Bitcoin vs Ethereum
Although Ethereum is often thought of as similar to Bitcoin, they are more akin to cousins than siblings. Ethereum, however, leverages blockchain technology for far more than the straight-forward peer-to-peer exchange of digital currency. Let’s take a closer look.
The original cryptocurrency, Bitcoin is the most widely known and used cryptocurrency. Bitcoin offers a peer-to-peer electronic cash system that guarantees user anonymity. Bitcoin is completely decentralized with no third party (such as a bank or central government) overseeing or verifying transactions. Instead, Bitcoin relies on blockchain technology and advanced cryptography to guarantee the authenticity of transactions, all of which are recorded in a publicly available ledger. Thousands of merchants around the world accept Bitcoin for payment, including prominent companies such as Microsoft, Paypal, Square and Dell.
Like Bitcoin, ether (the tokens associated with Ethereum) can be used for financial transactions wherever they are accepted. Ethereum, however, leverages blockchain technology for far more than the straight-forward peer-to-peer exchange of digital currency. The Ethereum blockchain is an open software platform that allows developers to build and deploy decentralized applications In the Ethereum blockchain, instead of mining for bitcoin, miners work to earn ether, a type of crypto token that fuels the network. Beyond a tradeable cryptocurrency, ether is also used by application developers to pay for transaction fees and services on the Ethereum network.
“Bitcoin is first and foremost a currency; this is one particular application of a blockchain. However, it is far from the only application. To take a past example of a similar situation, e-mail is one particular use of the internet, and for sure helped popularize it, but there are many others.” Dr. Gavin Wood, Ethereum Co-Founder
Bitcoin uses blockchain technology to track the ownership of digital currency (bitcoins), making peer-to-peer electronic financial transactions possible. The Ethereum blockchain makes it possible to develop applications that eliminate third parties from just about any type of transaction. Think of all the different transactions that require a third party to secure the exchange: mortgages, loans, title registries, regulatory compliance and more. Developers can create applications using the Ethereum blockchain that allow the entities directly involved in a transaction to use smart contracts that ensure authenticity, privacy and security, without the time and financial costs associated with a bank, title company or other third party.
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