Ethereum vs. Bitcoin
What’s the difference?
Their age is the most obvious, with Bitcoin having entered this world as the very first global cryptocurrency in 2009 and Ethereum only showing up in 2015 as a potential alternative. Although it is less proven than its predecessor, Ethereum does have a few nifty features that give it a lot more potential than its older sibling in some key areas. For this guide, we’ll look at two shared aspects of the cryptocurrencies: Their ability to act as a store of value and as transactional mediums. We’ll also take a look at some of the unique features which make them stand apart.
As a store of value
The most successful cryptocurrency for storing value continues to be Bitcoin. As the most valuable coin in the world by quite some margin — and the progenitor of the entire cryptocurrency revolution — Bitcoin has proven itself. It enjoys far more recognition than any of its peers, and that makes it easier to buy, store, and sell.
That’s not to say that Ethereum and its coin, Ether, have been ineffective. For such a young currency, Ethereum has proved to be one of the most popular. At the time of writing, its market value and 24-hour trading volume are second only to Bitcoin. However, the actual monetary value for a single ETH is currently less than 3% of Bitcoin, so owning a few Ether is no way near as pleasant as holding a few Bitcoin.
Part of that is down to Bitcoins’ built-in scarcity. There is a hard limit on the eventual number of Bitcoins, with diminishing returns for miners as they approach that mythical 21 million mark. One day no more Bitcoins will be created, and no matter how many end up being lost, no more will be made. Thanks to supply and demand, Bitcoin should, in theory, grow in value, at least until no more coins appear.
In comparison, Ethereum will continue to release the same amount of Ether regularly forever, so its supply will remain constant and expanding.
Cryptocurrencies are nothing if not volatile, though. As much as it seems most likely that Bitcoin will remain the king of the cryptocurrencies for the foreseeable future, there is no guarantee of that.
Ethereum vs. Bitcoin
As a transactional medium
The difference in speed is because Ethereum can serve as a platform for other cryptocurrencies, and also because Ether transactions tend to be confirmed quicker by the blockchain. It’s built to be more efficient than Bitcoin, partly through virtue of being a newer and more optimized cryptocurrency. The specifics of it are rather complicated, but if you want to dig into them, some excellent breakdowns will let you dive as deep as you want to go.
Another advantage of using Ethereum over Bitcoin for transactions is that its fees tend to be far lower. There is always the potential that Ethereum will face increased charges as it hits the same sort of scaling walls as other cryptocurrencies. However, that is unlikely to happen in the same manner as it has Bitcoin, so costs will likely remain lower for some time to come.
Empowering others
While the primary uses of Ethereum and Ether make it quite different from Bitcoin, the most significant arguable difference is in the underlying technology behind each and what that means for other cryptocurrencies. Technically, Ethereum isn’t a cryptocurrency at all, but a special kind of blockchain technology. This technology not only powers Ether transfers between people but can be used to create all types of other cryptocurrencies — and it has.
Part of the reason there are so many cryptocurrencies today is that many of them are built on Ethereum’s underlying technology, even relying on it entirely in some cases. While the specifics of that are beyond the scope of this guide, it’s all possible because of one key feature that Ethereum has that Bitcoin doesn’t — smart contracts.
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