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FinTech / November 19, 2022

Bitcoin vs Ethereum River Financial

Bitcoin, for example, uses a ‘proof-of-work’ algorithm, which is very energy intensive. But before you complete a trade or transaction for either, it can be good to look at the network fees to see if they’re running higher than usual. If it’s not a time-sensitive transaction, you can sometimes save money by waiting for fees to go down. Bitcoin dropped to $17,708.62 on 18 June, while ether fell to $896.11 on the same date. Bitcoin has seen large surges in price several times in recent years, attracting the attention of the mainstream media and investors beyond cryptocurrency traders.

Ethereum vs Bitcoin the two cryptocurrencies compared

From a business perspective, it’s helpful to think of blockchain technology as a type of next-generation business process improvement software. Bitcoin is a digital currency that can also be called a cryptocurrency. It was mainly created ethereum vs bitcoin to speed up cross-border transactions, reduce the government’s control over the trade and simplify the process without third-party intermediaries. Not having intermediaries has brought down the transaction costs significantly.

How do you invest in bitcoin versus ethereum?

Rather than an investment, USD Coin is envisioned as everyday money that can be spent with merchants on the internet. Surging crypto prices have led many developers to try getting a cut of the action. And blockchain technology has usefulness beyond just digital currencies. Bitcoin wasn’t the first digital money, but it was the first blockchain-based, decentralized cryptocurrency. The network, based on Nakamoto’s white paper, launched in January 2009. The bitcoin cryptocurrency coin runs on the Bitcoin blockchain, a network of computers and servers that processes transactions and stores the data on a decentralised ledger.

In September 2022, Ethereum moved to proof of stake , a set of interconnected upgrades that will make Ethereum more secure and sustainable. To address issues regarding scalability, part of the transition to proof of stake is sharding, which will continue to be addressed through 2023. At the start of the cryptocurrency boom in 2017, Bitcoin’s market value accounted for close to 87% of the total cryptocurrency market. However, by late August 2022, Bitcoin’s market share had declined to 39.6%. Like any cryptocurrency, Bitcoin is also speculative, and although many companies use it, it is not known if it will eventually be widely accepted. Cryptocurrency is the technology that acts as the medium for conducting financial transactions.

  • When centralized entities failed the world in 2008, Satoshi Nakamoto made bitcoin to decentralize control of money.
  • Transactions are faster on the Ethereum network than on Bitcoin’s.
  • Bitcoin has a Proof of Work blockchain which is currently composed of 1 megabyte blocks.
  • We examine some of the ways FS firms are using blockchain, and how we expect the blockchain technology to develop in the future.
  • As the second-largest cryptocurrency by market capitalization , comparisons between Ether and bitcoin are only natural.
  • Before Bitcoin, the trouble with the digital currency concept is that they were all just strings of computer code and could be copied infinitely and spent twice—or countless times.

A consensus mechanism is a type of algorithm used to run a blockchain. The main goal of any consensus mechanism to to solve what’s known as the “double spend” problem. Ethereum also enables payments, using its internal ETH cryptocurrency, but its scope is much broader than Bitcoin by design. Bitcoin is the most popular, established, valuable, secure, and reliable cryptocurrency around. Ethereum has its pros and cons but I’d certainly trust it more than MGO, which is relatively unknown and a little over a year old. I don’t see any functionality in MGO which couldn’t be replicated in BTC or ETH.


The shift to PoS will increase the differences between Bitcoin vs Ethereum. PoS algorithms do not use miners to validate and create new blocks, instead, stakers lock their ether coins into pools on the blockchain in exchange for the right to become validator nodes. If a node is selected to process a block, they receive ether coins as a staking reward. This process is far less energy intensive than mining in a PoW system.

The process is known as “mining,” and it makes it possible for participants to receive cryptocurrency rewards in exchange. Mining uses a huge amount of energy, which has led to significant criticism of cryptocurrency in general. Overall, a long-term investment in either represents the hope that their underlying technology will achieve worldwide use, increasing the demand for the limited supply of their cryptocurrency.

The value of all other cryptos generally moves in tandem with Bitcoin, and Bitcoin is still traded more than any other crypto. Although Bitcoin was not the first attempt at an online currency of this type, it was the most successful in its early efforts. As a result, it has become known as the predecessor to virtually all cryptocurrencies that have emerged over the past decade. Ethereum applications and contracts are powered by ether, the Ethereum network’s currency. With time, people began to realize that one of the underlying innovations of Bitcoin, the blockchain, could be used for other purposes. Honestly, it’s up to you because at the end of the day, it all depends on the amount of money you have available to invest and the type of investment you want to make.

Proof of Stake

Blocks are mined on average every 15 seconds by hashing a modified Dagger-Hashimoto algorithm. The Ether market cap is about 1/2 of that size, coming in at around $153billion. Ethereum was created as a complement to Bitcoin, not as competition. Bitcoin and Ethereum are very different blockchains, but both are available for purchase on eToro and Exodus. Bitcoin signaled the emergence of a radically new form of digital money that operates outside the control of any government or corporation. She holds a Bachelor of Science in Finance degree from Bridgewater State University and helps develop content strategies for financial brands.

Ethereum vs Bitcoin the two cryptocurrencies compared

“With a more accommodating macro backdrop, Ethereum appears to have bottomed, solidified by improved activity resilience than the previous bear cycle, and broadening use cases. After the successful merging of several testnets, the Ethereum Foundation announced on 12 August that the target date for The Merge on the main blockchain, known as the mainnet, is 15 September. We’re transparent about how we are able to bring quality content, competitive rates, and useful tools to you by explaining how we make money. Bankrate senior reporter James F. Royal, Ph.D., covers investing and wealth management.

Ethereum was distributed in the form of an ICO , whereby 31,529 BTC were traded for 60,102,216 ETH in advance of the Ethereum blockchain’s launch. As Satoshi’s coins have yet to move, some speculate they may be inaccessible. Ethereum currently has a Proof of Work blockchain, although a proposed fork will switch it to Proof of Stake .

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Ethereum vs Bitcoin the two cryptocurrencies compared

The Ethereum blockchain hosts a more complex, wider variety of smart contracts than Bitcoin. In addition, many different types of tokens can be issued natively on the Ethereum blockchain, while bitcoin is the only token transferred directly on the Bitcoin blockchain. However, Ethereum’s design decisions come at a cost, including a significant increase in complexity and a loss of true decentralization. USD Coin is another stablecoin, and, like Tether, it is pegged to the U.S. dollar. The idea behind USD Coin was to create a “fully digital” dollar, one that has the stability of U.S. fiat currency but doesn’t require a bank account or that the holder live in a particular country.

The shining knight: ethereum

Thus, investors often compare the two projects and the value of their respective tokens. While Ethereum boasts greater current flexibility and a faster rate of change, Bitcoin has clearly established a superior monetary policy, true decentralization, ultimate security, and long-term scalability. Earlier, we said that the Ethereum blockchain could store arbitrary data. A smart contract is a program stored on the blockchain and executed by the EVM. Transactions can trigger the execution of smart contract functions and thereby alter the state stored on the blockchain. For example, you could create a smart contract that sends Ethereum to an address monthly for a year to pay your rent.

Halving events, combined with coins lost through user error, will ultimately result in a deflationary currency. Bitcoin has a limited supply of 21 million coins, while Ethereum does not have a maximum supply. Ethereum 2.0 is the next generation of the Ethereum blockchain that uses a proof-of-stake model to verify transactions. Investopedia requires writers to use primary sources to support their work. These include white papers, government data, original reporting, and interviews with industry experts.

Ethereum is a programmable blockchain that finds application in numerous areas, including DeFi, smart contracts, and NFTs. The Bitcoin and Ethereum blockchains and networks are different concerning their overall aims. Bitcoin was created as an alternative to national currencies and thus aspires to be a medium of exchange and a store of value. Ethereum was intended as a platform to facilitate immutable, programmatic contracts and applications via a global virtual machine. While bitcoin is designed as a currency and a store of value, the Ethereum network is intended for complex smart contracts and decentralized applications.


Cryptocurrencies are virtual currencies which operate independently of banks and governments but can still be exchanged – or speculated on – just like any physical currency. Launched in 2009, bitcoin was the first decentralised cryptocurrency. Since then, thousands more cryptocurrencies, known as altcoins, have launched. While there is broad and growing acceptance of blockchain technology for numerous applications, the ultimate value, of any individual crypto coin or token cannot yet be confidently determined.

The native coin for a blockchain serves as the medium of exchange between the blockchain users. It’s also usually used to pay fees for transactions over this blockchain network. Bitcoin is the world’s first cryptocurrency, developed by a secret someone under the pseudonym Satoshi Nakamoto. The construction and development of BTC took more than 40 years of research and included the failure of a lot of projects such as BitGold, B-money, ECash, and HashCash. Each of these projects failed in its attempt to decentralize the monopoly of currency and overcome central bank control in money management. In 2008, all of the failures and inventions allowed Bitcoin to take shape.

The market capitalization of each consists of the total extant coins multiplied by the current trading price, and there’s a wide divergence. Bitcoin is the largest, with Ethereum trailing a distant second and Dogecoin among the top 10, according to CoinMarketCap. Traders cluster around the most popular cryptocurrencies and volume drops significantly below the top 20. Bitcoin and ethereum are cryptocurrencies that can be purchased directly on a cryptocurrency exchange. You could also invest in both via investment trusts, such as those offered by Grayscale, but they have stiff fees and minimum investment requirements.

Those transaction processing fees, paid to the blockchain’s network operators, vary based on network congestion. Besides the fact that Bitcoin and Ethereum are popular cryptocurrency blockchains, another key similarity between Bitcoin and Ethereum is network adoption. These networks have much more users than other cryptocurrencies, making them the 2 most valuable cryptocurrencies by market capitalization. While Bitcoin has more institutional adoption, Ethereum has a larger active user base and transacts far more volume than Bitcoin on a daily basis. Both cryptocurrencies have widespread adoption, so these networks should have strong staying power as the blockchain industry matures. Bitcoin is primarily designed to be an alternative to traditional currencies and hence a medium of exchange and store of value.

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