Bitcoin vs. Ethereum: Differences between BTC and ETH
September 30, 2024
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In the ever-evolving cryptocurrency space, Bitcoin (BTC) and Ethereum (ETH) have so far reigned supreme among other digital assets in terms of popularity and market capitalization. While both share some similarities — having blockchain as its underlying technology — each possesses a unique set of features and purposes. They serve vastly different functions and exhibit key distinctions that have contributed to their respective fame and success.
Bitcoin, often referred to as digital gold, was created in 2009 by an anonymous entity known as Satoshi Nakamoto. The pseudonymous individual or group intended BTC to become a decentralized digital currency meant to function as a store of value and a medium of exchange. According to its white paper, Bitcoin’s primary purpose is to facilitate peer-to-peer transactions, allowing individuals to send and receive funds without the need for intermediaries such as banks. Bitcoin’s supply is capped at 21 million coins, creating scarcity and giving its well-known anti-inflationary properties.
On the other hand, Vitalik Buterin’s brainchild, Ethereum, officially launched in 2015, offering a far more versatile platform. While it has its own cryptocurrency called Ether (ETH), the network is primarily designed as a decentralized computing platform that enables the creation of smart contracts and decentralized applications (dApps). Ethereum’s use cases extend beyond simple transactions, empowering developers to build complex applications on its blockchain.
This beginner’s guide will give you a simple breakdown of the differences between Bitcoin and Ethereum, helping you understand the fundamentals of these popular projects.
Bitcoin, often referred to as “digital gold,” is the first and most recognized cryptocurrency.
Bitcoin’s primary purpose is to serve as a decentralized digital currency for peer-to-peer transactions without the need for intermediaries.
Bitcoin operates on a blockchain, a public ledger that records all transactions.
Bitcoin has a fixed supply of 21 million tokens, making it deflationary.
Bitcoin is mainly used as a store of value and a means of transferring wealth securely.
Ethereum is a blockchain platform with its own cryptocurrency called Ether (ETH).
Ethereum extends beyond digital currency, enabling the development of decentralized applications (dApps).
Ethereum refers to smart contracts as its fundamental building blocks. They are compute programs stored on the blockchain that self-execute agreements that automate processes.
Ethereum operates on a blockchain but is more versatile than Bitcoin.
Ethereum’s dApps have various applications, including decentralized finance, gaming, and more.
Bitcoin primarily serves as a digital currency, while Ethereum offers a broader range of applications through smart contracts.
Bitcoin has a fixed supply, whereas Ethereum's supply is not capped, though it has an annual issuance limit.
Both Bitcoin and Ethereum have large and active development communities.
Bitcoin often has a higher market capitalization than Ethereum, reflecting its dominance.
Ethereum tends to be more volatile than Bitcoin due to its utility beyond the store of value.
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