Do you know the difference between Bitcoin and Ethereum?
Anyone considering investing in cryptocurrencies or anyone who has had their interest peaked by recent surges in their value should know the difference between Bitcoin and Ethereum. Bitcoin has been on the scene since 2009, being the first crypto to come to life and the most successful. Ethereum is a much later development and was introduced around six years later than Bitcoin. Together they make up the top two spots in most popular and valued cryptos – but that doesn’t make them the same!
First, What Is Bitcoin?
Bitcoin is a digital coin that operates from a decentralised and transparent blockchain. Peer-to-peer payments are recorded on the blockchain and make global payments quicker, safer and cheaper. To do this the user would need to have a reliable wallet such as the Luno Bitcoin wallet and use a Bitcoin exchange.
Bitcoin was followed up by an array of cryptocurrencies, all of them trying to improve on the way Bitcoin worked. One way that they developed on Bitcoin’s success was making them faster, which is something that Ethereum has achieved. While Bitcoin transactions can be settled in minutes, it takes Ethereum counterparts just seconds to execute. However, this is far from what makes them different.
What Makes Bitcoin and Ethereum Different?
Ethereum is also built from a blockchain, but its blockchain is used for more than monetary transfers. It is also used to transfer data or computer code, making it useful for business processes and more. The system uses Ether, which is purchased and sold on by businesses or governments to use Ethereum’s resources and allow them to run applications.
Smart contracts are the most popular of these applications. Overall, they allow businesses to automate their agreements post the completion of obligations. One possible example of using smart contracts would be to automate the process of paying a vendor one they had met their obligations within a contract.
Should You Invest in Bitcoin or Ethereum?
Bitcoin can sometimes be labelled as a risky investment, especially while a large segment of the industry remains unregulated. However, it is not too late to invest in Bitcoin successfully. More businesses are lined up to start using it as it becomes regulated and taxation rules are clarified. This means the real crypto boom may not have even happened yet – but it could be close. Ethereum may also be a worthwhile investment in this regard because Ethereum does not have a cap, unlike Bitcoin. Overall, it may be best to diversify your crypto investments by looking at both Bitcoin and Ethereum.
Final (and First) Thoughts!
Whenever you do decide to invest in these cryptocurrency powerhouses, remember they are not the same and their different uses should be considered before making your investment. Which industries are profiting on their functions and how will this affect your potential return on investment? Just one of the many questions to ask yourself before investing.