The cryptocurrency world is only a little more than ten years old, but it has already revolutionized finance and brought many new and exciting opportunities. While Bitcoin has taken the online community by storm, Ethereum has quietly established itself as one of the most influential cryptocurrencies to date, making this Ethereum vs Bitcoin comparison so important.
Many factors contribute to the popularity of Bitcoin and Ethereum among investors, developers, and even ordinary people who want to learn more about this exciting technology.
This post will examine the key differences and similarities between Ethereum and Bitcoin, how their technologies have evolved, how they differ today, and the extent of their economic and social impact.
Ethereum vs Bitcoin: Side-by-Side Comparison
|Launch||July 2015||January 2009|
|Developer||Vitalik Buterin, Gavin Wood, Mihai Alisie et al.||Satoshi Nakamoto|
|Block Time||15 seconds||10 minutes|
|Transaction Throughput||30 transactions/second||7 transactions/second|
|Release Method||Presale||Genesis Blocked Mined|
|Coin Supply||Unlimited||21 Million|
Ethereum vs Bitcoin: What’s the Difference?
Blockchain technology is used by both Ethereum and Bitcoin to provide a secure, decentralized, and transparent payment system. However, the manner in which they accomplish this is entirely different.
Ethereum uses PoS for security, whereas Bitcoin uses PoW. Furthermore, their transaction processing speeds and transaction fees are vastly different. Here are some more significant distinctions between the two.
Bitcoin is a cryptocurrency, which means it is encrypted. To secure the blockchain, Bitcoin uses the Proof-of-Work (PoW) algorithm. When using PoW, miners must constantly solve complex mathematical equations in order to keep the blockchain network running and avoid double spending of coins.
While PoW has proven to be extremely secure, it is a costly and energy-intensive method of maintaining the blockchain. As a result, as the difficulty increases, there will be fewer miners in the future, and only about 10 million Bitcoin exist today.
Ethereum employs a Proof-of-Stake (PoS) algorithm, which necessitates more computing power to verify chain consensus. As a result, generating new blocks on the Ethereum blockchain is always easier than on the Bitcoin blockchain.
In contrast, Ethereum’s security is based on the Stake algorithm, which requires voters to stake a certain amount of Ethers in order to validate transactions and maintain chain consensus. PoS has more nodes than miners in the Bitcoin network today because it is less computationally intensive.
Block Size Limit
Because Bitcoin has a fixed block size limit of 1 MB, a block can only hold a maximum of 1 MB worth of transactions. This limit was set to prevent spam from congesting the blockchain and taking over the Bitcoin network, potentially allowing attackers to launch a 51% attack on the network.
Other existing solutions, such as SegWit and Replace-By-Fee, do not require a block size limit (RBF). The block size can technically be increased with SegWit as well. However, it has not yet been activated, and there is no set limit to the size of the block.
The size of an Ethereum block is not fixed. However, because there are some self-imposed limitations on the maximum transaction amount per block, it may change in the future.
Transaction Speed and Fees
Bitcoin transactions are quick. The transaction will be confirmed on the blockchain within 10 minutes. However, its transaction fees are extremely high. Bitcoin was originally intended to have a transaction rate of three transactions per second (TPS).
However, its security has significantly increased, resulting in a slower block time and, as a result, fewer transactions being processed every second. Furthermore, there are only 21 million Bitcoin available today, which has resulted in a significant increase in transaction fees.
Ethereum transactions are just as quick as Bitcoin transactions. Ethereum transactions can also be confirmed on the blockchain within 10 minutes. However, unlike Bitcoin, Ethereum has low transaction fees. At the moment, the average transaction fee per transaction is less than $1 USD, with a median of around $0.27 USD.\
Bitcoin suffers from a scalability problem. Its transaction fee is high, making it difficult to use as a payment method on a variety of daily platforms. Furthermore, Bitcoin’s average transaction speed of 10 minutes makes it difficult to use as a payment method.
Bitcoin is also experiencing significant network congestion, which may result in higher transaction fees and slower transaction times. Bitcoin’s blockchain is not scalable in comparison to other cryptocurrencies. It has a hard-coded block size limit of 1 MB per block, and there is no way to increase the block size limit.
The scalability of Ethereum is an entirely different story. Its blockchain has multiple layers, allowing it to use new technologies such as sidechains and off-chain transactions.
Because of these technologies, the network can scale in different ways, making it more scalable than Bitcoin. Ethereum, for example, can handle 30 transactions per second, whereas Bitcoin can only handle about seven transactions per second. Read; Crypto Wallets Found to Be Used for Stealing Funds
Transaction Confirmation Time
Miners use a process called mining to confirm Bitcoin transactions. To validate transactions and maintain the blockchain network, miners must use a Proof-of-Work (PoW) algorithm.
As a result, the transaction speed of Bitcoin is slow. Miners can generate more than 50 new blocks per hour, but this is still too slow for average users who use Bitcoin as a payment method across multiple platforms throughout the day. After each block is mined, it takes an average of 10 minutes for your transaction to be confirmed on the blockchain.
Ethereum transactions are typically confirmed within 10 minutes. Because mining is currently not possible on the Ethereum blockchain, when a transaction is made, it is instantly broadcasted to all other nodes in the network and confirmed within seconds.
Ethereum vs Bitcoin: Pros and Cons
|Pros of Ethereum||Cons of Ethereum|
|Smart contract programming language||operates in a market that is very competitive|
|No chance of downtime, fraud, censorship, or interference from third parties||Smart contracts in Ethereum have yet to be proven to be completely secure from hackers.|
|The Ethereum Virtual Machine enables the creation of smart contracts.||Miners must pay a mining fee based on the complexity of the smart contract and its associated gas.|
|Pros of Bitcoin||Cons of Bitcoin|
|Ubiquity||Fluctuating price, making it a risky investment|
|Blockchain is a highly secure and sophisticated digital ledger.||Mining is a slow process|
|Decentralized and fully encrypted||There is no central issuing body (risk of Bitcoin inflation and devaluation)|
Ethereum vs Bitcoin: 10 Must-Know Facts
- Satoshi Nakamoto, the creator of Bitcoin, introduced it to the world in early 2009.
- In July 2015, Vlad Zamfir and Vitalik Buterin released a white paper that introduced Ethereum to the world.
- Bitcoin is a cryptocurrency that enables online payments to be sent directly from one user to another without the use of a centralized system such as a bank.
- Ethereum is a distributed computing platform based on blockchain that allows users to run blockchain-based decentralized applications (dApps) on the Ethereum network.
- To secure its network, Bitcoin employs a Proof-of-Work (PoW) algorithm, whereas Ethereum employs a Proof-of-Stake (PoS) algorithm.
- Bitcoin has a fixed limit of 21 million coins, whereas Ethereum does not.
- Ethereum has a higher volatility than Bitcoin.
- Bitcoin is a deflationary currency, meaning its value falls over time. Because Ethereum’s inflation schedule is negative, its price falls in the opposite direction.
- Because Ethereum has a faster block time, more blocks are added to the blockchain every minute.
- While Bitcoin has four developers for every 1,000 users, Ethereum has ten developers for every 1,000 users.
Ethereum vs Bitcoin: Which Is Better?
When it comes to popularity and market cap, Bitcoin is the clear winner when comparing these two cryptocurrencies. However, when it comes to investment opportunities, Ethereum is a promising coin that could be worth your money.
They both have distinct advantages and disadvantages. In order to successfully invest in a cryptocurrency, you must first determine whether the benefits outweigh the drawbacks.
Ethereum vs Bitcoin: FAQs
What is the purpose of Ethereum?
Ethereum is a blockchain-based cryptocurrency designed to serve as a platform for developing decentralized applications. The Ethereum blockchain is responsible for managing decentralized apps and ensuring that data and information are not lost or corrupted.
How long does it take to purchase Bitcoins or Ethereum?
It should take no more than ten minutes.
What is the Bitcoin to Ethereum exchange rate?
This varies by exchange, but it is usually around 1BTC = 14.81 ETH.
Are Ethereum and Bitcoin the same thing?
No. They are two distinct cryptocurrencies, each with its own set of advantages.
How do I buy Bitcoins and Ethereum?
Coinbase can be used to purchase BTC or ETH on both Android and iPhone devices.