Bitcoin and Ethereum are the top 2 cryptocurrencies by market cap and both have a large following in the cryptosphere. However, both the cryptocurrencies are quite different in their orientation and what their larger goals are.
Bitcoin was launched in 2009 and is the pioneer of the cryptocurrencies, it was the reason behind an internet phenomenon which has led to the formation of a new trade market with a valuation above 100 billion dollars.
Ethereum, on the other hand, was launched in 2015, and even though follows the basic principle of blockchain and distributed ledger technology, it’s quite different from the pioneer bitcoin. This article would help you understand the major difference between the two and even though both are cryptocurrencies, both serve a completely different purpose.
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Bitcoin vs Ethereum: The Difference in Approach
Bitcoin was a vision of a decentralized and distributed network of finances where there would be no monopoly of ant centralized institutions like banks. Satoshi Nakamoto the anonymous inventor of the Bitcoin and a financial revolution of a sort was not a big fan of banks and financial institutions which held a monopoly over people’s own money.
Bitcoin was invented from a purely financial; point of view and was aimed to disrupt the centralized institutions. The system was designed as such that the community would be responsible as a whole for any work on the main net and there won’t be any concentration of power at the top.
Be it transaction verification or maintaining the network, everything is done by one or the other peer on the network, while the development process is handled by a core team. However, even you can make changes into the main net, given it is supported by the majority.
Ethereum main net was launched in July 2015 by Vitalik Buterin, a coder himself, and the aim behind the network was not just another token in the vast crypto space but a complete blockchain ecosystem.
The basic principle of decentralization and distributed network is followed on the Ethereum main net as well, but instead of focusing on the finances the main aim was to create a complete blockchain ecosystem which allows for tokenization for other new entrants, the use of smart contracts, a platform for the creation of decentralized applications (DApps)
Ethereum’s approach using Blockchain technology is quite different from that of Bitcoin’s and it has been successful so far. Now, just like earl cryptocurrencies which used to imitate Bitcoin working structure is slowly moving towards the Ethereum approach of the complete ecosystem rather than just the tokenization.
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Technical Difference Between Ethereum and Bitcoin
When we talk about the technical aspect Bitcoin and Ethereum has major differences. Bitcoin has a block time of 10 minutes while Ethereum Block time range from 10 to 19 seconds. Block time refers to the formation of the new block on the blockchain.
A Blocktime of 10 minutes suggest that every 10 minutes a new block gets mined for Bitcoin while it only takes 10-20 seconds to mine Ethereum block.
The next difference comes in the form of mining script or hashing algorithm since in a decentralized ecosystem the peers are responsible for transaction verification, each cryptocurrency uses a certain consortium to mine the blocks.
Bitcoin makes use of Proof of Work based SHA-256 hashing algorithm which allows the miners to verify the transaction by solving a cryptographic signature attached to each transaction. On the other hand, Ethereum makes use of Proof of Stake based Ethash algorithm to mine Ethereum blocks and receive a certain amount in Block reward.
Since the cryptocurrencies have gained enough attention and market value, mining of blocks has turned into a legitimate job because of which the mining farms have hijacked the process and the main aim of mining using a simple home-based PC to verify the blocks has gone out of trends.
Both the networks are constantly looking and developing new protocols to ensure that anyone can mine the blocks and not just someone with good resources who can afford a high-class mining rig.
Ethereum is already making changes to devoid the advantage of ASIC mining and Bitcoin is into the development process to ensure that its hashing algorithm and mining difficulty does not end the mining opportunity for newcomers.
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Despite the major technical differences and a difference in approach, both Bitcoin and Ethereum holds a great value of its own and have a separate user base. The growing scalability concern of Bitcoin and the increasing block size is the current major issue at hand for both the parties. The developer community behind the respective networks are working hard to find both immediate and long term solutions.
Hopefully, with more refinement in the technology, these issues will get sorted and hopefully we would soon get to see the changes and improvement in both the networks.
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