Cryptocurrency might not have skipped your ears if you are a proactive social media user. You might have come across two more essential buzzwords in the digital currency domain. Yes, you’ve guessed them correctly! These words are nothing but Ethereum and Bitcoin. Typically, people get carried away when listening to these terms. They seem similar to many of them. But that’s a massive mistake!
Honestly, Ethereum and Bitcoin are entirely different. They have multiple contrasting points. You should know their differences if you want to learn Blockchain from scratch. Do you know? Most Blockchain interviewers expect you to give a detailed explanation of Ethereum vs. Bitcoin when asked. So, it’s better to clear your concepts from the foundational levels. We’ve got you covered!
This article will reveal all aspects related to Ethereum and Bitcoin. Besides, this post will share a detailed overview of the difference between Ethereum vs. Bitcoin. So, it will help you answer all questions regarding their contrast in an interview. Let’s concrete your Ethereum-Bitcoin base even before pursuing a Blockchain certification.
Meaning of Ethereum
Ethereum derives its functionalities by depending on a next-gen blockchain network, like all other prominent cryptocurrencies. All transactions are authenticated, verified, and recorded on a decentralized, distributed public ledger blockchain.
It’s distributed since everyone on the Ethereum network has an exact copy of the ledger, allowing them to investigate and peep into all by-gone transactions. It’s decentralized as the web isn’t run or managed by a single body but rather by all of the distributed ledger’s owners.
Cryptography is leveraged in blockchain transactions to keep the network safe, protect confidentiality, and verify transactions. People us`e computers to “mine” or solve complex mathematical functions that authenticate each transaction on the web while integrating new blocks into the system’s blockchain. Participants are given cryptocurrency tokens as an incentive. These tokens are known as Ether in the Ethereum system (ETH).
Bitcoin, also termed cryptocurrency, digital money, or virtual currency is a purely virtual form of money. It’s similar to an electronic version of real money. You can use it to buy goods, collectibles, and services, but few stores accept it, and several nations have outright outlawed it.
However, some businesses have become well-familiar with its infinite potential. Typically, each Bitcoin is a computer file stored in a digital wallet on a smartphone or computer via the Internet.
You can send Bitcoins (or Bitcoin portions) to your digital wallet, and you can send Bitcoins to others. Every fund transfer gets recorded in the blockchain, a public ledger. It allows people to follow the history of Bitcoins, preventing them from spending coins they don’t own, copying transactions, or undoing them.
Ethereum vs. Bitcoin – The Battle Begins!
Now, it’s time to understand the fundamental differences between Ethereum and Bitcoin. Let’s take a deep dive into Ethereum and Bitcoin!
Even though both Bitcoin and Ethereum rely on distributed ledgers and cryptography, their technical specifications vary. While Bitcoin is curated to be a digital counterpart of gold for storing value, Ether is used to fuel the Ethereum network and its applications.
You can create new tokens on both the Bitcoin and Ethereum networks. The Omni Layer is a platform for creating and trading currencies on the Bitcoin network, and Bitcoin uses it. Stablecoins have been the focus of the Omni layer’s adoption. In contrast, Ethereum tokens are issued using a variety of standards, the most notable of which is ERC-20.
The ERC-20 standard lays out guidelines for the network’s tokens. Before launching their tokens, developers must comply with the ERC-20 standard, which covers several features. These features include presenting information about the token’s total supply, account balances on users’ addresses, and the ability to transfer payments across addresses.
Nature of transactions
Bitcoin transactions are monetary, but notes and messages can be attached to them by encoding them into the data fields of the transactions. Ethereum fund transfers can include executable code used to build Smart Contracts or interact with self-executing contracts and applications.
New block addition time
The time it takes to integrate new blocks into the blockchain network impacts the time required to verify transactions. It is another distinction between Ethereum and Bitcoin.
New blocks are appended to the Bitcoin network every 10 minutes, but they take approximately 15 seconds on Ethereum.
On both networks, the public wallet addresses are unique. These wallet addresses are unique identifiers allowing users to receive funds, similar to an International Bank Account Number (IBAN). The financial institutions use IBAN to determine which bank and nation are associated with a user’s account. Addresses on Bitcoin can start with a 1, a 3, or “bc1,” but on Ethereum, they begin with “0x.”
Number of transactions per second
The Ethereum network can handle roughly 30 transactions per second, compared to seven for Bitcoin. On the other hand, Visa processes approximately 1,700 transactions per second and claims to grow up to 24,000 transactions per second.
BTC and ETH take distinct methods to scalability. Segregated Witness (SegWit) is a technical update that “segregates” some data outside of the space available in each block propagated to the network. SegWit enables more efficient use of the 1 MB of space available in each Bitcoin block.
Ethereum is also working on scaling solutions that will work on the Ethereum network and through layer-two networks. Sharding is Ethereum’s main bet for expanding its primary blockchain. It would reduce network congestion and boost transactions per second by generating new blockchains called “shards,” reducing web traffic and increasing transactions per second.
The Bottom Line
You are well aware that Ethereum and Bitcoin are not equivalent. They have different use cases, networks, and whatnot. Hopefully, you won’t intermingle them after reading this article. Ethereum and Bitcoin are becoming increasingly popular every day. You got a great start by understanding their difference and the fundamentals. Woohoo! You are all set to pursue the intermediate Simplilearn online course on Ethereum and Bitcoin. Happy learning!