Bitcoin and Ethereum

With more than 2800 different cryptocurrencies in circulation, it may often get confusing when comparing bitcoin to altcoins. After all, making comparisons between bitcoin and 2800 other coins is a daunting task. However, of all these altcoins, there are a few that have their own buzz. One of the altcoins attempting to challenge bitcoins #1 position is Ethereum. In this post, we will be going through the factors that affect the price of Bitcoin and Ethereum, as well as some of their key features.

Since it’s release at the North American Bitcoin Conference in 2015, Ethereum has received a lot of attention. Consequently, becoming a popular altcoin opens you up to infinite comparisons to Bitcoin. Investors deem it highly important to understand the differences and similarities between Ethereum and Bitcoin, as well as the factors affecting the price of Bitcoin and Ethereum. Before we dive deeper into bitcoin price compared to Ethereum’s check the following sheet table.

Bitcoin and Ethereum Comparison

Bitcoin (BTC) Ether (ETH)
What is it? A currency A Token
Inventor Satoshi Nakamoto Vitalik Buterin, Joseph Lubin, Gavin Wood, etc.
Went live January 2009 July 2015
Supply Style Deflationary (a finite # of bitcoin will be made) Inflationary (like fiat currency, more tokens can be made over time)
Supply Cap 21 million in total 18 million per year
Smallest Unit 1 Satoshi = 0.00000001 BTC 1 Wei = 0.000000000000000001 ETH
New token issuance time  Approximately every 10 minutes Every 10 – 20 seconds
Amount of new token at issuance 12.5 (Oct 2018). Half at every 210,000 blocks 5 per every new block
Utility Used for purchasing goods and services, as well as storing value (much like how we currently use gold). Used for making dApps (decentralized apps) or smart contracts on the Ethereum blockchain.
Price Around $8500 at the moment Around $228 as of writing
Purpose A new currency created to compete against the gold standard and fiat currencies A token capable of facilitating Smart Contracts (For example a lawyer’s contract, an  exchange of ownership of property, and voting)

Bitcoin

  • Launching in 2009, bitcoin became the first cryptocurrency on the market, and the first use of blockchain technology
  • Bitcoin is a digital currency
  • It aims to solve the plethora of problems in global finance
  • Bitcoin negates the need for a 3rd party such as a bank or PayPal
  • It was built to serve as an alternative to fiat currency
  • Tailored for manual transactions such as buying goods and services, or sending and receiving money
  • With a highly liquid trading volume, it is easy to convert bitcoin to fiat currency. Our bitcoin to rand calculator.
  • Bitcoin transactions can take a few minutes to process completely.

Ethereum

  • Launching in 2015, the Ethereum blockchain became commonly known as “Blockchain 2.0”
  • Smart contracts program transactions on this network
  • Smart contracts eliminate the need for a third party in more systems than just the financial system
  • The Ethereum platform gives users the ability to build smart-contract apps (dApps)
  • Ethereum has a custom programming language ‘Solidarity’ that is used to build dApps
  • Like bitcoin, Ether is highly liquid, making it easy to trade for cash
  • Ethereum take seconds to process

Driven by different purposes?

At its core, Bitcoin is a payment system. It is digitalized, and free from any central or government regulations (third parties). While it may be true that Ethereum and Bitcoin share several similar qualities, Ethereum is far more than a payment system. Ethereum is an infrastructure.

When you think bitcoin, you think “digital gold”. When thinking about Ethereum, chances are the first words that come to mind is “smart contracts”. While the price of bitcoin and Ethereum is one of the main factors people use to differentiate the two cryptocurrencies, this is the easiest way to remember the purpose of each of these cryptocurrencies and is also the primary difference between the two.

Bitcoin is a store of value. It provides users a way to send money to others. Ethereum does this also, however only when certain things happen. For example, the Ethereum platform for dApps allows it to send tokens (ETH) that represent a value. These values can be anything, it’s not limited to digital currencies, differing it from bitcoin.

Transactions

The price of bitcoin and Ethereum hardly determine the potential value they have in real-world cases. Bitcoin is the most common adoption because it is a store of a larger value. Bitcoin is often the coin people default to when attempting to get involved in cryptocurrency. Despite this, Ethereum has far more potential, even though it is less expensive than BTC.

To better understand the way transactions work with these two currencies, I’ll explain how they would look:

Bitcoin transaction: James sends 5 BTC (Bitcoins) to Patrick

Ethereum transaction: Send 5 ETH (Ether) from James to Patrick if James’ balance is 10 ETH and the date is 01.01.2019

As you can see, bitcoin transactions are done manually. Whereas users can code their Ethereum transactions to become automatic. Another main difference between these two currencies are the transaction speeds. Ethereum’s block time (the time it takes to process a transaction) takes a matter of seconds. Bitcoin, on the other hand, can take a few minutes to process.

Ether is the fuel of the Ethereum network, powering transactions. Consider it a gas
Bitcoin is a store of value with the intention of becoming the default in real-world transactions. Consider it money

Supply cap

The coin supply of these two cryptocurrencies is also different. Bitcoin has an all-time supply limit of 21,000,000 coins in circulation at once. Ethereum, on the other hand, has no coin limit. Ether has a continuous flow of production, however, the supply of Ether will slow down over time. Founder of Ethereum, Vitalik Buterin, stated “The total number of coins in circulation will not reach more than 100,000,000 ETH in the foreseeable future”

Despite this, the price of Bitcoin and Ethereum has the potential of going up solely as a result of bitcoin nearing its market cap. Most altcoins move in the direction Bitcoin does on the market.

The bottom line

Many people make comparisons between the price of Bitcoin and Ethereum, but is that what’s most important? Ethereum is an advancement of the principle blockchain technology that supports bitcoin, all without trying to be a direct competitor of bitcoin.

When looking at Ethereum’s concept, it’s clear to see that it truly has no intentions of becoming a bitcoin alternative. Instead, Ethereum attempts to run alongside Bitcoin, serving a different but equally as necessary purpose.

As it stands, there is plenty of room for these two cryptocurrencies to co-exist without endless comparisons. Although, if there was room for only one of these cryptocurrencies to survive on the market, chances are it’d be Ethereum. This is because it provides smart contracts, fast transaction speeds as well as a store of value.

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Disclaimer Notice:

This article is intended to educate and should in no way be seen as investment advice or an enticement to use the ice3x.com platform. Bitcoin is highly volatile with big profit opportunities but you should also remember that you could lose part or all of your investment whenever you take part in any high risk investment. Bitcoin trading is not a regulated industry in South Africa, which in itself carries additional risks. IF YOU ARE NOT AN ASTUTE BITCOIN TRADER, SEEK INDEPENDENT FINANCIAL ADVICE BEFORE MAKING ANY INVESTMENTS.