Bitcoin vs. Ethereum
It has been said before: there will come a time wherein buying and selling will ultimately become paperless, with the world economies’ movements relying on digital currencies. Leading in the field are Bitcoin (BTC) and Ethereum (ETH), both of which can either be mined or bought by every investor to be sold for profit.
This short feature will go into the details of how Bitcoin and Ethereum function and what is in store for buyers and investors if they choose to mine these.
First thing’s first, let’s focus on the digital currency that started it all: Bitcoin. Created back in January 2009, BTC has never been under control of any one institution. It exists inside a decentralized system, and a good thing about it is that you don’t have to pay much to transfer it around.
As you know, this cryptocurrency is completely virtual. All information about owners and interactions with it are in open access inside the Blockchain system, which also offers ways of transferring the coins to other users. In this system, all users are equal (P2P).
Bitcoin users who possess hardware of significant power are known as miners, and what they mine is BTC itself. It is a beneficial activity, because these people (organizations or persons) are given special status which allows them to collect fresh coins whenever they are released prior to anyone else.
In contrast, physical currencies are issued by the governing authorities, such as banks. They are available for anyone right away and roughly reflect the value of economical products. Therefore, they don’t change as much and depend on outside factors. Plus, the exchange rates on them are always known beforehand, thanks to the strict regulation.
Much like Bitcoin, Ethereum is public and makes use of Blockchain technology, with its operating system offering what is called a Smart Contract function. Ethereum actually refers to the platform; the cryptocurrency is called, Ether. Its entire system saw its conceptualization back in 2013, with its development started in 2014. Finally, in 2015, the entire system was launched. Departing from its likeness with Bitcoin, Ethereum was divided into two Blockchains: the one severed from the original version was called ETH, with theft being reversed. The original went on as Ethereum Classic with the monetary symbol, ETC. Ether recompenses mining nodes when computations are made. Ethereum accounts make their users privy to Ether balance. The money can travel from wallet to wallet, while Ether proper can be exchanged for gas, a computation unit given for transactions and state transitions.
Noteworthy are the Bitcoin’s and Ethereum’s differences:
|Block Time||10 minutes||14-16 seconds|
|Mining (for new coins)||Halves every 4 years||Consistent rate (changes during hard forks)|
|Proof of Work||Uses Hashcash||Uses Ethash|
|Transaction fees||Differs by computational complexity, usage of bandwidth, and storage requirements (gas)||Changes depending on how much information the transaction stores|
|Account System||Uses the UTXO system: like spending cash and receiving change||Debits Wei values from accounts and credits these to another|
Bitcoin Mining vs. Ethereum Mining
As already specified in the table above, dissimilarities between Bitcoin and Ethereum can also be seen through methods of mining.
In many respects, Bitcoin differs from Ethereum in mining. While the primary functions of both are fundamentally the same, a block is added to the Ethereum Blockchain after every 14-16 seconds. In Bitcoin, it takes about 10 minutes.
It is a protocol in Bitcoin mining that mathematical equations be solved to add blocks to a chain of transactions called Blockhain. Each of these blocks makes use of a hash code that came from the block before it. This will serve as a timestamp to the new block. Bitcoin miners go against each other to solve a mathematical problem through the hash function, SHA-256. The result of which always begins with four zeroes. As the process entails strong processing ability, electric usage would be at a high. The miner who solves the problem first is entitled to 12 BTCs.
The miner here is called “node” within the Blockchain. This works hand-in-hand to secure the longest chain of transactions. The longer the chain, the more valid it is. Validation of the chain is called “consensus”. The chain should reach a validity of at least 51% for it to be supposed as honest.
Ethereum on the other hand, uses the ethash mining algorithm.
Here, the node added receives a reward of 3.5 ETH. As stated before, Ethereum has a dual account structure. Here, the private key, controlled, and contract-code accounts co-exist. The contract-code accounts are also called Smart Contracts.
Ethereum makes use of the programming language called, Solidity. This permits Smart Contract integration. Through the ERC-20 and ERC-721 protocols, token creation is facilitated.
Bitcoin and Ethereum, while sharing a lot of commonalities, differ in nature and modes of mining. But there is no absolute point of comparison really. Whichever a crypto buyer or trader chooses, he or she is still the one decisive as to how to make the best out of the investment.