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Bitcoin VS Ethereum: Cryptocurrency Comparison
Bitcoin was released in early 2009, and ever since them is has been the leader of cryptocurrencies. Throughout this time, there have been many imitators, but Bitcoin is still on the first place.
Ethereum, on the other hand, has been released in the mid of 2015, yet this is Bitcoin’s strongest rival. There are however few issues which Ethereum needs to sort out, such as the DAO problems.
It is said that these two cryptocurrencies are, in fact, not competing with each other, but instead they are complementing each other with the new technology which is brought it by Ethereum. There is a theory that the web is definitely able to support both of these currencies at their maximum potential:
Bitcoin is considered the digital gold. This money system is a free one, has nothing to do with things such as inflation or political issues.
Ethereum is slowly turning and improving into the world computer; a blockchain-based programming language allowing contacts which are code-based, along with decentralized applications.
In reality, the issues aren’t that simple, they’re much more complex. There is a very important overlap between the functions and markets of these two currencies which needs to be taken into consideration.
Bitcoin VS Ethereum. The competition between Bitcoin and Ethereum
§ It’s a known fact that traders and Investors spend their money based on their probable returns and risks.
§ CEOs & Founders always choose the platform which suits their needs the best.
§ Developers sometimes also help out with open-source projects.
§ Depending on the coin that is being mined, miners will buy the equipment which suits them the best and which they need the most,
There isn’t such a thing as coexisting peacefully when it comes down to these two currencies, though. They both want each other’s users, and that makes it impossible for ‘peace’ to exist between them. On the other hand however, this is a positive thing because it makes both of them improve more and more in order to have more people on their side.
Bitcoin VS Ethereum – Popular Support
It is a common thing for Bitcoin users to be both politically and economically conscious, by having certain principles they follow in their lives, for example. Or by supporting different political parties.
The users which are into Ethereum however, are usually less motivated by ideologies. The focus is to improve the business and financial application.
Bitcoin VS Ethereum. The scripting language of these two
Bitcoin transaction data does not only allow a person to be the owner of some coins; it also provides important instructions relating to the transaction. These instructions are known as the scripting language used by Bitcoin. It is intentionally made to be limited to transactional processing.
Bitcoin VS Ethereum. Risk vs. Reward:
It is commonly known that Ethereum has a larger attack surface than other currencies, and this is because of its added complexity at the protocol level. Also, it’s important to note that there isn’t a very big advantage to the scripting language which this currency uses. If however this language is going to be improved in the future, and if it’s going to provide a decisive advantage which cannot be reproduced by its competition, then Ethereum could finally become the first digital currency in the world, if we are to consider the market cap.
The blockchain of Bitcoin and Ethereum
Bitcoin currently has a Proof of Work blockchain that is made up of 1 megabyte blocks. These blocks can be mined every ten minutes, using the SHA-256 hashing. Bitcoin mining is mainly done by ASIC machines. The blockchain used allows Bitcoin to have about 3 transactions for each second
Ethereum also has a Proof of Work blockchain, however it is expected to change into a Proof of Stake(PoS) in the future. Its blockchain allows it to process 25 transactions per second.
Centralization is likely to increase as soon as Ethereum switches to PoS, although it is currently going through a great period of time right now, which can be compared to the earlier days of Bitcoin. Gavin Andresen, who previously worked as a lead developer at Bitcoin, didn’t have the best opinion about it when interviewed, so he chose to criticize it instead: “I think proof-of-stake is hard coded, ‘the rich get richer’ and is deeply unfair.”
Bitcoin VS Ethereum. Mining Ethereum & Bitcoin
Many of you might be interested in mining Ethereum. It is possible and it can also bring good profit, as long as performant, new GPUs are used. One of the reasons for this is because the costs for the power are also lower. You might also think that the more advanced, and newer graphic cards are expensive, however that isn’t the case. They cost less than $200 in most cases, and you can also play games and run different other apps as well. But then again, whoever is thinking right now about starting to mine Ethereum should probably give it a second thought because once the PoS change takes place, whichever investment they may have made instantly becomes irrelevant, since they would no longer be able to mine it.
Recently, Bitcoin has become much harder to mine, while also making a profit out of it. Right now, it’s only worth mining Bitcoin as long as special ASIC hardware is used, because it needs to be able to run on very low costs (for electricity that is). You may want to know however that performant ASIC hardware will cost you quite a lot, even more than $2000 for each unit. This, unfortunately, has no other purpose besides the obvious mining of Bitcoin.
Bitcoin VS Ethereum. The supply of Bitcoin and Ethereum
It’s a known fact that the total supply of Bitcoin is limited to 21 million coins. Each four years, Bitcoin has its issuance reduced by half. Since the last reduction in July of 2016, the inflation rate of this digital currency has dropped to a 5% rate per year. It is expected that in the future, due to this reduction process, along with other errors made by users which result in the loss of coins, will eventually result in this currency becoming deflationary.
When we’re talking about Ethereum however, there is a rate of 18 million ETH per year that’s being issued by miners. This means that there is an inflation in this case, with a rate of about 20%, considering the current supply. Due to the fact that the ETH isn’t being consumed, and it’s only sent to the miners, the ultimate result will be the declining of the Ethereum in the long run.
Bitcoin VS Ethereum. What are the implications?
As long as everything else remains equal, this could mean that we could see an increased power of buying for the deflationary currency which is likely to increase over time, while the relative value of the currencies that undergo the process of inflation could fall. This is why Bitcoin is right now encouraging saving, while also benefiting those who bought it very cheap a long time ago. Ethereum, on the other hand, does the opposite: because it prefers spending, it also encourages it, while making it easier and less expensive for the newcomers to join.
Bitcoin VS Ethereum. The initial distribution of the two biggest digital currencies
It is thought that initially, during the early phase of Bitcoin, the currency was being mined only by Satoshi Nakomoto. During that time, the only possible barrier for the newcomers was the obscurity of the currency. Satoshi is said to own about 5% of the total supply of Bitcoin.
The distribution of Ethereum started off as an Initial Coin Offering, known as ICO. It’s also known that 31,529 bitcoins have been traded for 60,102,216 Ethereums, and this was before the blockchain launch of the Ethereum. Just about $14 million was obtained in this way. This money went to the Ethereum Foundation. This foundation has also decided to award itself with 12 million ETH, which equals to just about 14% of the current supply.
Bitcoin VS Ethereum. Fairness:
The launch of Bitcoin was a fairer one. Because of Ethereum’s intention to switch to PoS (Proof of Stake) way of mining, people are concerned with the majority stake which the Ethereum Foundation currently has. Under the Proof of Stake, it is possible to mint new coins, as long as you have holdings. This means that the foundation could further award itself with even more wealth.
Bitcoin VS Ethereum. The development of Ethereum and Bitcoin
There are over 100 main contributors, along with several other implementations to the codebase of Bitcoin. Given the fact that they have more than $10 billion in assets, their approach to the development of the coin is a more conservative one. Every improvement that is proposed, has to first undergo a rigorous peer review, along with a lot of testing before it is finally merged.
Because of the fact that this process is slow, there is now a lot of pressure put on the main developers, who are expected to deliver scaling solutions, while also making sure that there won’t be any security issues along the way.
The initial development of Ethereum was done by Vitalik Buterin, with the help of three other very skilled developers. They had a huge advantage: they could look into the ideas that were brought to Bitcoin’s development, or even other currencies’ development, and choose what they wanted to implement from those. Of course, they also came up with their own ideas as well. There is, however, the possibility to code a contract (it’ll have to be smart though) which could be made to run on Ethereum. Here there won’t be only opportunity, but danger as well.
It is estimated that there are way too many bugs in the code, even as many as 1 in 10 lines of code.
This story keeps developing
Both Bitcoin and Ethereum have to go through challenges that may be seen as very important so that they can reach their full potential. However, some of the smartest people come into this industry, and they certainly influence this process a lot.
Bitcoin VS Ethereum. Final Word
It seems that Bitcoin is ready for almost anything, and it’s not really wise to bet against it. Along all these years when it has been around, it has more than proved itself. There are many ongoing development processes for this digital currency (such as SegWit, Rootstock, Elements, etc), and as long as they have the expected outcome, then the Bitcoin will easily remain number one in the world of digital currencies.
On the other hand however, Ethereum isn’t such a safe bet. It doesn’t mean though that it can’t prove people wrong and make those who truly believe in it huge profits.
There are certain things which everyone should keep in mind, such as the DAO crisis, the PoS change and this currency’s rather high rate of inflation in the long term.
Next Article: All you need to know about Ethereum
February 8 2018
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