London, UK — Bitcoin is a virtual currency and payment system invented by an unknown individual known as Satoshi Nakamoto in 2009. Bitcoin is a decentralized peer-to-peer electronic cash system that does not rely on any central authority. Cryptography is used to secure and authenticate transactions, which are recorded in a public open ledger known as a blockchain. Bitcoin was the first practical implementation of a distributed crypto-currency, described in part in 1998 by Wei Dai on the cypherpunks mailing list.
FinancialCentre Broker Raul Jimenez said that the system is designed so that each block contains a hash of the previous block, a timestamp, and transaction data. Bitcoin nodes use the blockchain to differentiate legitimate Bitcoin transactions from attempts to re-spend coins that have already been spent elsewhere. They can be exchanged for other currencies, products, and services. At the start of the year 2015, the number of firms accepting bitcoin crossed 100,000. Instead of 2–3% typically imposed by credit card processors, merchants accepting bitcoins often pay fees in the range from 0% to less than 2%.
Ethereum, released in 2015, is a decentralized computing platform that features smart contract functionality. A cryptocurrency called “ether” is used to pay participant nodes in the Ethereum network for their services. This token can be transferred between accounts and used to compensate node participants for computations performed. On the network, “gas” is a transaction pricing mechanism that reduces spam and manages the allocation of resources.
Ethereum was initially described in a white paper by Vitalik Buterin, a programmer involved with Bitcoin Magazine, in late 2013 with the goal of building decentralized applications. Buterin had argued that Bitcoin needed a scripting language for application development. Failing to gain agreement, he proposed the development of a new platform with a more general scripting language.
Ethereum vs Bitcoin
Although bitcoin is a much more hyped coin than Ethereum, the underlying technology of Ethereum is far more advanced and robust. If we compare both the coins side by side then Ethereum has a clear advantage over bitcoin in terms of its technology.
Jimenez said. “Although from an investment point of view, Bitcoin is the king, Ethereum has better technology.”
The problem with Bitcoin is that it’s very slow and it has a limit on the number of transactions that can be processed per second. Ethereum doesn’t have that problem because it uses a different algorithm, which is called ‘Proof of Stake’. Ethereum also provides a cryptocurrency token called “ether”, which can be transferred between accounts and used to compensate participant nodes for computations performed.
Ethereum is often described as a digital currency but, more accurately, it’s a decentralized platform that runs smart contracts. These apps run on a custom-built blockchain, an enormously powerful shared global infrastructure that can move value around and represent the ownership of property. This enables developers to create markets, store registries of debts or promises, move funds in accordance with instructions given long in the past (like a will or a futures contract) and many other things that have not been invented yet, all without a middleman or counterparty risk.
The Ethereum project is supported by a diverse range of companies and industries. Its goal is to decentralize the internet by creating an infrastructure that can’t be controlled by any single entity. The project has been backed by some of the biggest names in the tech and finance world, including Microsoft, JPMorgan Chase, and ING. Ethereum is also being used by a growing number of startups and established companies, such as Canonical (the company behind Ubuntu), to create new applications or to run existing ones more efficiently.
Bitcoin, on the other hand, is a digital currency that can be used to buy things like coffee, books, and even houses. However, unlike Ethereum, Bitcoin is not trying to build a new internet or decentralized platform. Rather, it’s trying to be an alternative to existing payment systems, such as Visa and PayPal. While Ethereum has been embraced by some of the biggest names in tech, Bitcoin has been adopted by more everyday businesses, such as Overstock.com and Expedia.
Jimenez says, “Ethereum is the clear winner in terms of technology.” When it comes to investments, however, he says that “Bitcoin is still the king.” So, if you’re looking to invest in a digital currency, Ethereum may be a better choice than Bitcoin. However, if you’re looking for a payment system that’s more widely accepted, then Bitcoin is a better option. The bottom line is that each digital currency has its own strengths and weaknesses, so it’s important to do your research before investing.
Disclaimer: Our content is intended to be used for informational purposes only. It is very important to do your own research before making any investment based on your own personal circumstances. You should take independent financial advice from a professional in connection with, or independently research and verify, any information that you find on this article and wish to rely upon, whether for the purpose of making an investment decision or otherwise.