Which cryptocurrency to invest in?

Bitcoin Ethereum cryptocurrency
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Bitcoin and Ethereum are the two most widely used blockchains today. But are they really comparable? Although they are similar, these two blockchains (as well as the associated cryptocurrency) are very different and do not seek to achieve the same goal. To help you see more clearly, we offer a comparison of Bitcoin and Ethereum.

Bitcoin: a brief overview

Bitcoin was born in 2009. Created by the mysterious Satoshi Nakamoto, bitcoin offers the promise of a safe online currency and is in no way dependent on the central government, despite what we know about the currencies issued by our governments.

Although bitcoin is not the first currency of its kind, it has been able to unite most people since childhood, and has been properly implemented. The idea of ​​cryptocurrency, or money without physical form, really arose with the birth of bitcoin.

So you understand why bitcoin is the number one cryptocurrency today, and why it is also the most traded.

As we have already noted, bitcoin was originally designed to provide a decentralized alternative to currencies created by governments. Thus, the goal was to make it a currency for any transactions. Except that over time, bitcoin has established itself as a source of value, digital gold.

Why? This is good because its blockchain can only support a small number of transactions per second, and the transaction fee is relatively high.

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Ethereum Basics

Ethereum was created a few years after Bitcoin. He draws inspiration from this, trying to solve certain shortcomings and problems. Blockchain was born in 2015 and is the work of Vitalik Buterin.

With Ethereum, blockchain technology is used to create more than just cryptocurrencies. The goal is to create a network that can host decentralized applications (DApps) that are accessible to all and that no one can stop.

Regardless of your past and the country you are in, you will be able to access decentralized financial services (for savings, trade, etc.), as well as online games, NFT and other types of programs. who will not be able to steal your data or censor you.

Like the Bitcoin blockchain, Ethereum has its own cryptocurrency: ether. Ether is the essence of the Ethereum blockchain. Thanks to this cryptocurrency, you will be able to pay a transaction fee each time you interact with a program deployed online. It is also the currency used by developers to deploy new programs.

Returning to the topic of decentralized programs, they exist through the concept of intelligent contracts (or smart contracts). To develop a smart contract, the Ethereum Foundation has created its own language: Solidity. This is a reference language for deploying smart contracts on Ethereum.

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Bitcoin vs. Ethereum: common features

Although Bitcoin and Ethereum have many differences, the two blockchains also have one thing in common.

First, they both use the Proof-Of-Work consensus to execute and verify transactions. As soon as 51% of network nodes agree that the transaction is valid, the latter is permanently placed in the blockchain.

Recall, Proof-Of-Work is a concept that requires network nodes to provide evidence that they have used computing power to gain consensus in a decentralized way. The whole point is to prevent bad actors from taking over the network.

With all this in mind, although Bitcoin and Ethereum are currently using the Proof-Of-Work consensus, this should not be the case for Ethereum. The Ethereum Foundation plans to move to a Proof-Of-Stake consensus with Ethereum 2.0 (Serenity). This will make the blockchain much less energy-intensive (and therefore much more environmentally friendly), more secure, but also more scalable (support for more transactions and lower costs).

Another thing Bitcoin and Ethereum have in common is acceptance. These two networks have many more users than other cryptocurrencies and blockchains. They were able to attract institutions, as well as a large number of people. To give you an idea, Ethereum focuses more than 60% of the total blocked value, all chains together, on decentralized financial protocols (source: Defi Llama).

Differences between Bitcoin and Ethereum

I wonder what the difference is between bitcoins and Ethereum? We will list them for you without further ado.

In our opinion, the most important difference is the use of each blockchain. On the one hand, bitcoin has established itself as a real store of value, receiving the nickname digital gold.

On the other hand, Ethereum exists to facilitate access to services (finance, games, art, etc.) that are fully decentralized and therefore accessible to all. Everything has become possible thanks to a concept that does not exist on the side of bitcoin, smart contracts. These are two completely different visions that oppose each other but complement each other. You can also transfer bitcoin to the Ethereum network thanks to WBTC (Wrapped Bitcoin). This is a real proof of their complementarity.

Another notable difference in this comparison between Bitcoin and Ethereum is the overall cryptocurrency offering. Bitcoin has a certain total stock that cannot be exceeded. In total, only 21 million bitcoins can be created. And the more time passes, the harder and longer it will be to have new bitcoins.

What about Ethereum? There are no restrictions on the amount of air that will be created and put into circulation. The network has inflation of 4% per year, as well as a mechanism for burning tokens to compensate for this rate of release. With the launch of Ethereum 2.0, the overall supply is likely to be deflationary, in part because emissions will fall from 4% per year to 0.5%.

Conclusion: Bitcoin and Ethereum are not competitors

As you can see from reading this comparison between Bitcoin and Ethereum, the two blockchains and their cryptocurrency have things in common, but they also have differences.

Now we can say exactly one thing: they are, strictly speaking, not competitors. The ideas conveyed by these two projects are fundamentally different. On the one hand, Ethereum is a decentralized platform that allows you to deploy decentralized applications. On the other hand, bitcoin is ready to prove itself as a serious store of value.

However, yes, both Bitcoin and Ethereum rely on blockchain technology to protect their network. This technology opens up new opportunities that may well lead to mass adoption.

If you are sure that the future will be written for Bitcoin and Ethereum, know that we have written guides that explain how to buy bitcoin and ether.

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