Ethereum and Bitcoin – What’s the difference?

Find out more about the two most famous cryptocurrencies

Ethereum and Bitcoin are the most popular cryptocurrencies by market cap. Ethereum is a robust ledger technology companies use to build new programs. Bitcoin, on the other hand is a store of value, designed for sending and receiving payments without a bank.

This article will dive into the main differences between Ethereum and Bitcoin and briefly touch upon Ethereum´s transition from PoW to PoS with its recent Merge. Let´s get started!

What are Ethereum smart contracts?

Ethereum smart contracts automatically execute transactions if certain conditions are met, thus cutting out the middleman.

Smart contracts enable dapps (decentralized applications). Ethereum provides a foundation for running decentralized software programs and it is the protocol with the largest dapp ecosystem.

The Ethereum platform provides a foundation for running decentralized software programs, which have become known as smart contracts and decentralized apps (dapps).

How is Ethereum different than Bitcoin?

Ethereum and Bitcoin have many functional and structural differences in their operation. These include:

Ethereum enables faster transactions

Ethereum has an average block time of 12 seconds, while Bitcoin averages 10 minutes. Accordingly, the Ethereum blockchain enables faster transactions. 

Bitcoin is scarce, Ether is not

Bitcoin is inherently a scarce economic model because block rewards halve every four years. For Ethereum, it is different because the network releases the same amount of Ether every year.

Ethereum will use Proof of Stake (PoS) mining going forward, while Bitcoin retains Proof of Work mining (PoW).

Mining is no longer a thing for Ethereum, but is at the core of Bitcoin

Before the merge, Ethereum gave no advantages for pool mining because of the network’s Ghost protocol and Ethash algorithm. This system inherently discouraged centralized mining.

Now, after the Ethereum merge, there will be no more mining for Ethereum (ETH) because the network has switched to Proof-Of-Stake (PoS), thus making crypto miners redundant.

• Read more about the Ethereum Merge

For Bitcoin, on the other hand, the more powerful your equipment, the more competitive your mining operation is. 

Ethereum is the king of dapps

Dapps are a game-changer for the cryptocurrency industry. They offer a practical way for people to use cryptocurrencies. Most dapps are built with Ethereum.

• Learn how the Ethereum Merge will affect dapps

These platforms don’t merely provide utility services but are a way for developers to control and monetize their creative content in a democratic way. 

Therefore, dapps can disrupt many sectors. Here is a quick overview :

Gaming

Ethereum gaming dapps attract many users every day. Many of these games use NFTs, or tokens that appeal to many individuals.

Gambling

These are your usual gambling applications with a twist of added blockchain elements. They run on Ethereum’s decentralized network rather than a central server.

DeFi

Decentralized Finance (DeFi) transforms old financial products into trustless and transparent protocols. Ethereum is at the core of this decentralized financial revolution, accessible to anyone with an internet connection.

Exchanges

Decentralized exchanges (DEX) like the popular Uniswap, are built on Ethereum. Decentralized exchanges are open-source, allowing users anywhere in the world to trade crypto without a middleman.

Collectibles

Collectibles also referred to as NFTs, were made possible by the Ethereum network when the team created a token standard called ERC-721, especially for their minting. Their main use case is IP ownership and the tokenization of assets.

Marketplaces

Marketplaces are platforms that allow users to buy and sell NFTs. The most dominant NFT marketplace built on Ethereum right now is OpenSea.

Social

The Ethereum network is the developer´s darling in building decentralized social media. This is due to its popularity and massive user base.

Which one is better, Ethereum or Bitcoin?

The key advantage of Ethereum is the versatility that dapps bring to this industry. Dapps allow people who wouldn’t otherwise use crypto to get into this space and thus drive more adoption.

Even though Bitcoin is still the dominant coin and settles into a more store-of-value/speculative asset, the utility value of Ethereum dapps has a bright future on the horizon.