Ethereum, the currency used to complete transactions on the Ethereum network (learn more), and Bitcoin have many fundamental similarities. Both are cryptocurrencies that have their roots in blockchain technology. This means that independent computers around the world voluntarily participate to manage a list of transactions, which allows the history of each currency to be verified and confirmed.
Both are virtual currencies that are actively used for services, contracts, and as a store of value. Its popularity has drawn the attention of both news outlets and traders hoping to better understand how blockchain technology can change the monetary landscape over time. This is where most of the similarities end. Their decentralized nature is a big change from traditional currencies, but they are not accepted everywhere. While Bitcoin is more widely accepted and considered an international digital currency, Ether is only accepted for transactions by digital applications (Daps) running on the Ethereum network.
Key differences between Ether and Bitcoin
Both Ether and Bitcoin are cryptocurrencies that are based on blockchain technology. Other than that, these coins are quite different and have different uses.
Bitcoin is the vast majority’s thought process of when they hear the words ‘blockchain’ or ‘digital money’. It was the first use case for blockchain technology and reimagine what a currency could be if it weren’t tie to a specific central bank or country.
Its technology also makes it difficult to steal or manipulate, since all machines on the decentralized network must agree on the terms of any transaction. This primarily means confirming that the beneficiary is the rightful owner of the coin. The currency can be trad on the open market or an individual can land computing power to the network (mining) and be pay in Bitcoin for using their machine (harvesting).
The maximum number of Bitcoins that can be produce is 21 million, which introduces scarcity in the market. To prevent the supply of Bitcoin from running out, halving events are build into the protocol to pay fewer Bitcoins to miners after reaching a set harvest milestone. Traders often keep an eye on these developments as some have created market volatility. While others have not created significant market movement.
Not long after the send-off of Bitcoin, Ethereum took a gander at the way blockchain innovation was being utilized and envision how it very well may be utilized past cash. Beginning with Smart Contracts and Decentralize Applications (Dapps), Ethereum before long understand that they require single money for their foundation that could rely upon as indicated by their conventions. This caused the Ethereum Foundation — a body that oversees Ethereum activity but cannot independently change protocols — to create Ether.
The mining process for Ether is the same as for Bitcoin. But unlike Bitcoin, Ethereum miners may charge a fee for confirming a transaction. Also, there is no limit to the amount of Ether that can be issue. This removed the perceived scarcity that may be a factor in Bitcoins higher valuation.
Ether is to recognize currency that can be used throughout the Ethereum network, but is not widely accept elsewhere. In the same vein, Bitcoin cannot be use as a recognized currency on the Ethereum platform.
Will Ethereum Overtake Bitcoin?
Both Bitcoin and Ether, from Ethereum, have many factors that influence their valuations.
To speculate on the valuations of cryptocurrencies like Ether and Bitcoin, traders need to ask key questions like:
- How is each currency in use?
- Widely is it currently accept? How widely accepted will it be in the future?
- What can historical data tell us about this instrument?
While Bitcoin has traditionally been price higher than Ether. It is important to note that the cryptocurrency market has been very volatile thus far and will likely continue to be. Unlike centrally regulated stocks, commodities, or even currencies; the underlying value of a cryptocurrency is unclear.