Bitcoin vs Ethereum: What’s the Difference?
Widely known as the first true cryptocurrency, Bitcoin has been in circulation since 2009. As a more recent development, Ethereum went live in 2015. In the period between, many different cryptocurrencies emerged. Most of them were limited and focused on improving specific aspects of Bitcoin’s performance, like increasing transaction speed, improving the anonymity or security of transactions.
Bitcoin and Ethereum in a Nutshell
Bitcoin created a decentralized form of currency that could be traded by individuals without the need for an intermediary. The validation and confirmation of each transaction are performed by the entire Bitcoin network. Since a single point of failure doesn’t exist, it’s impossible to shut down, manipulate or control the system.
Ethereum’s transactions are typically completed in seconds so it’s faster than Bitcoin which requires minutes to perform the same thing. While still based on blockchain and operating as a digital store of value, supporters of Ethereum see it as a distributed computing platform that comes with its own built-in currency called Ether. The main goal of Ethereum is to completely decentralize the internet.
The 3 Key Differences
The Bitcoin blockchain can be visualized as a database of accounts (or wallets) each storing an amount of currency. On the other hand, Ethereum’s blockchain network presents a more complex construction able to store decentralized applications (or Dapps) and execute them by using the processing power of the network.
Ethereum’s programming language, Solidity, is used to write “smart contracts” which execute when consensus confirms the conditions have been met. Although they’re simple by design, there’s a wide array of usage scenarios for these contracts, such as enabling payment systems to release funds on work completion or authorizing ownership transfer for a certain good after payment has been made.
Finally, the Ethereum network allows creating other cryptocurrencies or tokens with the same protocol used by Ether but distributed by different public or private blockchains. In other words, they can be created by organizations to be used as shares, voting rights or as a way to provide identity or authorization credentials.