoin continues to play Ethereum in this regard.
The advocates of Ethereum consider that this ease of use is one of the main reasons the future of cryptocurrency. In addition, Bitcoin has always been slow to implement new changes and, in many ways, is still only because it was the first cryptocurrency.
Although the cryptocurrency sector is still in its infancy, blockchain technology is slowly transforming the world . There are hundreds of other crypto-currencies, each attempting to decentralize and disrupt the status quo in their area of activity ( as a completely decentralized Internet ).
to appear. Many are direct scams, as has been demonstrated many times. Need help to decide? See our article on to avoid cryptocurrency scams – This is an excellent starting point.