Key Differences Between Bitcoin and Ether
While both the Bitcoin and Ethereum networks are powered by the principle of distributed ledgers and cryptography, the two differ technically in many ways. For example, transactions on the Ethereum network may contain executable code, while data affixed to Bitcoin network transactions is only used to record transaction information. Other differences include block time (an ETH transaction is confirmed in seconds, compared with minutes for BTC), and their consensus algorithms are different: Bitcoin uses SHA-256, while Ethereum uses LMDGhost.89
The Bitcoin and Ethereum blockchains and networks are different concerning their overall aims. Bitcoin was created as an alternative to national currencies and thus aspires to be a medium of exchange and a store of value. Ethereum was intended as a platform to facilitate immutable, programmatic contracts and applications via a global virtual machine.
Proof of Work vs. Proof of Stake
Bitcoin uses a consensus protocol called proof of work (PoW), which allows the network nodes to agree on the state of all information recorded and prevent certain types of attacks on the network. In September 2022, Ethereum moved to proof of stake (PoS), a set of interconnected upgrades that will make Ethereum more secure and sustainable. To address issues regarding scalability, part of the transition to proof of stake is sharding, which will continue to be addressed through 2023.10
A major criticism of proof of work is that it is highly energy-intensive because of the computational power required. Proof of stake substitutes computational power with staking—making it less energy-intensive—and replaces miners with validators, who stake their cryptocurrency holdings to activate the ability to create new blocks.
BTC and ETH are both digital currencies, but the primary purpose of ether is not to establish itself as an alternative monetary system but to facilitate and monetize the operation of the smart contract, dApps, and any other blockchain solution that can be thought of.
The Ethereum ecosystem is growing by leaps and bounds thanks to the surging popularity of its dApps in areas such as finance (decentralized finance, or DeFi apps), arts and collectibles (non-fungible tokens, or NFTs), gaming, and technology. Ethereum will also introduce sharding sometime in 2023 to enhance its scalability.
Bitcoin has also experienced change, introducing the Taproot upgrade to enable smart contracts. The Bitcoin Lightning Network is another project being worked on as a second-layer protocol that intends to take transactions off-chain for the purpose of speeding up the network.
It remains anyone's guess which cryptocurrency and blockchain will stand the test of time—perhaps they both will. But one thing is certain—both have induced much-needed discussions about financial systems worldwide.
What is the Main Difference in Application Between Bitcoin and Ethereum?
Bitcoin is primarily designed to be an alternative to traditional currencies and hence a medium of exchange and store of value. Ethereum is a programmable blockchain that finds application in numerous areas, including DeFi, smart contracts, and NFTs.
Why Is Bitcoin Compared with Digital Gold and Ethereum to Digital Silver?
Bitcoin is compared with digital gold because it was the very first cryptocurrency and is the biggest, with a market cap exceeding $375 billion, while its limited supply (the maximum number of bitcoins that can be mined is 21 million) may ensure that it retains value. Ethereum is compared with digital silver because it is the second-largest cryptocurrency by market cap and, like the precious metal, has a wide variety of applications.
What are Bitcoin and Ethereum’s Shares of the Crypto Market?
As of Aug. 30, 2022, Bitcoin had a market cap of $376.5 billion, accounting for about 39.6% of the total cryptocurrency market, which was valued at just over $954.3 billion. Ethereum, with a market cap of $818.8 billion, had a market share of 18.8%.
How many BTC and ETH are Currently in Circulation?
As of Aug. 30, 2022, there were 19.1 BTC and 122.2 ETH in circulation.
What Are Some Similarities Between Bitcoin and Ether?
Ether and bitcoin are alike in many ways. Each digital currency is traded on online exchanges and stored in cryptocurrency wallets. Both are decentralized, meaning they are not issued or regulated by a central bank or other authority, and both use blockchain technology