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Bitcoin vs Ethereum: What Are The Major Differences?

August 28, 2020 No Comments

Featured article by John Moran, Independent Technology Author

Everybody has heard of Bitcoin regardless of how much they know about blockchain and cryptocurrency. In fact, Bitcoin has become the catch all term for any kind of cryptocurrency by many people. When they talk about it, they are usually talking about any and all types of alt coins.

Ether is the second largest and popular cryptocurrency on its own blockchain called Ethereum, but many people don’t know what it is outside of enthusiasts and traders. Aren’t Ethereum and Bitcoin the same thing? Actually, aside from being cryptocurrency, they are vastly different in how they work.

If you are new at this and wonder how do you buy Bitcoin you may want to dig a bit further and see if you may actually prefer Ethereum before you buy. To understand the difference, we have to understand what it is that they do.

What is the blockchain?

The essence of the blockchain is that it is a ledger that contains coe representing transactions. The uniqueness of the blockchain lies in the fact that all of these transactions are encrypted and can’t be changed. The reason for this is that there is no server where these ledgers are stored.

Rather, anybody with a computer that connects to the blockchain becomes a piece of the server. In other words, there are potentially millions of servers that contain the ledger so any changes made to any of the transactions, called hashes, would be seen immediately by anybody else looking at the blockchain.

To create these hashes takes time and money for the encryption. As an incentive for people to work on the blockchain they were given a token. This is the actual currency in the form of Bitcoin and other crypto coins.

How Ethereum works

Bitcoin works on the most basic principles of the blockchain laid out above. So, let’s start with how Ethereum works so you can see the differences right away.

Ethereum works with smart contracts so each of the transactions, or hashes can contain a lot more information. In addition to that, Ethereum has its own coding language that can be used on the blockchain. In other words, you can create applications that work on the blockchain itself.

This is very attractive to programmers as these apps can be developed without any downtime of the server and with complete security. Ethereum generally has a lot more enthusiasm amongst its fans as there is a lot of potential beyond it just being a tradable commodity in its coin from Ether.

How Bitcoin works

Bitcoin is also decentralized, but these hashes only really contain notes. There is no possibility to add any kind of application to the blockchain and really only serves to trade cryptocurrency and use it as a fiat replacement. There isn’t much to it besides that so it is limited in its function.

It is the most popular because many people simply are not interested in the blockchain as a technology and just want a decentralized currency to use.


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