To understand the ways in which Bitcoin and Ethereum are different, it’s helpful to know some of the basics of each.
Here are definitions for some of the keywords and phrases you’ll come across on your journey into cryptocurrency:
- Cryptocurrency: A digital currency that utilizes encryption techniques to regulate its release and verify transactions. Bitcoin is a cryptocurrency, as are Ethereum and Litecoin.
- Blockchain Technology: The system used to create and manage cryptocurrencies. The blockchain is made up of blocks that “chain” together through cryptographic links. Each block contains information about its preceding block (this prevents a user from spending coins twice) as well as transaction data. This means that information is distributed instead of stored in one central location (a common feature among decentralized networks).
As you can tell by now, no one owns or controls the blockchain—and this extends to cryptocurrencies themselves. However, someone does have to provide computing power for transactions to be processed and recorded onto the blockchain ledger (which takes power). These people are called miners because they get rewarded with coins when they solve complex mathematical problems associated with recording transactions on a particular block.
A cryptocurrency exchange is an online platform where you can exchange one cryptocurrency for another cryptocurrency (or for fiat currency). Coinbase is an example of popular exchange service.
A cryptocurrency wallet is a software program that stores private keys which show ownership of assets on the blockchain. It also enables users to send or receive cryptocurrencies and monitor their balances. You can think of this as an email account or bank account number—if someone wants to send you Bitcoin Cash, they will ask for your wallet address.
Bitcoin Network vs. Ethereum Network
If you’ve talked with friends about cryptocurrencies, you’ve likely heard of Bitcoin. But Ethereum is another cryptocurrency that has been growing into one of the most popular on the market. So what’s all the buzz about? And how do they compare to each other?
With both Bitcoin and Ethereum being cryptocurrencies, they have similar features when it comes to their foundation. However, they are fundamentally different when it comes to their underlying technology.
The Bitcoin network is a cryptocurrency exchange, while Ethereum is a blockchain platform for developers and coders to build decentralized applications (Dapps). The main difference between these two networks is that the Bitcoin network uses blockchain technology only for peer-to-peer processing payments, whereas Ethereum uses this technology for creating and running apps as well as processing payments.
Another difference between Ethereum and Bitcoin is that Ethereum’s blockchain can be used to run smart contracts or computer code on decentralized apps which are called Dapps, whereas the Bitcoin network cannot run programs or computer code in its blockchain.
This means that if you want your application code to run on any specific network like Bitcoin or Ethereum, then you need to move your code into those blockchains so that other participants can access it from there. That’s why we call them Decentralized Blockchains where anyone can add their own application codes, which will be processed by miners like any other transaction inside those networks without needing any permission from a central authority governing them!
Bitcoin Fears Vs. Ethereum Fears
The hard cap. One of the biggest fears about Bitcoin is that its price will be crushed as supply caps out. There are only 21 million BTCs, and as more people mine them, the harder it gets to find new ones. Many analysts believe this will lead to a scenario in which Bitcoin is worth less per coin than it is now—and that miners will eventually walk away from their computers en masse. So, if you’re in the Bitcoin camp, you’ll have to face this issue when it comes up and make your own decision on how much value there truly is behind all those 1s and 0s.
Nothing can be perfect forever. If Ethereum scales its way into prominence, then we’re likely at the very beginning of a long journey toward mainstream adoption—which means that future problems could arise that we don’t know about yet (just like they have with Bitcoin).
Even so, it says a lot that some of the biggest concerns surrounding Ethereum are more theoretical than actual at this point—and I think anyone who buys ETH should consider themselves lucky for having gotten their hands on it before the price skyrocketed!
Bitcoin Mining vs. Ethereum Mining
You may be wondering what mining is. Mining is the process of verifying transactions on the blockchain and adding transaction records to it. Miners are rewarded with cryptocurrencies for doing this. By making sure that each transaction is valid and then including them in blocks, miners complete the process of adding transactions to the ledger, which leads to a new block being added to the chain.
Mining is a distributed consensus system that verifies and adds transactions to the public ledger which keeps track of all past transactions (the blockchain). The blockchain serves as a historical record of all past transactions carried out using these cryptocurrencies.
During the mining process, recent transactions are compiled into blocks as it tries to solve a computational puzzle called proof-of-work. The miner who solves that puzzle first gets rewarded with a new cryptocurrency (Bitcoin or Ethereum). This is how we create more coins for these two currencies.
Calculating Profitability For Bitcoin Vs. Ethereum
To find out the potential for profits, you need to input data about your rig. This is a complex calculation that takes into account the cost of electricity, the difficulty of mining, the price of Bitcoin and Ethereum in your location, whether you mine in a pool or solo, and other factors:
What’s your hash rate?
Your hash rate is how fast your miner can solve calculations. It’s measured in hashes per second (H/s), megahashes per second (MH/s), or gigahashes per second (GH/s). The higher your hash rate, the more cryptocurrency you’ll earn. A good way to think about it is like this: if two people are trying to win a game of tic-tac-toe, they’d be using different strategies than if they were playing chess.
The higher their skill level at chess, the better chance they have of winning. Mining is similar; if your rig has a high hash rate, it’ll have a better chance of solving blocks before other rigs do and earning cryptocurrency for itself (and you).
What hardware do you have?
The hardware you use will depend on what currency you’re mining and what OS comes with it. If you’re mining Bitcoin on Windows 10 but decide to switch over to Monero on Linux after three months, that means new hardware for the Monero system—and vice versa when switching back again.
What are the electricity rates where you live?
Some areas pay less than others because their governments subsidize energy costs like electricity bills as an incentive for companies to move there. Others are just naturally low cost because of regional advantages like being close proximity to hydroelectric plants or wind farms.
Which One Should You Choose?
The question of which one you should choose is one that can only be answered by you. There are no wrong answers, and the best option for one person may not be the best for another.
Of course, there is a lot of debate surrounding this topic. In fact, it’s rare to find a blockchain enthusiast who does not have a strong opinion on which cryptocurrency is going to come out on top in the future.
Both show great promise, but which one will ultimately win out is not yet clear. Ultimately, which cryptocurrency you decide to invest in will depend on your own personal preferences and desires for the service. There are many factors and features that can be used to help you choose between Bitcoin and Ethereum—some of them include:
- Security. Some users may be more concerned about security than others, as it is a matter of personal preference. Those who value stability and security may find Bitcoin more appealing, while those who desire flexibility might be drawn towards Ethereum. Each platform has its respective pros and cons, so it’s important to do your research before settling on the one that best suits your needs;
- Cost. This includes the cost of investing in the currency itself, as well as the transaction fees associated with receiving or sending payments through these platforms;
- Ease-of-use (EOU). How easy is it to use each platform? Some people prefer having all their information stored on a single wallet, while others like having multiple wallets set up so they can easily manage their funds from different locations;* Transaction times:
How long does it take for each transaction type? For example: sending money internationally could take longer than with domestic payments because there are different processing speeds involved depending on where you’re sending money from/to — but using cryptocurrencies does allow instant transactions!