What crypto should you invest in?

© Journal du Geek

Bitcoin and Ethereum are the two most widely used blockchains today. But are they really comparable? Although they have similarities, these two blockchains (as well as the associated cryptocurrency) are very different and do not seek to accomplish the same goal. To help you see more clearly, we offer a Bitcoin vs Ethereum comparison.

Bitcoin: quick overview

Bitcoin was born in 2009. Created by the mysterious Satoshi Nakamoto, Bitcoin offers the promise of a secure online currency and in no way dependent on a central authority, contrary to what we know with the currencies issued by our governments .

Although Bitcoin is not the first currency of its kind, it is the one that has been able to unite the most people from its infancy, while being implemented correctly. It was with the birth of Bitcoin that the idea of ​​cryptocurrency, or money without physical form, really came into being.

So you understand why Bitcoin is the number 1 cryptocurrency today, and why it is also the most traded.

As we have noted, Bitcoin was originally designed to provide a decentralized alternative to currencies created by governments. The objective was therefore to make it a currency to carry out transactions of all kinds. Except that over time, Bitcoin has established itself as a store of value, digital gold.

Why ? Well because its blockchain is only able to support a low number of transactions per second and the fees charged for carrying out a transaction are relatively high.

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Ethereum Basics

Ethereum was created a few years after Bitcoin. He draws inspiration from it, while trying to resolve certain faults and problems. The blockchain was born in 2015 and is the creation of Vitalik Buterin.

With Ethereum, blockchain technology is harnessed to create more than just cryptocurrency. The goal is to create a network capable of hosting decentralized applications (DApps) accessible by everyone and that no one can stop.

Regardless of your past and the country you are in, you will be able to access decentralized finance services (for saving, trading, etc.), but also online games, NFTs, and other types of applications. who will not be able to steal your data or censor you.

Like the Bitcoin blockchain, Ethereum has its own cryptocurrency: Ether. Ether is the essence of the Ethereum blockchain. It is thanks to this crypto that you will be able to pay transaction fees each time you interact with an application deployed on the network. It is also the currency used by developers to deploy new applications.

To return to the subject of decentralized applications, these exist thanks to the concept of intelligent contracts (or smart contracts). To deploy a smart contract, the Ethereum Foundation created its own language: Solidity. It is the reference language for deploying smart contracts on Ethereum.

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Bitcoin vs Ethereum: Commonalities

Although Bitcoin and Ethereum have quite a few differences, these two blockchains also have things in common.

The first is that they both use Proof-Of-Work consensus to operate and validate transactions. As soon as 51% of the nodes in the network agree that a transaction is valid, the latter is permanently posted on the blockchain.

As a reminder, Proof-Of-Work is a concept that requires the nodes of a network to provide proof that they have spent computing power in order to obtain a consensus in a decentralized way. The whole point behind this is to prevent bad actors from taking over the network.

All of this being said, although Bitcoin and Ethereum are currently using the Proof-Of-Work consensus, this should not last for Ethereum. The Ethereum Foundation plans to migrate to the Proof-Of-Stake consensus thanks to Ethereum 2.0 (Serenity). This will make the blockchain much less energy-intensive (and therefore much more environmentally friendly), more secure, but also more scalable (support for a greater number of transactions and lower costs).

The other thing Bitcoin and Ethereum have in common is adoption. These two networks have far more users than other cryptocurrencies and blockchains. They have been able to attract institutions but also a large number of individuals. To give you an idea, Ethereum concentrates more than 60% of the total value blocked, all chains combined, on decentralized finance protocols (source: Defi Llama).

The differences between Bitcoin and Ethereum

Wondering what the differences are between Bitcoin and Ethereum? We will list them for you without further ado.

In our opinion, the most important difference lies in the use case of each blockchain. On the one hand, Bitcoin has established itself as a true store of value, earning the nickname of digital gold.

On the other hand, Ethereum exists to facilitate access to services (finance, gaming, art, etc.) that are totally decentralized and therefore accessible to everyone. The whole thing is made possible thanks to a concept that does not exist on the side of Bitcoin, smart contracts. These are two totally different visions that oppose each other, but which complement each other. It is also possible to transfer Bitcoin to the Ethereum network thanks to WBTC (Wrapped Bitcoin). This is real proof of their complementarity.

The other notable difference in this Bitcoin vs Ethereum comparison is in the total cryptocurrency supply. Bitcoin has a defined total supply that cannot be exceeded. All in all, only 21 million Bitcoins can be created. And the more time passes, the more difficult and longer it will be to mine new Bitcoins.

What about Ethereum? There is no limit in place regarding the number of Ether that will be created and put into circulation. The network has an inflation of 4% per year as well as a token burning mechanism in place to compensate for this rate of issuance. Once Ethereum 2.0 is rolled out, total supply will most certainly become deflationary, in part because issuance will drop from 4% per year to 0.5%.

Conclusion: Bitcoin and Ethereum are not competitors

As you have seen by reading this Bitcoin vs Ethereum comparison, these two blockchains and their cryptocurrency have common points but also differences.

Now one thing is certain: they are not strictly speaking competitors. The ideas conveyed through these two projects are fundamentally different. On the one hand Ethereum is a decentralized platform allowing the deployment of decentralized applications. On the other hand, Bitcoin is poised to establish itself as a serious store of value.

That said, yes, both Bitcoin and Ethereum rely on blockchain technology to secure their network. This technology opens up new opportunities that could well lead us to mass adoption.

If you are convinced that the future will be written with Bitcoin and Ethereum, know that we have written guides explaining how to buy Bitcoin and Ether.

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