In the crypto currency space, Bitcoin is still the leader among a huge list of crypto assets. Of this multitude, Ethereum is the favorite. Both Bitcoin and Ethereum have long been on the balance sheet of reputable institutions, but in the case of Bitcoin it is more frequent.
However, there is a significant difference between the projects. And that’s fine. Ultimately, they both have a purpose. Nowadays, exchange between ETH and BTC is made in an easy way, thanks to one of the best solutions on the market. Any day, or night, you can always exchange ETH to BTC on Quickex.
What are Bitcoin (BTC) and Ethereum (ETH) Used for?
- Bitcoin is seen as “digital gold. People, businesses, and governments purchase VTCs in order to store their assets and protect them from government-induced inflation and confiscation.
- Ethereum serves as a software development platform on which all sorts of financial applications are created. Think about decentralized trading platforms and NFT markets. These applications require an Ether coin to run, which creates a demand for ETH.
Origins of Coins
The main difference between Bitcoin and Ethereum is in their origins. At the very beginning in 2009, Bitcoin was a completely different project than all the other cryptocurrencies that followed it. Exclusively because the conditions in which Bitcoin emerged cannot be copied, Bitcoin cannot be copied or replaced.
It was launched in 2009 as an experimental peer-to-peer payment system. The Bitcoin blockchain began with 0 bitcoins in circulation. For the first year and a half, the coins were priceless: it was a purely voluntary project of people who believed in a better financial system.
In comparison, in Ethereum, the founding team made a preliminary call and sold the first batch of Ether on the market. It happened in 2014. That’s how they funded their project. There was just as much idealism in that, but the expectation of financial gain was different.
So Ether is still a security under U.S. law. They got rid of that classification, but many other similar crypto currency projects continue to fear lawsuits-not that this is the end of such a project, but still. Bitcoin has no such problems.
How Variable are They?
The Bitcoin protocol is characterized by many fundamental features. The principle that there will never be more than 21 million bitcoins in circulation is fixed by the protocol. There is no probability of that happening. This fact does not embarrass many owners.
In comparison to Ethereum: in this case, the process of issuing money is still being modified. It is an experimental process, and there is no guarantee that the parameters will not change many more times. This provides the flexibility to respond to the needs of the market. The downside is the possibility that one day the “money press” will turn on, as it often does in the traditional financial system.
Switching to Proof-of-Stake
The Bitcoin and Etherium protocols started out as Proof-of-Work (PoW), which implies that energy consumption secures the network: energy is the foundation of the consensus mechanism for determining what counts as valid transactions.
Ethereum has begun the transition to the new Proof-of-Stake consensus and has called the event a “merger.” This operating model is more reminiscent of the shareholder model, in which it is not miners who get paid, but ETH owners who “bid” for their ETH in exchange for “dividend” rewards.
The advantage is the much lower power consumption of proof-of-stake compared to proof-of-work. A possible danger is the centralization of power in the hands of those who own most of the ETH.
The transition to Proof-of-stake reveals another problem for Ethereum, which is that PoS is significantly more complex from a software perspective and therefore more vulnerable. The software language in which Ethereum is written is fully compliant with the Turing language, which means that any possible computation can be performed on it.
Such flexibility and sophistication also brings with it the possibility of unforeseen hacker vulnerabilities.
What Kind of Competition are They Facing?
There have always been challengers to Bitcoin’s throne. In the early years, they were almost copies or forks that tried to distinguish themselves from Bitcoin in some parameters, such as block size (Bitcoin Cash). But these forks never materialized. For this reason, by now it has been established that bitcoin is still the only player in the “digital gold” niche.
First of all, it is something that cannot be copied. It is the effect of network users, developers and miners. And it has a brand name, all of which is hard to replicate.
In this respect, Ethereum has never been a direct competitor to Bitcoin: it is a completely different project, created as a complete Turing blockchain. It is a completely different project, created as a full-fledged Turing blockchain. Moreover, Ethereum has a huge range of possible applications.
Bitcoin, on the other hand, is limited to one thing: being “digital gold. This means that Ethereum leads the world in blockchain-based smart contract platforms, but how sustainable it will prove to be remains to be seen.
The current global crisis has caused fluctuations in Ethereum and Bitcoin prices. There have been multiple ups and downs in prices, but as business returns to normal by 2023, investors may abandon traditional investments.
Nevertheless, the future of the Ethereum and Bitcoin blockchain is promising from an investment perspective. Ethereum standards, in particular, could show steady growth through 2023 and beyond.