Bitcoin (BTC) and Ethereum (ETH) are the titans of the crypto space. But even though they are the most significant projects in the space, their primary purposes, as well as the technology backing each one of them, are fairly remote.
In this guide, we take a look at the differences and similarities between these crypto giants so you can make an informed investment decision.
Bitcoin Key Highlights
- October 31, 2008: The Bitcoin whitepaper was published
- January 3, 2009: Bitcoin’s Genesis Block was mined
- January 12, 2009: The first Bitcoin transaction in which Bitcoin founder, Satoshi Nakamoto sent 50 BTC to Hal Finney
- October 12, 2009: The first known sale of Bitcoin in exchange for fiat. At that time 5,050 BTC was sold for $5.02
- November 6, 2010: The market cap for Bitcoin exceeded $1 million USD
- October 2011: The first Bitcoin fork which resulted in the creation of Litecoin
- August 1, 2017: Bitcoin experiences another fork to form Bitcoin Cash
- October 2017: CoinFalcon was launched
- December 2017: Bitcoin futures contracts were listed on the Chicago Mercantile Exchange (CME) and CBOE Global Markets (CBOE) for the first time ever. In the same period, Bitcoin reached its all-time high price
- November 15, 2018: Bitcoin’s market cap fell below $100 billion
- January 2019: Bitcoin price was below $4000
- February 24, 2019: Bitcoin price broke the $4k mark to close at $4,199
- June 22, 2019: Bitcoin broke the $10k mark, closing at $10,738
- August 5, 2019: Bitcoin breaks the $11.5k mark, trading around the $11,700 to $12,300 range
Ethereum Key Highlights
- November 2013: Ethereum founder, Vitalik Buterin published the Ethereum whitepaper
- January 2014: The Ethereum platform development was publicly announced with its original development team consisting of Vitalik Buterin, Charles Hoskinson, Mihai Alisie, and Anthony Di Iorio
- August 2014: Ethereum ends its ICO having raised $18.4 million.
- July 30th, 2015: The Ethereum network went live with 72 million Ethereum premined
- October 25, 2016: The Ethereum protocol is forked to form Ethereum Classic
- October 16, 2017: The Metropolis Byzantium hard fork update occurs
- January 13, 2018: Ethereum recorded its all-time high, closing at $1,432.88
- February 28, 2019: The hard fork update for Metropolis Constantinople happens.
Major Differences Between Bitcoin and Ethereum
Before diving into the differences, let’s take a look at the similarities. For one, both Bitcoin and Ethereum are decentralized entities based on blockchain technology. They are both powered by their native coin BTC and ETH, and more importantly, these coins can be used outside their respective ecosystems as an exchange of value.
Now on to the differences, which we look at based on the following categories:
- Supply Cap
Bitcoin vs. Ethereum: Purpose
Bitcoin came about after the 2008 financial crisis so the public’s faith in banks and financial institutions was at an all-time low. Its purpose was and still is, to be a viable alternative to regular money while empowering people to have full control over their finances. As a global decentralized financial system, Bitcoin is a medium of payment transactions with the capability of becoming a digital store-of-value. Put simply, Bitcoin lets you control your own money, sending it anywhere at any time without involving any third parties like banks or any other payment processors. The fees are also consistent so it won't matter whether you’re sending it to someone beside you or on the other side of the world.
Ethereum, on the other hand, is designed as a platform that facilitates peer-to-peer contracts and applications using its own currency vehicle. Ethereum founder, Vitalik Buterin, believed that blockchain technology could be leveraged to allow developers can create real-world applications on top of it. This is done by creating smart contracts and executing them on top of Ethereum. Ether, the platform’s currency, was primarily designed to facilitate and monetize the working of Ethereum so that developers can build and run decentralized applications, also known as dApps.
Bitcoin vs. Ethereum: Mining
Mining works a bit differently for these crypto rivals. Sure, blockchain technology is at the core of both Bitcoin and Ethereum, however, their consensus algorithms are in no way similar. With each digital asset having its own distinct consensus algorithm, the way they verify the validity of the information being added to the ledger is different. Bitcoin mining is based on the Proof of Work (PoW) algorithm in which the probability of mining a block is based on the amount of computational work done. The mining reward is then given to the first miner who is able to solve a complex cryptographic puzzle of each block.
On the flip side, Ethereum mining is based on the Proof of Stake (PoS) algorithm. In this concept, the probability of validating a new block is determined by how large of a stake you hold, or, in other words – how many coins you have. Unlike with PoW, block validators don't receive a block reward; instead, they collect network fees as their reward, which in the case of Ethereum is called Gas. To get a clearer picture of this reward, think of Ethereum like a car engine and Gas is like the gasoline needed to run the engine. Executing a smart contract command is like covering a certain distance on a trip, which requires a certain amount of Gas to cover.
Another thing to note is that Ethereum features a fairly faster amount of time necessary to validate a block. This is known as block time. Bitcoin’s average block time currently is a little over eight minutes, while Ethereum’s block time is around 17 - 20 seconds.
Bitcoin vs. Ethereum: Supply Cap
Bitcoin has a fixed supply of 21,000,000 BTC, which makes a deflationary currency. According to Bitcoin advocates, this fixed supply means that banks are kept in check and do not have to power to arbitrarily issue fiduciary media. It also seems likely that this supply cap may cause prices of the cryptocurrency to continue to increase. At the moment, the circulating supply of Bitcoin stands at nearly 18 million BTC, which means mining will only get more competitive.
Unlike Bitcoin, Ethereum tokens have no capped supply, at least for the time being. So much like fiat currency, these tokens can be subject to inflationary trends. At the moment, the circulating supply of Ethereum stands at a little over 107 million ETH.
Bitcoin vs. Ethereum: Charts
2018 was mostly a bearish year for Bitcoin, but it has since made a stunning turnaround this 2019. In May, the price of Bitcoin jumped by almost 60%, marking its most impressive monthly performance since December 2017. On 16 June, BTC hit $9,311. At the time of writing, BTC was trading between the $10,400 - $10,600 price range. Ethereum has also been making constant progress and performing quite well having reached the $279 mark on 16 June. At the time of writing, ETH was trading between the $200 - $300 price range.
Which One to Choose
It can be rather difficult to invest in one over the other as both Bitcoin and Ethereum offer many advantages. As with any investment, you should make sure to arm yourself with as much knowledge as possible before making any financial commitments. In the last two years, the value of these cryptocurrencies have experienced significant ups and downs, but there is no denying their immense potential. They both have a strong fundamental basis, a considerably large fan base, and a reputation of the most advanced blockchains available today. As such, if you’re looking for relatively stable crypto assets to invest in, Bitcoin and Ethereum are definitely worth keeping an eye on.
You can buy and sell both BTC and ETH here on CoinFalcon. What’s more, you can now use your credit/debit card to purchase cryptocurrencies. This is in addition to previous payment options like bank transfers, Skrill and Neteller payments, and other cryptocurrencies. So what are you waiting for? Get the future of money in your hands today!