Bitcoin and Ethereum are undoubtedly among the most widely discussed cryptocurrencies, especially after an unprecedented bull run at the end of 2017 pushed prices to unprecedented highs. While they are the leading and most popular cryptocurrencies, the technology behind them is quite different.
Bitcoin is a distributed peer-to-peer digital currency that allows instant and secure transfers between two parties, regardless of where they are currently located. It's essentially a digital currency that you can send to any other Bitcoin user anywhere in the world. Bitcoin was launched in October 2008, with a white paper published by a man named Satoshi Nakamoto introducing bitcoin. A peer-to-peer electronic cash system ". Bitcoin is based on blockchain technology. The blockchain represents a common ledger that contains all the transactions that have ever been executed in a given system. The classifiers themselves are stored in the entire network, and updating one of them updates all of them.
It is this common ledger that contains the history of all past transactions. Bitcoin miners, on the other hand, confirm the existence of transactions to other participants in the network by grouping bitcoin -- hence the importance of mining bitcoin. This is crucial to the whole concept of bitcoin. Once a transaction is broadcast and included in the mining block, it is added to the blockchain. Once this happens, it cannot be reversed or changed in any way. It will remain in the public ledger and be verifiable at any given moment.
The etheric fang
If Bitcoin is meant to be used as a digital currency, ethereum is a decentralised platform that runs smart contracts. The applications are described as operating exactly as programmed, without any possibility of fraud, censorship, downtime or third-party interference. Ethereum is not a currency -- it's a platform. It has its own digital currency, called Ether, or ETH. Ethereum was launched in 2015 and is by far the largest open distributed software platform, supporting the creation of distributed applications (dApps) and smart contracts. The ethereum platform concept was developed by Vitalik, a programmer based in Toronto, Canada.
Bitcoin and Ethereum mining
When it comes to Bitcoin VS Ethereum, particular attention needs to be paid to how both currencies are mined. Both Bitcoin and Ethereum have blockchain technology at their core. However, major differences can be found when it comes to consensus algorithms. Both Ethereum and Bitcoin have different consensus algorithms, which means they have different ways of verifying the validity of information added to the ledger. Bitcoin mining is based on so-called "Proof of Work" (PoW) algorithms. In this concept, the probability of mining a block is based on the amount of computational work he has done. The mining prize will be awarded to the first miner who successfully solves each block's complex encryption puzzle. According to the PoW concept, each network miner competes with each other in the use of computing power.
Ethereum mining, on the other hand, is based on another Proof algorithm called Proof ofStake (PoS). In this consensus algorithm, the probability of verifying a new block depends on how many shares a person owns, or in other words, how many coins he owns. In PoS algorithms, block validators do not receive block rewards - they charge network fees as rewards. In ethereum's case, the reward is called gas. With PoS, there are no mathematical puzzles to solve and the creator of the new block is selected in a deterministic manner. Interestingly, Ethereum has fairly fast block time -- the time it takes to validate a block. Bitcoin's current average block time is just over eight minutes, while Ethereum's block time is around 25 seconds, according to BitInfoCharts. Naturally, pricing is one of the biggest concerns for the public, especially when it comes to investing in cryptocurrencies.
Historically, BTC versus ETH has been an interesting race, but bitcoin has clearly outperformed Ethereum by a wide margin. First, it's important to note that Bitcoin has been on the market much longer than Ethereum. The former was launched in October 2008, while the latter was launched in 2015. The price of bitcoin peaked at around $20,000 in early January 2018. This marks a historic rise in prices throughout 2017, and especially towards the end of the year. At the start of 2017, BTC was trading at about $900, so its value rose more than 20-fold by the end of the year. ETH also had a phenomenal year in 2017, as the cryptocurrency peaked around $1,400, up from just $10 at the start of the year.
This marks a 140-fold increase in the value of bitcoin, far outpacing the rise in its price.
As we explained earlier, Ethereum is a platform, not a digital currency, so we'll look at other platforms for creating decentralized applications.
It is important to use these fundamental distinctions when investing in the cryptocurrency space. Many of the most valuable projects have their own names, and not all of them are actually currencies, although users often call them that.
Bitcoin and Ethereum are just two of the best-known projects in the digital coin space, but there are more than 2,000 different projects, each with its own specifications. When considering cryptocurrency investments, it is absolutely vital to conduct thorough and in-depth due diligence to ensure that you have a clear understanding of the project's specifications and its growth potential to justify your investment in this area.