Help me Understand: Differences in BTC and ETH

Both BTC (Bitcoin) and ETH (Ether) are Crypto-currencies but what are the differences?

Bitcoin and Ether are similar in that both are crypto-currencies; both are decentralized; both can be traded and both can be stored; and both use Blockchain technology.

Those similarities fail to separate our understanding of their differences. So now let’s look at what makes each one unique.

First, let’s gain some understanding about Bitcoin (BTC):

Bitcoin (abbreviated BTC) was introduced in January of 2009 when Satoshi Nakamoto presented the Whitepaper with aspirations of becoming a decentralized digital payment system with no central banks involved. Bitcoin uses a photographically distributed public ledger on the Blockchain that anyone can call up and see. This eliminates any central controlling agency to secure our transactions.

Bitcoin has dominated the crypto-currency in popularity and value from the beginning and in 2017 accounted for 87% of the total Crypto-currency market.

But in time, other uses for Blockchain emerged. One such crypto-currency concept was Etherum.

Now, let’s learn how Etherum (ETH) is different.

Etherum was launched in July of 2015 and has become the largest and most well-developed, open-ended decentralized software development. Etherum was created with the development of decentralized “Smart Contracts” and other decentralized programs that eliminates fraud, downtime and control from any third party.

Etherum has many potential use cases, which are powered by it’s native token ETHER (abbreviated ETH) Ether powers a number of potential applications. In 2014 Etherum offered a presale of Ether (ETH) which had a very successful response. Think of Ether as the fuel for running the commands on the platform and is used by developers to build and run those programs.

Ether serves two main purposes: It is traded the same as any other digital currency, plus it is used to power and build applications on the network platform. It is said that people all over the world use ETH to pay bills, as a store of value and even as collateral.

KEY DIFFERENCES

According to Investopia, the KEY differences in BTC and ETH are these:

“While both the Bitcoin and Ethereum networks are powered by the principle of distributed ledgers and cryptography, the two differ technically in many ways. For example, transactions on the Ethereum network may contain executable code, while data affixed to Bitcoin network transactions are generally only for keeping notes. Other differences include block time (an ether transaction is confirmed in seconds compared to minutes for bitcoin) and the algorithms that they run on (Ethereum uses ethash while Bitcoin uses SHA-256).” 

“More importantly, though, the Bitcoin and Ethereum networks are different with respect to their overall aims. While 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 its own currency.” 

“BTC and ETH are both digital currencies, but the primary purpose of ether is not to establish itself as an alternative monetary system, but rather to facilitate and monetize the operation of the Ethereum smart contract and decentralized application (dapp) platform.”

“Ethereum is another use-case for a blockchain that supports the Bitcoin network, and theoretically should not really compete with Bitcoin. However, the popularity of ether has pushed it into competition with all cryptocurrencies, especially from the perspective of traders. For most of its history since the mid-2015 launch, ether has been close behind bitcoin on rankings of the top cryptocurrencies by market cap. That being said, it’s important to keep in mind that the ether ecosystem is much smaller than bitcoin’s: as of January 2020, ether’s market cap was just under $16 billion, while bitcoin’s is nearly 10 times that at more than $147 billion.”

These “differences” make owning each an awesome addition to any portfolio whether HOD-ling or using as payment or medium of exchange.

https://www.investopedia.com/articles/investing/031416/bitcoin-vs-ethereum-driven-different-purposes.asp

About the author

Gail holds one of the most challenging role in the Compumatrix Leadership: Membership. She ensures that that members and potential members enjoy the benefits of being part of the Compumatrix community.

Comments

  1. Thanks Gail. I have never really known that there was a huge difference, apart from their names. I thought that the value first of all, was based on the usefulness or demand for the coin. So this has really given me a lot of insight. Ethereum and a few others are definitely on my list to obtain some time in the future. I am looking forward mostly to be able to buy all the tokens and coins in the Compumatrix Bundles.

    1. Very Welcome Vee Dell. I am glad it helps to understand their differences. I am going to try to do a series of these blogs to share MY understanding of all things Crypto and a plus is for this to help others understand.

  2. Awesome work Gail — I know that there are differences but had not thought that much on it with us here working basically in Bitcoin here at compumatrix but have followed ethereum through just keeping tabs on bitcoin — but now will take a longer more detailed look — thank you Gail —

  3. My goal is to keep my “head in the game” and learn this industry no matter how hard it is for me to wrap my head around this! This kind of simple explanation of the 2 top crypto currencies is very welcomed. Sometimes I find some information from an author or source that speaketh computer language and they might as well be speaking another language from the other side of the globe. Gail, I really appreciate this post whereas it states, Bitcoin does this and Ethereum does that. (period) I due time, I will learn more and how to utilize each for its own uniqueness.

  4. Total number of available Bitcoins is limited and therefore its liquidity is far more than Ethereum. Technology of Ethereum is better than that of Bitcoin.
    Bitcoin was launched in the year 2009 and is the first one to use blockchain technology. As time passed by, the value of Bitcoin rose to new heights. I the times ahead, Bitcoin will attempt to solve global financial problems. It’s a people’s bank which does not depend on any government.
    Ethereum was launched in the year 2015 and it uses “Blockchain 2.0”. Ethereum’s transactions are programmed by smart contracts and take seconds to complete. Ether is the currency of Ethereum and is highly liquid.
    So, Bitcoin is synonymous with digital money and Ethereum with smart contracts.
    To further understand their way of transactions:
    1. Bitcoin: Send me one Bitcoin
    2. Ethereum: Send 10 Ethereum to so and so, when that so and so has so many Ethereum by so and so date.
    3. Ethereum’s transaction are completed in seconds, where as Bitcoin transactions gets completed in minutes and some times, even more time.

  5. This is a very well-written post by you, Gail.
    It helps me to understand the differences between both of them and gives me a better insight as well.
    At first sight, Ethereum is just another cryptocurrency but, lately, it has been gaining popularity.
    Looking forward to more blogs from you, so that all of us could get a better understanding of all that the Crypto world offers us.
    A big thank you in advance!!

  6. The real plus to me about Ethereum that sets it so much apart from Bitcoin is its ability to store smart contracts on its blockchain. That’s something far different than just storing a transaction of value. What an amazing development it is and it runs completely on it’s own blockchain. I still have all kinds of trouble understanding the “gas” they use in their transactions, and how that is all calculated, but I am fascinated by the whole smart contract thing.

    1. Thank you for the informative article Gail. I assumed Ethereum was just another type of cryptocurrency to be bought and sold. This is another financial language to learn and understand, with SO much to learn, I will read your article more then a few times, and others, to get it clear in my mind.

      1. You are very welcome Bruce. Just keep reading and learning and soon it will all click for you and you will be on your way! There is a lot to learn but just like the elephant, do it in bites and it will go down easier…lol

  7. Thank you Gail – another great education post. I now can understand that there are differences between Bitcoin and Ethereum even though there are points that are still murky, but realize these are the differences between the two…..Look forward to learning more and a great idea to do more of these kinds of posts – anything that helps in the education process is tops in my books!

  8. Interesting Gail, have never thought about it and never spend the time to find it out also . I like many others look forward to own more of the cryptos out there once we get the green light . In the meantime yes its a good time to learn more about the differences between one or the other, even we have already a long list of our own cryptos to start with.

  9. Informative blog Gail. Although many Cryptocurrency users talk about Bitcoin and Ethereum, all may not be knowing the importance of each of them. Your blog has made it simple to those who want to know what is Bitcoin and what is Ethereum and their comparison.

    As most cryptocurrency users know, Bitcoin was launched in 2009, where as Ethereum was launched in 2015. With less coins in circulation, liquidity of Bitcoin is more than any Cryptocurrency, including Ethereum. Bitcoin is digital money, where as Ethereum is identified with smart contracts. Ethereum transactions gets completed in seconds, where as Bitcoin transactions take minutes.

    Keep it up Gail, you will one day reach the top of the blogging world.

  10. This post is very valuable and will help so many to understand the important differences. This single quote is very powerful because it so simply summarizes the main differences:

    …“More importantly, though, the Bitcoin and Ethereum networks are different with respect to their overall aims. While 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 its own currency.”

    In these still early days of cryptocurrency, anyone who can effectively explain the difference between Bitcoin and Ethereum should be considered to be a “virtual expert” on crypto. But you don’t need to be an expert of any kind to be able to benefit from owning some of these 2 leading coins! Of course the same can be said about Compumatrix members, in that they don’t need to be experts on the Compumatrix Assets in order to benefit from owning them.

  11. Excellent information Gail. Maybe bitcoin could take a lesson from Ethereum and speed transactions up a bit. Whilst ETH might be a good investment, it is not as readily used to purchase items, be it coffee or goods,maybe in time it will. The good news is that most of the hard wallets are able to store ETH, so no need to buy new ones. From ETH to BTC to ATM card to shop.

  12. I must say so much to learn as every one else I thank You For Your Time Gail to ex-plane the
    difference in simple way for me to understand. Yes I must learn little at a time my focus has been just on BTC now add ETH for its talent Goods and trading to learn what are smart contracts, to facilitate immutable and programs this sound like this can improve a Business
    in a large way or just increase the knowledge for a person around the world its so much to learn wow!

  13. It’s interesting that Vitaly Dmitriyevich “Vitalik” Buterin who is a Russian-Canadian programmer and co-founder and inventor of Ethereum, seems to have much more control over it’s blockchain and system than people know. Whereas Bitcoin is proven to be quite decentralized, I see Ethereum as a bit less decentralized. Different from Satoshi Nakamoto, we know who created it, and we also know that he still have a huge say in it’s present development.

  14. Thank you, Gail, for a clear presentation! I have always been excited about Etherium, for it’s smart contract potential. I can imagine a future where there is Etherium powered smart contracts for many of the things we use government or law for these days. I can also imagine platforms where one could create smart contracts for personal use. Perhaps to set up a loan agreement, or create a will. That would be exciting, and can help us to create a more just, caring world.

  15. Thank you so much for this blog the information explains the difference very well. It is good to learn about this and get educated to help make your choices for the future, I look forward to your blogs and running my business. It is always good to have a back up

    1. Thank you Tim and I’m very glad this has helped. We ALL have lots to learn and can certainly learn from each other as well as other ways. I intend to keep trying to write blogs because my goal is to help people to get a better idea of what they have in their hands by owning their own Crypto Business.

  16. This an excellent educational post. I just read it for the second time and got more out of it than I did the first time. Thank you for posting it Gail. In addition to being educational I find it to be thought provoking. I look forward to reaching a point of understanding how to I can actually use the smart contract features of Ethereum in my own business life.

  17. This was an interesting article to read. I honestly had not done any research on the Etherum digital currency. I appreciated the basic differences that are detailed in this article between bitcoin and Etherum. I, however, feel that it is necessary for me to dig a little deeper, so that I can understand these two digital currencies functional differences. As basic as the description is in this article, I would think that one of the purposes of the author would be to create a desire within the reader to know more.

  18. What a wonderful, helpful information this is for us, Gail. Because of eherium’s distinctive feature compared to other coins in the market including bitcoin, it seems to be a different class in itself. It is not surprising it ranks next to bitcoin in popularity and demand. I would want to own a few of this too, when I can afford it. I am so thankful that the Compumatrix Blog is revived, anyone who reads through the topics and the comments will always learn something new about cryptocurrency and its future.

  19. This is a nice succinct article on and differences between these two cryptocurrencies. Many people are trying to get their heads around this, so I will added this to their recommended reading. Smart contracts have such potential as it would be a great way to guarantee proportional payments directly to a number of individuals in a project. For instance, a movie project could pay all involved there portion of due revenue directly as sales are made. Ether also seems to have the ability to be used as a money asset like BTC, so it’s hard to say which will lead in the future, but BTC is set up very good to be an alternative to endless printing of dollars.

  20. This is a very informative blog. I am grateful for the information share here ,the insight has already gotten me “Ready” to invest in ETH. This asset appears to be just as important to the future of Digital Currency as Bitcoin and Blockchain. If i read and comprehend correctly I would say ETH is as important to Digital Currency as Brick is to a Builder.

  21. Hi Gail!
    Thank you for helping us to understand more about the Crypto world! At the speed that the Universe is moving, it is very important that we are more and more informed about the news!
    I wish everyone a great Sunday! Hugs!

  22. awesome read with a tremendous amount of viable and usable information — I am my second reading and then reading the replies with so much more good info in this thread it is very helpful to me as I try and learn and get back into the world of Crypto financials and Blockchain and the different types of available coins or avenues to utilize — and knowing differences between types is major help– thank you

  23. I am getting myself ready also for furthering my online presence like “goodgirl” and I am also trying to become less dependent on others here to further and make my own little compu biz successful and special thank you to those who have helped me again — I know there are differences twix the online currencies but I believe by studying each you can see similarities and use that info for your own success —

  24. Very interesting read on the difference of the two. Educational to be able to get a better grasp on how BTC and ETH work and helps get a perspective on the investment side of both.

  25. came back again and read through Posting and the replies and there is so much Good to be gleaned from this Blog posting and the replies — I agree totally that we as Business People really do Need to Know the differences but also the triggers to what makes both work so we can be ready to move if or when we need too — wisdom is what is needed and advanced Focus will be extremely helpful as we move forward — I believe —

  26. A very clear blogpost about the differences between Bitcoin and Etheruem. Thank you Gail. I learned some things that I didn’t know before. In other forums I read that a lot of experts see an upward potential of Ethereum price. Maybe I start adding them to my wallet.

  27. This definitely helps me further differentiate the differences and similarities between the two currencies, Bitcoin and Ethereum. I am very new to this space, so I am trying to wrap my head around all the concepts, but for anyone like me who is trying to understand at a deeper level how BTC and ETH differ and are alike; I recommend watching interviews of the creator of ETH, Vitalik Buterin. I recently did this and it helped me think in the way Buterin does about his creation of ETH. Two years ago, he said in an HBO interview that he was inspired by the creation of BTC and wanted to add onto it. Buterin did this by creating ETH, which allows for smart contracts that could change the way businesses pay their employees and hold people accountable for money transactions.

  28. BTC is the foundation of all cryptocurrencies. BTC is how cryptocurrencies started. ETH is what I consider a BTC 2.0. Vitalik Buterin, ETH’s founder, took the concepts of BTC and added “new features” to create an altcoin called ETH. ETH is BTC 2.0 because it includes smart contracts, which could essentially change the way businesses do payroll every month.

  29. Very nice terse succinct article about the BTC and ETH ,their differences and functionalities.Got to know that BTC has a Cap of 21 Million and ETH cap increases every year.The speed difference in which these two work may be an advantage to ETH in the long term and may in time overtake the usage for all transaction in the long run. Have read it afew times and will again . thanks

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