Bitcoin vs Ethereum – Informative Differences you need to know

Bitcoin vs Ethereum: Informative Differences You Need to Know

After bitcoin, Ether (ETH), the native cryptocurrency of the Ethereum network, is the second most popular digital token (BTC). Comparisons between Ether and bitcoin are natural given that Ether is the second-largest cryptocurrency by market capitalization (market cap).

Bitcoin Vs Ethereum

In many ways, ether and bitcoin are similar: Each is a digital currency that can be traded on online exchanges and stored in various cryptocurrency wallets.

There are, however, numerous significant differences. While bitcoin is intended to be a currency and a store of value, the Ethereum network is intended to support complex smart contracts and decentralized applications.

Bitcoin heralded the emergence of a radically new type of digital currency that operates independently of any government or corporation.
People gradually realized that one of Bitcoin’s underlying innovations, the blockchain, could be used for other purposes.

Ethereum proposed using blockchain technology not only to run a decentralized payment network, but also to store computer code that can be used to power tamper-proof decentralized financial contracts and applications.
Ethereum applications and contracts are powered by ether, the currency of the Ethereum network.

Bitcoin

Bitcoin was first introduced in January 2009. It introduced a novel concept outlined in a white paper by the enigmatic Satoshi Nakamoto—Bitcoin offers the promise of an online currency that is secure without the intervention of a central authority, unlike government-issued currencies.

There are no physical bitcoins; instead, there are balances associated with a cryptographically secured public ledger.

Although Bitcoin was not the first online currency, it was the most successful in its early days. As a result, it has come to be known as the forefather of nearly all cryptocurrencies that have emerged in the last decade.

The concept of virtual, decentralized currency has gained acceptance among regulators and government bodies over the years. Despite the fact that it is not a formally recognized medium of payment or store of value, cryptocurrency has carved out a niche for itself and continues to coexist with the financial system despite being frequently scrutinized and debated.

Ethereum

Blockchain technology is being used to develop applications that go beyond simply enabling digital currencies. Ethereum, which was launched in July 2015, is the largest and most well-established open-ended decentralized software platform.

Ethereum enables the creation and deployment of smart contracts and decentralized applications (dApps) without the need for downtime, fraud, control, or third-party intervention.

To achieve this, Ethereum includes its own programming language that runs on a blockchain.

Ethereum’s potential applications are diverse, and they are powered by its native cryptographic token, ether (commonly abbreviated as ETH). Ethereum held an ether presale in 2014, which was met with a resounding success.

Ether is primarily used for four purposes: it is traded as a digital currency on exchanges, held as an investment, used to purchase goods and services, and used to pay transaction fees on the Ethereum network.

Bitcoin Vs Ethereum – Key differences

While both the Bitcoin and Ethereum networks are based on the distributed ledger and cryptography principles, they differ in many ways. Transactions on the Ethereum network, for example, may include executable code, whereas data attached to Bitcoin network transactions is only used to record transaction information. Other differences include block time (an ETH transaction is confirmed in seconds, whereas a BTC transaction takes minutes), and their consensus algorithms: Bitcoin employs SHA-256, whereas Ethereum employs LMDGhos.

Bitcoin employs a consensus protocol known as proof of work (PoW), which enables network nodes to agree on the state of all information recorded and prevents certain types of network attacks. In September 2022, Ethereum switched to proof of stake (PoS), a series of interconnected upgrades that will make Ethereum more secure and long-lasting. Sharding will be addressed as part of the transition to proof of stake to address scalability issues, which will continue to be addressed until 2023.

The overall goals of the Bitcoin and Ethereum blockchains and networks differ. Bitcoin was designed as an alternative to national currencies, and it aspires to be both a medium of exchange and a store of value. Ethereum was designed to be a platform for immutable, programmatic contracts and applications through the use of a global virtual machine. BTC and ETH are both digital currencies, but ether’s primary goal is not to establish itself as an alternative monetary system, but rather to facilitate and monetize the operation of smart contracts, dApps, and any other blockchain solution that can be imagined.

Source: Investopedia

Bitcoin Vs Ethereum – What is the difference between bitcoin and Ethereum in terms of storing value?

Bitcoin Wallet

Bitcoins are kept in a wallet, which is a digital wallet. The digital wallet can be hardware or software-based. The wallet can also be stored on a mobile device, a computer desktop, or by printing the private keys and access addresses on paper.

Every wallet contains a set of private keys that the bitcoin owner cannot access without. The most serious threat to bitcoin security is an individual user losing or having their private key stolen. The user will never see her bitcoins again if she does not have the private key. Aside from losing the private key, a user can also lose her bitcoin due to computer malfunctions (hard drive crashes), hacking, or physically losing the computer where the digital wallet is stored.

Online wallets are also referred to as “hot” wallets. Hot wallets are wallets that operate on internet-connected devices such as computers, smartphones, and tablets. Because these wallets generate the private keys to your coins on these internet-connected devices, this can lead to vulnerability. While a hot wallet can be very convenient in terms of quickly accessing and transacting with your assets, it also lacks security.

Cold wallets are the next type of wallet and the safest option for storage. A cold wallet is simply a wallet that is not connected to the internet and thus has a much lower risk of being compromised. These wallets are also known as offline wallets or hardware wallets.

Anyone interested in owning cryptocurrency must first learn about safe storage and the concepts of both hot and cold wallets.

Services are emerging that enable Bitcoin investors to purchase physical Bitcoins. The coin you buy will have a tamper-proof sticker on it that covers a predetermined amount of Bitcoin. Due to the cost of the coin’s manufacture and shipment, you may need to pay a slight premium over the value of the Bitcoin that you’re purchasing in order to purchase the physical coin.

Source: Investopedia

Ethereum Wallets

Ethereum wallets are applications that let you interact with your Ethereum account. Think of it like an internet banking app – without the bank. Your wallet lets you read your balance, send transactions and connect to applications.

An Ethereum account is a separate entity with the ability to send transactions and a balance.

An Ethereum account, like an email inbox, has an Ethereum address. You can use this to transfer money to an account.

A wallet is a piece of software that allows you to manage your Ethereum account. It allows you to check your account balance, send transactions, and do other things.

When it comes to security, wallets necessitate a slightly different mindset. The ability to access and use funds from anywhere comes with some responsibility – there is no customer support in crypto.

Take charge of your own finances

Centralized exchanges will associate your wallet with a username and password that you can recover in the traditional manner. Just keep in mind that you’re entrusting that transaction with custody of your funds. Your funds are at risk if that company is attacked or fails.

Make a note of your seed phrase.

Wallets will frequently provide you with a seed phrase that you must record somewhere safe. This is the only way you can get your wallet back.

Make a note of it in your wallet.

To protect yourself from phishing scams, bookmark the site where you use a web wallet.

Check everything three times.

Remember that transactions cannot be reversed and wallets cannot be easily recovered, so take precautions and be cautious at all times.

Source: Ethereum.org

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