Digital currencies, such as Bitcoin (BTC) and Ethereum (ETH), have become buzzwords in many conversations. They're two of the biggest names in the crypto industry, with most of the total cryptocurrency market cap made up of BTC and ETH. There are few better indicators of the state of the cryptocurrency market than Ethereum and Bitcoin price trends. Novice investors could benefit from a review of the industry's fundamentals, including the two coins' shared features and unique distinctions.
But first, let's go back to where it all started!
The History of Bitcoin
Bitcoin's alleged developer (or developers), under the alias Satoshi Nakamoto, published a white paper in 2008 outlining the blockchain technology that has since formed the backbone of the whole cryptocurrency industry. The genesis block, the first Bitcoin block, was mined on January 3, 2009, marking the formal beginning of the Bitcoin blockchain. It is rumoured that Satoshi mined up to 1.1 million Bitcoins in the first seven months. In 2010, Bitcoin became tradable on internet exchanges, and in April 2011, the price of a single Bitcoin surpassed $1 for the first time. Bitcoin has expanded rapidly to become a significant online and offline medium of exchange.
The History of Ethereum
Many people contributed to the creation of the Ethereum blockchain, but Vitalik Buterin is credited with writing the white paper that first detailed the system in November 2013. At a Bitcoin convention in Miami, Florida, in early 2014, Buterin introduced the blockchain project idea, which included Ethereum. In the fall of the same year, the team behind the project held an initial coin offering (ICO) to raise money for its development. They sold millions of dollars worth of Ether in exchange for the funds. In the years since Ethereum's 2014 debut, the blockchain has undergone several iterations, with names like Byzantium and Constantinople and developments like the Beacon Chain.
The Similarities Between Bitcoin and Ethereum
It's safe to say that Bitcoin and Ethereum are the two most well-known and widely used cryptocurrencies globally. Market capitalisation, wallet usage, and trade volume are all areas in which they dominate the crypto landscape. Additionally, Bitcoin and Ethereum are both decentralised, meaning they are not owned, supervised, or governed by a centralised authority such as the Federal Reserve System or the government. Both BTC and ETH use cryptographic techniques like seed phrases and hashing to ensure that user transactions are private and secure. Finally, both have decentralised blockchains with native currencies that can be stored in digital wallets.
The Differences Between Bitcoin and Ethereum
Here are some of the critical distinctions between Bitcoin and Ethereum:
The Reasons Behind Creation
Ethereum was founded to leverage blockchain technology to maintain a decentralised payment network and preserve computer code. In contrast, Bitcoin was developed to replace national currencies during the Global Financial Crisis in 2007-2008.
Rankings
Since their respective debuts in 2009 and 2014, Bitcoin and Ethereum have consistently ranked first and second in terms of market capitalisation among all cryptocurrencies.
Consensus Algorithm
Proof of work (PoW) is the consensus protocol used by Bitcoin, which ensures that all computers in the network can verify transactions and agree on the integrity of the ledger while shielding the network from specific attacks. Ethereum implemented a proof of Stake (PoS) in September 2022, a set of improvements to make the network more secure and long-lasting.
Block Limit And Time
Block size in the Bitcoin blockchain is 1 MB, and blocks are generated every 10 minutes. Block duration on the Ethereum blockchain is 14–15 seconds, and there is no hard cap on the number of blocks that can be created.
Smart Contracts
A smart contract refers to a set of prearranged terms and conditions encoded in a computer program executed when the blockchain protocol is reached.
Smart contracts are unavailable in the Bitcoin network. On the other hand, these can be made on Ethereum using programming languages like Solidity and Vyper.
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