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Unless you have been living under a rock, there is a good chance that you are at least aware of cryptocurrency. Bitcoin is the king but there are other types that have emerged to become viable forms of investment.
As the second-most popular cryptocurrency, Ethereum is also in regular discussion. Before your focus becomes what .2 ETH to USD looks like, it helps to know how the two compare and what the key differences between them are.
What is Bitcoin?
The very first cryptocurrency, created in 2009, started it all. It introduced blockchain technology on which any other form of cryptocurrency is based. Bitcoin has grown exponentially since then, at one point peaking at more than $60,000 per coin. That number has come down substantially, but Bitcoin is still at the top of the food chain.
Bitcoin established the basis on which the rest of cryptocurrencies have been established. Mining coins, the creation of exchange to simplify buying and selling, and just about any other practice that has become commonplace began with the implementation of Bitcoin. In the meantime, Bitcoin continues to be a massively valuable form of investment.
What is Ethereum?
Ethereum takes the blockchain technology a step further to create a decentralized open-source network. This network is powered by the native currency, ETH, which is used to interact with applications that have been built on top of the Ethereum network and can also be used for transactions of all kinds. There are even some retail establishments that accept ETH as a form of payment.
Ethereum has since established its own programming language known as Solidity. Using Solidity, smart contracts are created on the blockchain to create secure transactions. Because of these smart contracts, Ethereum has begun gaining traction, especially with decentralized applications being offered related to financial services, the most prevalent being nonfungible tokens (NFT).
The Biggest Differences Between Bitcoin and Ethereum
The concept for both is similar but there are actually vast differences between the two, especially in terms of technical specifications. Bitcoin is basically the equivalent of digital gold that is used to store value. Ether is used to power the applications and Ethereum network at large.
Issuing Standards
Though both Bitcoin and Ethereum can issue new tokens, it is how they do it that stands out. Bitcoin uses a platform for creating and trading currencies on the Bitcoin blockchain known as the Omni layer. Ethereum, on the other hand, uses the ERC-20 standard.
ERC-20 has a set list of rules pertaining to tokens on the network. There are different functions that must be implemented prior to the launch of new tokens. This includes information about user account balances, and the total supply of the token, and provides the ability for funds to be moved between different wallet addresses.
Different Transactional Natures
At its heart, Bitcoin transactions are monetary, though the transactions can have both messages and notes attached to them. These messages are encoded into specific data fields within the transaction. Transactions on the Ethereum platform, meanwhile, have executable code that creates the aforementioned smart contracts. Applications and self-executing contracts can also be built within those Ethereum contracts.
Finally, there is the incremental time of new data block additions. They are minor in difference but add up in the long run. For instance, blocks are added to the Bitcoin network roughly every 10 minutes or so. On the Ethereum platform, it takes about 15 seconds before a new block is added. Minor differences like that may not seem like a big deal but, in reality, add up to create vastly different platforms.
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