Bitcoin and Ethereum are the two largest cryptocurrencies in circulation and are, by far, the most popular amongst investors. At the time of writing, Bitcoin has a market cap of well over $628 billion and a circulating supply of over 18 million BTC. Ethereum, on the other hand, has a market cap of over $248 billion and a circulating supply of over 116 million ETH.
Both Bitcoin and Ethereum share many similarities as they are each digital currencies that are traded through online crypto exchanges and stored in various types of cryptocurrency wallets. Both Bitcoin and Ethereum tokens are decentralized in nature which means that they are not issued or regulated by any government authority or central bank. Moreover, both these cryptocurrencies employ distributed ledger technology commonly referred to as blockchain.
Differences between Bitcoin and Ethereum
While the similarities between Bitcoin and Ethereum are striking, there are key differences between these two giants in the crypto market that we must highlight. The differences between the two is mainly centred on the purpose and overall goals of each project.
With Bitcoin, it envisages itself as a store of wealth that has ambitions to become a globally adopted currency that will ultimately improve or replace traditional money. With Ethereum, on the other hand, it is developed as an open-source and decentralized platform from which smart contracts and decentralized apps can run.
In terms of supply, Bitcoin has a cap of 21 million BTC. This means that the maximum number of Bitcoin that can ever be mined and circulated is 21 million. It currently has over 18 million BTC in circulation. With Ethereum, conversely, it is not capped to any specific quantity. It currently has a circulating supply of over 116 million ETH and plans to continue in that trajectory as long as there is a demand from investors.
Bitcoin and Ethereum are produced from a practice called mining which requires a lot of energy capacity. The disproportionate electricity consumption required for crypto mining has attracted plenty of negative attention from authorities around the world. Ethereum is in the process of shifting its production methods to a proof-of-stake model that aims to produce Ethereum in a more environmentally-friendly manner as opposed to traditional crypto mining that is viewed as harmful to the environment.
In terms of transaction fees, that is completely optional when using Bitcoin. A user can choose to pay the miner more money in order for that miner to give that user’s transaction more attention. That specific transaction will still go through, eventually, even if a user opts not to pay any fee. With Ethereum, on the other hand, a specific amount of ETH must be paid in order for the Ethereum transaction to be successful. Typically, Ethereum users will offer Ether that gets converted to a unit referred to as gas. This gas then facilitates the computation which enables that transaction to be added to the blockchain.
When it comes to Bitcoin, it takes approximately 10 minutes to add a block to the blockchain. This is remarkably slower than Ethereum which takes under 15 seconds to add a block to the blockchain – Incredible!
In terms of security, both these cryptocurrencies use hashing algorithms to maintain privacy and strengthen security. With Bitcoin, it uses a hashing algorithm called SHA-256 while Ethereum uses a cryptographic algorithm referred to as Ethash.
For those looking to invest in the crypto market, you should certainly consider large-cap cryptocurrencies like Bitcoin and Ethereum that are well established and more resilient in times of volatility. You must bear in mind that the crypto market is filled with uncertainty, so you should only invest money that you are willing to part with.
While our team at Wisly are highly skilled, we are not financial advisors and do not make cryptocurrency investment recommendations, advice and/or guidance. Make sure to do enough research to ascertain the best investments to make on the crypto market. We hope that our guide on the differences between Bitcoin and Ethereum will help you with your decision. We recommend using established platforms like Wisly to effectively track and analyse your crypto investments. Good Luck!
Any data, text or other content on this page is provided as general market information and not as investment advice. Past performance is not necessarily an indicator of future results.