Both are decentralized, meaning there’s no central authority governing the networks.
Blockchain, the distributed ledger technology we evaluated in the previous article, underpins both networks. Each network has its own currency, native to their respective chains.
They are both available for trading on most exchanges.
These are just the major similarities between the two leading cryptocurrencies. Now, let’s look at their differences.
A High-Level Understanding of Bitcoin and Ethereum
Bitcoin was designed to be a secure peer-to-peer electronic cash system that would allow payments to be sent from one party to another without financial intermediaries or a central authority. It’s important to note that Bitcoin is largely used as a store of value. As the first cryptocurrency, Bitcoin laid the groundwork for today’s cryptocurrency ecosystem to flourish. Just five years ago, Bitcoin made up 87% of the entire cryptocurrency market. Today, it stands at just 42% with the emergence of alternative Layer 1 blockchains like Ethereum, Solana, Avalanche, Fantom, etc., which points to healthy competition within the market.
Ethereum, like Bitcoin, is used as a store of value, but it’s also used to run and interact with apps built on top of it. Ether enables the deployment of smart contracts and decentralized applications (DApps) to be built and run on its network. Developers can build on top of it using a programming language called Solidity and integrate with other DApps. Ethereum and the DApps built on its network have wide-ranging use cases including yield farming, derivatives trading, DAOs, NFT marketplaces, borrowing and lending, synthetic and prediction markets.
In recent years Ethereum’s market cap has been closing the gap on Bitcoin’s. The possibility of a swap in market cap position between the two is closely monitored within the industry – many analysts use the ETH/BTC ratio. This event is commonly referred to as “the flippening.”
Now You Know
Jumping off from this high-level understanding of Bitcoin and Ethereum, it’s time to apply the framework for evaluating blockchain technology discussed in the previous article. In the future articles, we’ll be breaking down how Bitcoin and Ethereum stack up to one another on the basis of decentralization, transparency, computational logic, trust, and security.
The post appeared first on Bittrex.com - The Next Generation Crypto-Currency Exchange.
