Difference Between Bitcoin Blockchain And Ethereum Blockchain – A Beginners Guide
What are bitcoin and Ethereum? Are they the same? If not, then why? Bitcoin and Ethereum are most familiar words when we talk about cryptocurrencies. And the well-discussed topic called blockchain was also introduced to the public through bitcoin. But many questions come to mind if you are a beginner or new to the cryptocurrency world. Furthermore it is also essential to clear the queries and basics to take stable moves in the future.
Today in this article, we will answer the previously mentioned questions. That, too, is a straightforward and convenient language without putting much stress and complicating things for you.
What Is Cryptocurrency?
Before directly jumping on the main topics, let’s understand cryptocurrency. Cryptocurrencies are entitled as future payment methods by many experts. And there is no doubt why it’s called so. The popularity of cryptocurrencies is growing with time and is seeking attention of youths due to their versatility.
But What is cryptocurrency? In simple words, Cryptocurrency is a digital currency that acts as an alternative form of payment and is wholly created using various mathematical and encrypted algorithms. Cryptocurrencies are both virtual currency and accounting systems as they are made of encrypted algorithms.
The use of cryptocurrency is simple. It requires a trustable digital wallet that is cloud-based and can be used on your PC or Mobile device. These Wallets are essential as that is where the encryption key is stored, which not only links your cryptocurrency but also helps to confirm your identity for security reasons.
What Is Bitcoin (BTC) ?
Bitcoin is a virtual currency used on a digital platform. It was created to establish a peer-to-peer electronic payment system that enables one person to make transactions with another person without having a mediator authority such as financial institutions like banks or government or any third party in between.
The characteristics of Bitcoin and standard currency are pretty similar. Just like our common currency, even Bitcoin is kept in a digital wallet which provides security.
The bitcoin wallet works similarly to a Bank account; they allow us to store and make transactions with other charges in the peer-to-peer network.
Every Digital wallet has an individual account which is denoted as an address. And these addresses help to make transactions with other charges. Furthermore, every address or account holder is provided with two keys named, private and public keys. These keys are used to do trading and receive funds.
Bitcoin completely works by Blockchain technology, a digital ledger where bitcoins are stored and exchanged securely.
Besides this, all the transactions made by bitcoin users are recorded and are visible on the bitcoin blockchain.
What Is Ethereum (ETH) ?
Ethereum is decentralized global software that works on blockchain technology and is very well known for its cryptocurrency ether(ETH)
In this blockchain, the blocks are designed by a blockchain miner or a participant that is transferred to other miners to miners for validation. People also use Ethereum to create secure digital technology for their businesses.
Besides this, Ethereum consists of a token created to pay for the work done in the field of Blockchain, and the participants can use it to pay for their goods and services wherever possible.
Ethereum is scalable and programmable technology. It is secure and the first choice of most blockchain developers and enterprises for creating decentralized technology for themselves.
Furthermore, the key feature of smart contracts makes it more durable to make decentralized networks or any application. Similar to Bitcoin, the Ethereum network is also an open(public), permissionless network, i.e., anyone can create transactions or contracts, validate them, and mine the blocks without logging in or signing up with any other firm.
Key Differences Between Bitcoin Blockchain And Ethereum Blockchain
After reading the above two introductions of Bitcoin and Ethereum, You would be very clear that they have similar characteristics like open network, blockchain technology, etc. Now let’s understand these key differences straightforwardly.
- Existence and share in the market
Bitcoin was introduced to the public in 2008. And was in use by people in 2009 but couldn’t get much attention due to flaws and less digitalization worldwide.
However, the current stage of Bitcoin is way different from before. Bitcoin is the world’s most popular cryptocurrency. And there are about 106 million people worldwide who claim to own bitcoin and make transactions through it.
Ethereum was officially published in a white paper in November 2013. And its ETH coins were purchasable by 2014 but couldn’t be used. Ethereum coins could be used only through Ethereum Blockchain, which came into existence on July 30, 2015.
Ethereum didn’t take much time to gain attention and users comparatively, and today, it is the world’s second most popular cryptocurrency after Bitcoin, with 13.1 million users only in the US.
Bitcoin was created in 2008 when there was a worldwide financial crisis. The primary purpose of Bitcoin is to offer people a money transaction system that is entirely online and cloud-based without compromising security.
Furthermore, this alternative payment system was also started to let people store data and assets and do Money transactions free of any Central control or authority.
EthereumWhen we talk about purpose, Ethereum is similar to bitcoin but has something extra to offer. Ethereum has a smart contracts system. Hence, through smart contracts, Ethereum enables blockchain developers to create various ETH-based tokens to power dApps.
- Energy consumption
Bitcoin uses the proof of work (PoW) consensus protocol to prevent the network from cyber-attacks. In this protocol, all information is sent to network nodes to agree and record data permanently according to the majority. Pow protocol helps very well in security, but in the PoW mechanism, the miners need to solve mathematical calculations to work further; this requires a lot of energy which isn’t that sustainable for all.
Ethereum recently moved its consensus protocol to proof of stake. Proof of stake is an alternative to the proof of work mechanism. In this mechanism, the miners aren’t required to solve puzzles or calculations. Instead, the validators must hold and stake tokens to earn transaction fees. PoS not only lowers security risk but also uses less energy.
Bitcoin still uses its traditional way of storing and updating the data in their data in a blockchain. And transaction speed is also slow comparatively. Bitcoin takes about 10 minutes to add information to its blockchain. And we also know that each block in Bitcoin is limited to only 1MB, which means the more information, the more blocks it needs and the more time it can take.
Ethereum is entirely based on new technology and coding. Ethereum takes just 15 seconds to add or record the information, and the blocks in its blockchain don’t have any fixed storage capacity. Hence, it won’t be wrong to say that Ethereum optimizes our time.
Bitcoin is already a very well-established cryptocurrency. There are millions of users and transactions around the world. Bitcoin is most suggested and adapted due to its storage value; you can store any digital assets without any issue.
Ethereum entered the cryptocurrency market way after Bitcoin but made mass users in a significantly less pace of time due to its modern technology and smart contracts support. Experts also believe that Ethereum will soon be equal to bitcoin in the coming years.
Bottom line Of Bitcoin Blockchain And Ethereum Blockchain
Ethereum and Bitcoin are well-established faces in the cryptocurrency world. And have created a revolution in database methods. And if you consider Bitcoin vs. Ethereum, which is better? Then the majority of votes may go to Ethereum as it is faster, has less energy consumption, and provides equal benefits as Bitcoin. However, Ethereum is quite complex too.
The more stress we put on the subject, the more complex it gets. Hence, In the above article, we tried covering all the important points one must know in simple words.