You’ve probably already heard of Bitcoin.
But there are many more so-called cryptocurrencies out there. Ethereum has since established itself as the second most valuable cryptocurrency.
This has inevitably caused many experts to start talking about the emerging rivalry of Ethereum vs. Bitcoin.
However, there are many common misconceptions and questions about cryptocurrencies.
What are cryptocurrencies? What are the differences between Ethereum and Bitcoin? And what are the implications of this new phenomena for banking as we know it?
In the unstable world of cryptocurrency, the value of Ethereum vs. Bitcoin is always changing.
But at the time of writing, Ethereum is valued at just under $700 and the second most valuable of the cryptocurrencies. And yet, that puts Ethereum’s value at over twenty times less than Bitcoin.
Despite this, many investors believe Ethereum is a worthwhile investment.
Ethereum Vs. Bitcoin — What Is Bitcoin?
Let’s start by looking at the original cryptocurrency Bitcoin, publicly launched in 2009.
The short answer is — it’s digital money.
That’s money without the many of the complications that come with having your money tied up with a bank.
Many people mistakenly believe Bitcoin is a company or a new technology. It’s not. It’s just money.
Do You Want To Start Buying And Selling Bitcoin?
It’s simple. You just create an account on one of the many cryptocurrency websites, such as Coinbase, and get started.
One feature of Bitcoin is that the cryptocurrency fluctuates in value in accordance with supply and demand.
People invest in Bitcoin for a variety of reasons.
It may be because you don’t want to hold your money in a bank. Or, you believe it to be a positive investment and you’re hoping for a return.
Others are using it to invest in companies through Initial Coin Offering (ICO). This is achieved through purchasing tokens that are issued by the companies.
What Is Ethereum?
Launched in 2015, the name Ethereum comes from the technology it runs on. The cryptocurrency is rather called Ether.
This digital currency has a decentralized payment network that provides investors with anonymity.
This means there is no requirement for any third party, such as a bank. Therefore, this means users don’t have to pay any fees for large transactions.
All transactions are carried out via the internet. And when a transaction takes place, this is displayed on the digital ledger for anyone to see. This is known as the Blockchain.
According to the website for Ethereum, security, and protection is in place to prevent fraud and theft.
While the benefits of Ethereum can be complicated, there is one thing for certain. The popularity of Ethereum has ballooned this year.
So far, much of the above could equally be used to describe Bitcoin. So what exactly is the difference between Ethereum vs. Bitcoin?
What’s The Difference Ethereum Vs. Bitcoin?
Although Bitcoin and Ethereum are both referred to as cryptocurrencies, Ethereum is technically a digital platform.
For many experts, this gives Ethereum an important advantage over the older Bitcoin in the battle Ethereum vs. Bitcoin.
This means that investors and programmers are using the platform of Ethereum to build programs. This means that it not just money that is running through the network, such as Apps.
Ethereum records transactions much more efficiently than Bitcoin, and therefore, has better functionality.
While both use Blockchain technology, many experts argue that Ethereum’s is much more resilient to fraud, theft and other destabilizing impacts.
The founder of Ethereum, Vitalik Buterlin says that it is the idea that there is a “magic computer in the cloud and anyone can send programs to it, anyone can run programs on it and those programs can talk to each other”.
What Are Smart Contracts?
Ethereum also has the power of the Enterprise Ethereum Alliance. This is made up of a group of Fortune 500 companies that want to develop the Blockchain technology. This includes the backing of super companies such as Microsoft and JP Morgan.
The Blockchain technology is known as “smart contracts”.
Smart contracts are digital contracts that are verified and enforced automatically. This means that companies can set up binding contracts without any third party involvement.
These contracts can include virtual tokens for shares, assets or membership.
Raise Funds For Your Online Business
Platforms, such as Kickstarter, have allowed start-ups to get started with their business idea. However, Ethereum provides entrepreneurs with a different route to develop their ideas.
You simply set up a smart contract and ask for pledges from the online community of Ethereum users. If a start-up fails to achieve the agreed target, then the funds are released back to the investors.
Unlike Kickstarter and other online fundraising platforms, Ethereum cuts out the middleman. This also means you avoid any of the additional fees that are included in Kickstarter.
Should I Invest In Ethereum Vs. Bitcoin?
Ether is currently worth over $28 billion market capitalization, according to the analysis site Etherscan. On the other hand, Bitcoin currently has a market capitalization of $123 billion.
Investors in cryptocurrencies are pinning their hopes on the chance that Bitcoin and Ether’s value will continue to grow in the near and far future.
Just as Bitcoin users have seen a huge increase in the value of their Bitcoins, Ether investors are hoping the same will happen with their investments.
Many people have become millionaires overnight thanks to these digital currencies. And yet, many experts continue to warn that the bubble could burst at any moment.
However, it could be argued that investing in Ethereum is different to investments in Bitcoin, or any other cryptocurrency.
As already stated, Ethereum is much more than a currency, instead, it’s a platform and innovative technology that supports the exchange of cryptocurrency.
To learn more about decentralized platforms and cryptocurrencies visit our ChainTrade website.