Learning the Bitcoin vs Ethereum differences starts with understanding cryptocurrencies. These digital assets use cryptography to secure transactions. They can also control the creation of new units.
In this article, we’ll focus on Ethereum and Bitcoin because they’re the major players. But we’ll also touch on what some of your other options are. (And yes, you should consider them.) Let’s begin!
What Is Bitcoin?
Bitcoin arrived in 2009 thanks to an individual or group of individuals under the pseudonym Satoshi Nakamoto. Bitcoin is worn as a store of value, a medium of exchange, and a unit of account.
The popularity of Bitcoin led to other cryptocurrency options. Ethereum emerged as a second major player.
Learning the Ethereum vs Bitcoin differences requires you to know something about Ethereum’s history as well.
What is Ethereum?
Ethereum’s development began in 2013. Vitalik Buterin, a Russian-Canadian programmer, proposed the system as a way to standardize decentralized applications and transactions. The system went live in 2015.
Bitcoin and Ethereum serve different purposes.
Bitcoin is basically digital cash. Ethereum is a decentralized platform that runs smart contracts. These contracts are programs that execute automatically and precisely as they are programmed.
On Bitcoin Cash
Bitcoin Cash vs Ethereum is a comparison between Ethereum and another cryptocurrency separate from Bitcoin.
Bitcoin Cash understandably gets confused with Bitcoin. It uses a different consensus mechanism than Ethereum.
While both use Proof of Work, Bitcoin Cash uses a variant known as Satoshi’s Vision.
The design is more resistant to mining centralization. Ethereum will eventually move to a Proof of Stake consensus algorithm, while Bitcoin Cash has no plans to change.
Bitcoin brings benefits. Let’s look at a few:
- No central authority
- Sends money quickly and securely across the globe without the need for a bank or financial institution
- Finalizes transactions via network nodes through cryptography and records in the blockchain
- Offers user anonymity
This last perk is not possible with traditional payment systems. (So long, government control and censorship!)
Ethereum’s value is strong, in part, because its design makes it adaptable. That means developers can create all sorts of applications on the Ethereum network.
- Capable of making digital tokens (NFTs)
- Executes new types of financial contracts
- Enables the existence of decentralized autonomous organizations
Furthermore, Ethereum’s smart contracts run on a Turing-complete virtual machine. Ethereum can execute scripts using an international network of public nodes. This makes Ethereum contracts more secure than those written in other programming languages.
Are Other Cryptocurrencies Worthwhile?
Investing in Bitcoin and Ethereum could help you offset losses. But another resource – Dogecoin, Litecoin, or The Graph, for example – could help you find new opportunities for earnings.
Bitcoin and Ethereum are excellent investment choices. But limiting yourself would be a mistake. Diversifying your portfolio minimizes risk and maximizes profit potential.
Learning Bitcoin vs Ethereum Is a Great Starting Point for Crypto Investing
Understanding key Bitcoin vs Ethereum differences will help you manage volatility and mitigate risk. But don’t leave other investments on the table. For more from the world of cryptocurrencies, follow some of our other posts!