Which crypto should you invest in?

Which crypto should you invest in?
© Journal du Geek

Bitcoin and Ethereum are the two most widely used blockchains today. But are they really comparable? Although they have similarities, 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 Bitcoin vs Ethereum comparison.

Bitcoin: quick overview

Bitcoin was born in 2009. Created by the mysterious Satoshi Nakamoto, Bitcoin offers the promise of a secure online currency and is in no way dependent on a central authority, contrary to what we know with currencies issued by our governments.

Although Bitcoin is not the first currency of its kind, it is the one that has been able to unite most people from its infancy, while being properly implemented. It was with the birth of Bitcoin that the idea of ​​cryptocurrency, or money without physical form, really arose.

So you understand why Bitcoin is the number 1 cryptocurrency today and why it is also the most traded.

As we have noted, Bitcoin was originally designed to provide a decentralized alternative to currencies created by governments. The aim was therefore to make it a currency to carry out transactions of any kind. Apart from the fact that Bitcoin over time has established itself as a value store, digital gold.

Why ? Well, because its blockchain is only capable of supporting a low number of transactions per second, and the fees for performing a transaction are relatively high.

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Basics of Ethereum

Ethereum was created a few years after Bitcoin. He draws inspiration from it while trying to solve certain errors and problems. Blockchain was born in 2015 and is the creation of Vitalik Buterin.

With Ethereum, blockchain technology is leveraged to create more than just cryptocurrency. The goal is to create a network that is capable of hosting 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, trading, etc.), but also online games, NFTs and other types of applications that will not be able to 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. It is thanks to this crypto that you will be able to pay transaction fees every time you interact with an application installed on the network. It is also the currency that developers use to implement new applications.

To return to the topic of decentralized applications, these exist thanks to the concept of intelligent contracts (or smart contracts). To implement a smart contract, the Ethereum Foundation created its own language: Solidity. It is the reference language for implementing smart contracts on Ethereum.

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Bitcoin vs Ethereum: Common features

Although Bitcoin and Ethereum have some differences, these two blockchains also have things in common.

The first is that they both use Proof-Of-Work consensus to drive and validate transactions. As soon as 51% of the nodes in the network agree that a transaction is valid, the latter is permanently placed on the blockchain.

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

All this being said, 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 migrate to the Proof-Of-Stake consensus thanks to 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 (supporting a larger number of transactions and lower costs).

The other thing that Bitcoin and Ethereum have in common is adoption. These two networks have far more users than other cryptocurrencies and blockchains. They have been able to attract institutions but also a large number of individuals. To give you an idea, Ethereum concentrates more than 60% of the total value blocked, all chains combined, on decentralized finance protocols (source: Defi Llama).

The differences between Bitcoin and Ethereum

Wondering what the differences are between Bitcoin and Ethereum? We will list them for you without further ado.

In our opinion, the most important difference lies in the use of each blockchain. On the one hand, Bitcoin has established itself as a true store of value that has been nicknamed digital gold.

On the other hand, Ethereum exists to facilitate access to services (finance, games, arts, etc.) that are totally decentralized and therefore accessible to all. It’s all made possible thanks to a concept not found on the side of Bitcoin, smart contracts. These are two totally different visions that oppose each other, but which complement each other. It is also possible to transfer Bitcoin to the Ethereum network thanks to WBTC (Wrapped Bitcoin). This is a real proof of their complementarity.

The other notable difference in this Bitcoin vs Ethereum comparison is in the total supply of cryptocurrency. Bitcoin has a defined total offering that cannot be exceeded. In all, only 21 million Bitcoins can be created. And the longer it takes, the harder and longer it gets to my new Bitcoins.

What about Ethereum? There is no limit in place as to the number of Ether that will be created and put into circulation. The network has an inflation rate of 4% per year as well as a symbolic firing mechanism in place to compensate for this issuance rate. Once Ethereum 2.0 is rolled out, the total supply will certainly be deflationary, in part because issuance will fall from 4% per year to 0.5%.

Conclusion: Bitcoin and Ethereum are not competitors

As you have seen by reading this Bitcoin vs Ethereum comparison, these two blockchains and their cryptocurrency have common points but also differences.

Now one thing is for sure: they are not strictly competitors. The ideas conveyed through these two projects are fundamentally different. On the one hand, Ethereum is a decentralized platform that allows the rollout of decentralized applications. On the other hand, Bitcoin is ready to establish itself as a serious stock of value.

That said, yes, both Bitcoin and Ethereum rely on blockchain technology to secure their networks. This technology opens up new possibilities that may well lead us to mass adoption.

If you are convinced that the future will be written with Bitcoin and Ethereum, you should know that we have written guides that explain how to buy Bitcoin and Ether.

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