What is Bitcoin (BTC)?
Bitcoin is a digital peer-to-peer currency that is typically used as a medium of exchange or store of value. It’s not a currency that is issued or regulated by any central authority. Users can conduct transactions semi-anonymous with full transparency at a fraction of the fees. All of this is possible via blockchain technology.
More information on Bitcoin here.
What is Ethereum (ETH)?
Ethereum’s native token “ether” is another form of digital currency that can be used as a medium of exchange. It’s also the “gas” used to power applications and services running on the Ethereum network. These include fixed, procedural contracts (known as smart contracts) and decentralised applications (or dapps).
More information on Ethereum here.
The similarities between Bitcoin and Ethereum
- Both can be traded like a normal cryptocurrency via an online exchange.
- Both use blockchain technology and a distributed ledger.
- Both networks are publicly viewable and built on ‘open source’ software – so developers can contribute.
- Both can be deposited into a mass number of cryptocurrency wallets.
- Both require Proof-of-work (computational mining) to verify transactions on the blockchain. (Ethereum is set to change this soon)
- Both currencies are decentralised, meaning that they are not issued or regulated by a central authority.
The differences between Bitcoin and Ethereum
- Ether does not have a limited supply like Bitcoin (21 million), but an unlimited supply. In saying this, the creation of new ether is very tightly controlled to keep inflation from ruining the value.
- Fundamentally: Bitcoin is mainly a store of value while Ether powers apps and services.
- Ethereum transactions can have attached actions to execute, while Bitcoin transactions usually contain recordings of notes.
- The algorithms that run on Ethereum use ‘ethash’, while Bitcoin uses ‘SHA-256’.
- Block times are different – Bitcoin (about 10 mins) and Ethereum (10 to 20 seconds).