Over the last few years, cryptocurrency has significantly gained popularity across the globe. Many people have been investing in digital currencies due to their benefits. Doesn’t matter if you invest in cryptocurrency or not, if you know about crypto, the first thing that comes into your mind is with bitcoin or Ethereum. Bitcoin (BTC) is the top-rated digital currency with the largest market capitalization followed by Ethereum (ETH). Many people contemplate either investing in one of them or both. When it comes to investing, the first thing that arises is the difference between the both and which one you should choose. Do you want to know more? Let’s find out:
Bitcoin BTC: Bitcoin was one of the first attempts to create digital currency with the main aim to create a currency that does not have any central authority such as a government and a type of currency that is decentralized, transparent, and under a public ledger. Though it’s not the only first attempt, BTC found its own way and niche in the markets despite not being recognized as a major payment method. Currently, BTC holds the largest market capitalization and the per coin value.
Ethereum ETH: Another digital, decentralized, and the largest open-ender software platform launched in July 2015. Ethereum runs on blockchain technology, it helps in the deployment of smart, decentralized payment options without any fraud or use of third-party methods. After bitcoin, Ethereum is another digital currency often referred to as Ether, which is bought and sold by investors to buy into ICO.
The main difference
Technically different: Bitcoin and Ethereum are both built on different technologies and have different algorithms to work and execute transactions. For instance, Ethereum is based on blockchain technology and transactions taking place on ETH might contain executable code while transactions taking place on the BTC network are generally used for taking notes.
Protocol and power use: Earlier both BTC and ETH used a protocol called Proof of work through this network, nodes of both the networks allowed data to record on blockchain technology in order to prevent the currency from economic attack. However, later in 2022 Ethereum switched or upgraded to proof of stake, proof of stake POS is an ETH upgrade, a set of different upgrades which make ETH more reliable and secure. In the past few years, Proof of work (PoW) has gained negative reviews as it consumes computational power to run the system while the replacement Proof of stake takes less energy and computation power, rather than using miners, it uses validators to create new blocks in the system.
Main aim or reason to create: Bitcoin and Ethereum, both are built on different ideologies and have different aims for digital currency. Bitcoin was developed to find an alternative for natural currencies with no centralized authority and use it as a common medium of exchange while Ethereum is used to facilitate programmatic contracts that are immutable through its own currency ETH.
Application: Bitcoin is used as a medium of exchange in replacement of traditional currency while Ethereum is programmable blockchain technology software that has applications in various areas such as NFTs, Smart contracts, and Defi.
Though the aim to create ETH and BTC is different and according to them, they should not be in competition. However, with the popularity of both in the digital world, it has pushed them into competition for digital currencies.
The current scenario
Currently, BTC holds the largest market capitalization with roughly $1.3 trillion of value in November 2021 and Ethereum holds the second largest market capitalization. Both Bitcoin and Ethereum see regular changes in the market, recently after Terra Luna’s breakdown in the cryptomarket, all the major cryptocurrencies including Bitcoin and Ethereum saw huge fluctuations in the market. Therefore, investing or not will depend on how much you can bear the loss in situations like these. However, Both Bitcoin and Ethereum remain the top cryptocurrencies.
To wrap up: Bitcoin and Ethereum hold the major part of the crypto market, and any change in both of them has an impact on the rest of the crypto market, whether a beginner or expert, investing in these coins is a good investment.
