Bitcoin vs Ethereum is a very requested topic that we want to discuss in the next sections. There are many things to take into consideration about these virtual currencies and how they work. Bitcoin vs Ethereum is a discussion that focuses on price, but we will also focus on functionalities, how they work and more.
In the following sections of this Bitcoin vs Ethereum comparison guide, we will get into the details of each of these virtual currencies. Moreover, we will compare them and offer you an overview of their main differences and similarities. Finally, we will get into the price details of Bitcoin vs Ethereum and we will also compare their price charts.
What is Bitcoin?
Bitcoin (BTC) is the largest and oldest cryptocurrency in the market. This digital asset was released in 2009 by Satoshi Nakamoto, the pseudonymous person or group of people behind the idea of BTC.
Over the course of the years, Bitcoin was able to become a recognized alternative to traditional financial systems and central banks. Bitcoin is a cryptocurrency that is digitally scarce and that is fully decentralized, owned by the community through a network of nodes.
There are 21 million Bitcoins that will ever be mined. That means that investors and retail users would only be able to rely on 21 million BTC in the coming years. There will be no more BTC issued, and this is something that has been programmed to be in that way.
Bitcoin relies on a technology called the blockchain. This makes it possible for miners to process blocks (full of transactions) and make sure that they get stored on the blockchain. These transactions cannot be reverted and they are among the most secure transactions in the world.
Additionally, there is no centralized party controlling Bitcoin. Thanks to nodes that run a copy of the blockchain, it is possible for Bitcoin to be resistant to possible attacks from governments or malicious parties. If a node is attacked or goes down, there are many other nodes around the world that will be able to replace it.
Therefore, even if a government decides to shut nodes down, all other countries would continue to have nodes operating. Despite that, such an attack is highly unlikely as running a node does not require large amounts of energy, hardware devices or technical knowledge. Hence, Bitcoin will always be running.
Another thing to take into consideration about Bitcoin is that due to the fact that it is decentralized and has a total supply of 21 million, it is currently working as an alternative to the traditional financial system. Several companies such as Tesla, MicroStrategy and MassMutual have already added Bitcoin to their balance sheets. This shows that there is a large demand for Bitcoin in the cryptocurrency market.
Hence, Bitcoin can be used in many different ways and it is also a great option to send and receive funds across borders. Thanks to the fact that transactions can cost below $1, sending and receiving funds across borders is something definitely possible and that people and companies are already doing.
What is Ethereum?
Let’s now move to Ethereum (ETH). Ethereum is the second-largest cryptocurrency in the world. It was created by a group of developers the most prominent being Vitalik Buterin. Ethereum is known for being a second generation blockchain project compared to those projects such as Bitcoin or Litecoin (LTC) that were created years before Ethereum.
Compared to Bitcoin, Ethereum added programmability to blockchain money. That means that thanks to the characteristics of the Ethereum blockchain, it is now possible for projects and developers to create new solutions and services to expand financial solutions.
In recent years, developers created new and unique solutions on top of Ethereum that allowed the virtual currency to become one of the largest in the world. The Decentralized Finance (DeFi) market and its expansion would not have been possible without Ethereum.
It is possible for investors from all over the world to get access to financial solutions without having to rely on centralized parties such as banks or traditional financial institutions. Therefore, thanks to all the new projects that have been built on top of Ethereum, there has been a large expansion of new solutions relying on blockchain technology.
At the same time, thanks to the technological advancements offered by Ethereum, it was possible to create an economy around non-fungible tokens – also known as NFTs. Despite the fact that NFTs have been popularized by the community as a silly way to make (and lose) money, NFTs could have many different real-world applications to tokenize goods and assets.
Thanks to this position that Ethereum was able to build in the cryptocurrency market, it became the second-largest virtual currency in the world. Nowadays, it is possible to use Ethereum, not for speculation but also to get access to the DeFi market.
It is also worth pointing out that thanks to Ethereum allowing projects to release tokens on top of it (through ERC-20 token standards), the 2017 bull run saw a large number of Initial Coin Offerings (ICOs) being created. Despite the fact that most Initial Coin Offerings and the tokens launched ended up disappearing, Ethereum allowed for the creation of new projects and solutions that could be implemented in the cryptocurrency market.
Bitcoin vs Ethereum 2022
It is now time to have a look at Bitcoin vs Ethereum and their differences and similarities. There are many things that we should take into consideration. This is just for educational purposes only and will show you which are some of the most distinguished features of both of these virtual currencies.
Bitcoin vs Ethereum have some differences that are worth mentioning. As you have already seen, Ethereum offers better solutions than Bitcoin in terms of programmable money. Indeed, Ethereum allows projects and crypto companies to release new solutions on top of its network, something that Bitcoin is not able to offer to the crypto community.
When it comes to the way in which these two virtual currencies work, Ethereum is transitioning towards a Proof of Stake (PoS) consensus algorithm. That means that there is an intention from the community to move away from Proof of work (PoW) as on the Bitcoin network. The main claim is that in order for Ethereum to be able to offer efficient DeFi solutions to crypto projects, it needs to become more efficient.
Another difference between Bitcoin vs Ethereum is related to the maximum supply of coins. We know that there will only be 21 million BTC coins in existence. But there is no cap on the number of ETH that will be created. Despite that, Ethereum developers and the community are working in order to reduce the number of ETH created in the future.
Bitcoin transactions tend to take between 10 to 20 minutes to be processed depending on the number of confirmations and the congestion in the network. Ethereum transactions should be processed in 5 minutes under light traffic conditions. Nonetheless, there have been large congestions on the Ethereum network pushing fees very high (over $50), compared to Bitcoin transactions below $1.
Therefore, Bitcoin blocks have an average processing time of 10 minutes compared to Ethereum’s blocks which have an average processing time of 12 to 14 seconds. As you can see, there are some differences between Bitcoin vs Ethereum. But there are also some similarities that are worth considering.
Bitcoin vs Ethereum have both a Proof of Work consensus algorithm. This is despite the fact that Ethereum is now transitioning to a proof of stake blockchain network. Both of these virtual currencies can be used to send and receive money across borders. There are no limits to that. Hence, if you want to use ETH rather than Bitcoin you can easily do so.
Another thing that is worth pointing out is that Ethereum and Bitcoin run both on top of blockchain technology. This is something that they have in common with other digital currencies as well. You can also store these two digital assets in the same wallet if the wallet that you use supports both blockchains.
Being decentralized is another thing that Bitcoin and Ethereum have in common. There is no centralized authority controlling these networks. That being said, Ethereum might be somehow more centralized than Bitcoin when it comes to node runners. There is a larger number of nodes operating on top of Bitcoin than on Ethereum.
Pros and Cons of Bitcoin
Let’s now talk about the pros and cons of Bitcoin and how there are many different benefits but also negative things about the largest cryptocurrency in the world.
- It has been in the market for over 10 years without a single successful attack
- Bitcoin is decentralized and running a node is accessible to anyone
- There are no leaders or figures leading on Bitcoin, the community plays a key role
- All changes must be reached through an overwhelming consensus
- Bitcoin has proven to be permissionless, trustless and decentralized compared to other assets
- There will never be more than 21 million BTC in existence
- The Bitcoin network does not need sponsors, it runs with its own rules that have been in place for over a decade
- Miners have proven to be quite reliable to attacks (thanks to Bitcoin’s difficulty adjustment)
- Bitcoin is the largest and most accepted digital currency worldwide
- Companies have already added Bitcoin to their balance sheets
- People rely on Bitcoin to store value and avoid their money being confiscated by governments
- It might not be the fastest and cheapest digital currency (but there are good reasons behind that)
- Bitcoin is not programmable as Ethereum
Pros and Cons of Ethereum
Let’s not move to the pros and cons of Ethereum and how they can compare to those of Bitcoin. As you might expect, there are many positive things about ETH.
- Ethereum is among the largest cryptocurrencies in the world
- It has been operative in the market for over 5 years
- It has a large community that believes in this project
- Ethereum allowed for new projects and solutions to be released to the cryptocurrency market
- Thanks to Ethereum, ICOs, the DeFi market and NFTs are now a reality
- Projects can develop new solutions and release tokens on top of Ethereum
- Despite being more centralized than Bitcoin it is relatively decentralized compared to other projects and altcoins
- In its early days, it was faster and cheaper than Bitcoin
- Users can rely on Ethereum to send and receive permissionless transactions
- People in some countries can get access to GPU mining and make a living from it (especially in developing countries)
- There are some projects released on top of Ethereum that have harmed the cryptocurrency ecosystem
- The network became quite congested in recent years due to a large number of users that it onboarded
- There is no cap on the total supply of ETH that could be created
Bitcoin in the Cryptocurrency Market
Bitcoin has experienced massive growth over the last few years. This is something that we can see when we will compare the Bitcoin vs Ethereum chart. Bitcoin moved from below $1 in 2010 to over $69,000 in 2021.
In 10 years, there have also been bull and bear markets. Hence, the growth was not linear. Bitcoin experienced different periods in which there was a large adoption of this virtual currency while there were some other periods in which the coin did not generate a lot of interest.
Nowadays, Bitcoin continues to be the leader in the cryptocurrency market. This is despite the fact that there are thousands of new projects that were not on the market 10 years ago. Hence, this shows that Bitcoin remains a reliable and useful virtual currency compared to others. Bitcoin dominance is the largest in the crypto space and there has been no other coin that was able to surpass Bitcoin’s dominance.
Another important thing to note about Bitcoin is that cryptocurrency is that when its price goes higher, other virtual currencies follow. This shows that Bitcoin remains a clear leader in the space and that other altcoins simply follow the general trend of the market.
Ethereum in the Cryptocurrency Market
We can also see that Ethereum has been appreciating in value since it was released to the market more than 5 years ago. The digital currency reached an all-time high of $4,878, according to CoinGecko on November 10th, 2021.
In the same way as Bitcoin, Ethereum has also experienced different periods in which the price of the asset moved higher and other periods in which its price moved lower. There is also a correlation between Ethereum and the whole crypto market, showing that flows of money enter the market at the same time.
In 2022, Ethereum has been moving lower from above $4,000 per coin to below $2,000 a few hours ago. This is a trend that can be seen in the whole cryptocurrency market and on many other altcoins rather than just on Ethereum.
In just a very short period of time, Ethereum became the second-largest cryptocurrency in terms of market capitalization. This was thanks to the possibilities that it offered to different projects in the cryptocurrency space and due to its unique features.