When first getting started in the cryptocurrency industry, professionals encounter a new set of definitions and jargon. The main goal they all set is to compare traditional money and cryptocurrency. Whether you’re coming from a regulatory, legal, financial organization or simply seeking a career or an investment in the crypto industry, it’s certain that you have heard of Bitcoin and Ethereum.
Many people believe that Bitcoin and Ethereum are competitors only because the two are the most extensively used blockchains. Blockchain technology is used by both Bitcoin and Ethereum to establish a value layer for the internet. Both systems are powered and protected by a decentralized network of individuals (miners) all over the world who are compensated for contributing to the network’s security.
Although Bitcoin’s technology is confined to payments and scarcity, Ethereum advances blockchain technology by embedding Smart Contracts and Decentralized Applications (DApps) into the value layer, modernizing many traditional financial processes and implementing newer, more efficient elements.
Bitcoin inspired the invention of Ethereum, but with the addition of smart contracts, Ethereum improved upon Bitcoin according to its faithful. While smart contracts and DApps are familiar to Bitcoin, Ethereum is the blockchain of choice among users for both. To better understand what makes both applications similar and greatly unique, let’s start with a few definitions.
What is Bitcoin?
Bitcoin is a digital currency that runs independently of any central authority or government monitoring. It is a decentralized digital currency that may be transmitted from user to user on the peer-to-peer Bitcoin network without the use of an intermediary. Bitcoins are produced as a result of the mining process. They may be exchanged for a variety of other currencies, goods, and services around the world and online.
Mining is the process of keeping the Bitcoin network up and running, as well as creating new tokens. To do that, members of a blockchain network act as contributors to that network. They contribute with computer power to solve complex functions and record data to a blockchain in return for a reward in cryptocurrency. Miners combine large groups of transactions into blocks by performing a cryptographic process. The first miner to solve the next block announces it to the network, and it is added to a public ledger called the blockchain if it is verified accurately.
A limit of 21 million coins is built into the Bitcoin program. There will never be more Bitcoins than that. By 2140, the total quantity of coins in circulation is predicted to reach. Every four years, the difficulty of mining Bitcoin scales up based on certain factors eventually lowering the size of the rewards.
The basic goal of Bitcoin was to establish itself as a viable alternative to country-backed fiat currencies. El Salvador may have been the first market for Bitcoin to achieve this goal by accepting it as legal tender. A number of other governments and locals are using cryptocurrency to an extent
What is Ethereum?
When Bitcoin was first introduced in 2009, it piqued the curiosity of a large number of individuals. Vitalik Buterin, a programmer who co-founded Ethereum, was one of them, with Ethereum’s crowdfunding completed in 2014.
Ethereum is a blockchain-based decentralized program with smart contract capabilities. It is an open-source platform that is primarily used to support Ether, the world’s second-largest cryptocurrency.
Ethereum’s programming language, Solidity, is used to build smart contracts that may be implemented on the blockchain. Developers picked Ethereum’s blockchain to construct their apps because it is extremely decentralized and hence less vulnerable to censorship and other types of centralized malice.
Smart contracts are simply computer programs that bind when specific conditions are met and are stored on a blockchain. They automate the execution of a contract so that all parties may be confident in the outcome immediately away, without the need for middlemen or wasted time. They can also automate a workflow by initiating the next phase whenever certain conditions are met.
Why Bitcoin And Ethereum Are Not The Same
Bitcoin was designed to accomplish the main purpose: to allow individuals to send money to one another without the use of a central bank. Ethereum was created as a general-purpose blockchain that can perform a wide range of operations thanks to its smart contracts capabilities and transaction verification speed. As a result, rather than functioning exclusively as a store of wealth, Ethereum is effectively versatile.
Ethereum’s blockchain has helped produce applications in Decentralized Finance (DeFi), smart contracts, and Non-Fungible Tokens (NFTs). The total number of DApps is over 3,000 and the value of some DApp smart contracts is over several billion dollars according to DApprader.com.
DApps are the second innovative reason why Bitcoin is different from Ethereum. A DApp is similar to any other piece of software you would use. It might be a website or a smartphone app. It differs from a standard app in that it is created on a decentralized network such as Ethereum. Below, we’ll take a look at some of the most popular DApps established on the Ethereum platform.
DAppradar.com: top Ethereum DApps based on number of users, and incoming value.
DApps are divided into 17 categories: exchanges, games, finance, gambling, development, storage, high-risk, wallet, governance, property, identity, media, social, security, energy, insurance, and health. A deep dive into the modern definition of DApps and the rate of growth discovered that virtual currency asset providers (VASPs) use DApps the most.
Popularity of DApps in “A first look at blockchain-based decentralized applications” research paper.
New applications replace traditional procedures and open new venues for easier, more connected finance. In the end, More financial organizations are embracing Bitcoin as a new form of payment, while the Ethereum network is becoming more extensively utilized and supported.
The growing popularity of Bitcoin and cryptocurrency has made it safe to say that the impact of blockchain technology and crypto on traditional finance is real. In just over 10 years, the world has turned from rejecting crypto in finance to changing the way it’s done. As a professional, you don’t have to fully understand blockchain technology and Bitcoin to integrate it within your career.
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Written By: Omar Marzouk
Writer, Content marketing at Blockchain Group
