Bitcoin and Ethereum are the two main cryptocurrencies that have never backed down. They are the indicators of the entire market. Although they are next to each other in the ranking, they were created for absolutely different tasks. Let’s explore their functions in this article.
Main common features
Talking about similar features, we can dwell only on the most general fundamental points, since Ethereum and Bitcoin are very different. So, what do these ecosystems have in common:
- Both coins can be used as a means of payment for goods or services. They can be transferred from sender to recipient. To some extent, they replace the standard banking system. Besides, these digital coins are very liquid. They can be easily sold in a couple of seconds, and there is always a demand for them.
- Both are based on blockchain technology, in which all blocks with transactions are inextricably linked into a single chain. They allow working with your own tokens without revealing the identity of the parties. It is done to maintain the anonymity of users. Both of these coins are only pseudo-anonymous since you can still find out the identity of the owner of the ETH and BTC wallet if you wish.
- Both have a decentralized transaction confirmation mechanism. They are independent of the failure of one or more nodes. None of the government regulators control them.
- Both have a Proof-Of-Works mining algorithm that requires miners to perform complex arithmetic calculations on their hardware. Ethereum has begun a process of a gradual transition to the Proof-Of-Stake protocol. It is the confirmation of ownership. However, it is still unknown when the system will completely switch to PoS. Vitalik Buterin’s team is actively working on the zero and first phases of Ethereum 2.0, but there are no deadlines yet.
- Both cryptocurrencies are very volatile (as well as the entire digital coin market). At times, their rate can change within a few days or even hours.
Which of them is more profitable to mine?
The approaches to mining these cryptocurrencies differ significantly. Bitcoin, based on the SHA-256 algorithm, today can only be mined on powerful ASIC devices. These are special devices aimed exclusively at one task – calculating hashes of cryptocurrency blocks. Since the price of the coin is very high, there is a constant influx of large miners. The complexity of the network is steadily growing, which leads to the rapid obsolescence of the equipment and loss of possible profits.
The usage of ASICs has almost completely supplanted ordinary miners from bitcoin mining. Since 2017, mining BTC on video adapters has been unprofitable. This network was notable for its availability to everyone at the beginning of its existence. It was profitable to mine even on simple central processors. Now the situation has drastically changed.
Ethereum mining is still profitable on a few good graphics cards, but ASIC miner manufacturers are trying to get there too. So far, the system uses the Ethash mining algorithm and resists this. It is unclear how long this battle will last. The complexity of the network is increasing, and single mining is becoming less common. Most miners work in pools since mining ETH solo doesn’t make sense.
Bitcoin advantages
It is the very first, most expensive, and most talked-about digital currency in the world. To date, the rate of 1 BTC to ETH is 32.13. People made their fortunes by changing quotes. Many large investors and businessmen have invested in this coin. To a certain extent, this approach is what is keeping it from collapsing even in tough times.
It is convenient to work with Bitcoin, as it is supported by almost all cryptocurrency exchanges and trading platforms. It remains the main competitor to traditional currencies.
There is already a wide network of BTC ATMs in the world. The coin is being introduced into payment systems and is gradually entering real life. Many offline services, shops, and restaurants sell goods and services for BTC.
The Bitcoin program code has well-thought-out inflation protection. the number of coins that can be created is fixed. There can be a total of 21 million BTC issued. The last satoshi will not be mined until 2140.
Advantages of Ethereum
This system was created later than its opponent. Its developers took into account the shortcomings of the first digital currency as much as possible so as not to repeat them. The advantages of Ethereum are:
- Network speed. Block generation in the Bitcoin network takes 10 minutes, while in Ethereum – 12.5 seconds. Consequently, all transactions on this network are completed and confirmed faster, and the miner can receive more crypto coins.
- The miner reward for Ethereum remains at the same level, while in Bitcoin it is halved every 4 years.
- Hundreds of other projects are built on the basis of the Ethereum blockchain.
- Ethereum supports smart contracts.
Conclusion
By far, Bitcoin and Ethereum are the most popular and most widely used cryptocurrencies. They are very different, so it is not correct to compare them. These two projects perform different functions, so they are more likely to complement each other rather than compete.
Some experts believe that Ethereum will soon oust Bitcoin from the leading position. However, given how many times the first cryptocurrency was “buried”, such statements are doubtful.
