ETH vs BTC: Key Difference Between Ethereum and Bitcoin

By: Obinna Tony

ETH vs BTC: Key Difference Between Ethereum and Bitcoin

August 11, 2022 11:38 PM

Bitcoin (BTC) and Ethereum (ETH) are dubbed the most popular cryptocurrencies in the market, and they have both ensured the growth of the crypto sector. The first cryptocurrency coin to be created is Bitcoin, and it's rightly viewed as digital gold, while Ethereum is seen as a decentralized computer all around the world.

 

Bitcoin is viewed as digital gold due to its scarcity as well as its durability, which is similar to any precious metal, but it is easy to store and also divide. Ethereum is viewed from the lens of a decentralized computer for its world, and this is because the network is employed when running decentralized applications (DApps). This means applications that are not controlled by a central authority.

 

What is Ethereum?

 

Ethereum goes beyond Bitcoin by using the blockchain to build a decentralized computer, allowing nodes and messages to be attached to each transaction. Bitcoin employs blockchain technology for financial transactions.

 

Powered by its own native coinage, Ether (ETH), which is used to conduct transactions and communicate with apps built on top of the Ethereum network, Ethereum is a decentralized, open-source, distributed blockchain network. Co-founder Vitalik Buterin of Ethereum released a white paper explaining the usage of smart contracts, which are self-executing contracts expressed in code, in 2013.

 

Decentralized applications, or DApps, are programs that operate independently of a centralized authority thanks to smart contracts. Buterin and the other co-founders of Ethereum sold Ether in 2014 to raise money for Ethereum's blockchain development.

 

Bitcoin (BTC): What is it?

 

The first cryptocurrency that was introduced and operates decentralized is called Bitcoin. Its anonymous founder Satoshi Nakamoto mined the genesis block, the first data block on its blockchain, in January 2009. Since then, adoption of Bitcoin has progressively increased. Since Bitcoin was developed as a peer-to-peer (P2P) electronic cash system, no central authority is required to complete transactions.


In 2008, Nakamoto published a white paper that laid the foundation for the idea that would eventually result in the development of the Bitcoin blockchain. Bitcoin enables users to control a currency independently of any governing body, bank, or financial organization. Instead, the Bitcoin is managed by a decentralized network of users. blockchain program that adheres to a set of rules that each network member accepts. The rules provided by the software govern a number of factors, including the supply limit of 21 million BTC, how transactions operate, and how long it takes for transactions to settle.

 

The first cryptocurrency built on the blockchain-based decentralized ledger technology (DLT) was called Bitcoin. The Byzantine Generals Problem, which explains the difficulty decentralized systems have in agreeing on a single truth, was one of several problems that blockchain technology resolved. Bitcoin uses a blockchain and the proof-of-work (Pow) technique to solve the Byzantine Generals Problem. The challenge is resolved by the numerous miners,  each of whom plays the role of a general. Every node tries to verify transactions that are the same as messages issued to generals.

 

      

Amongst the differences, Bitcoin and Ethereum also share similarities. And when measured in metrics, Bitcoin and Ethereum are the top two cryptocurrencies. The metrics that are used include market capitalization, unique wallet addresses, and trading volume, which is based on market capitalization, unique wallet addresses, and trading volume on cryptocurrency exchanges. The similarities between Bitcoin and Ethereum are that they are based on a publicly displayed distributed ledger, which is called a blockchain, and they can also be stored in digital wallets. They use alphanumeric strings as addresses and are traded on cryptocurrency exchanges.

 

While BTC may be used as a store of value, ETH is used when interacting with applications that are built on the Ethereum blockchain. When it comes to portfolios, BTC is used to preserve value and can be a haven for crypto lovers. ETH could be used when accessing decentralized financial (DeFi) services. 

 

While these two networks are solely based on the concepts associated with distributed ledgers and encryption, there are still a lot of core differences between them. As Bitcoin uses Omni Layer, a platform that is meant to create and trade currencies on the Bitcoin blockchain, Ethereum tokens are issued under different standards, with the most popular one being ERC-20. The ERC-20 standard includes several functions that developers can implement before they launch their tokens.

 

Bitcoin transactions are monetary in the sense that transactions can have notes and messages attached to them through encoding the notes or messages into a data field in the transactions. Ethereum transactions contain executable code to create smart contracts. The emergence of Bitcoin has highlighted the emergence of a radically new form of digital money that works outside the control of any government. 

 

In conclusion, both the Bitcoin and Ethereum networks are different concerning the overall view of their aims. Bitcoin was founded to be an alternative to available national currencies. It aspired to be a medium of exchange as well as a store of value. The intent of Ethereum was to be a platform whose main intent was to facilitate immutable, programmatic contracts and applications using its currency. Both Bitcoin and Ethereum are digital currencies, but Ether's core purpose is not to institute itself as an alternate monetary system but rather to facilitate and monetize the operation of Ethereum smart contracts, including the dApp platform.