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Tuesday, 26 December 2017

What is the difference between Ethereum and Bitcoin?

Cryptocurrency has to be one of the most over used words of 2017. Whenever somebody says "crypto currency" the first thing that pops into my mind is, undoubtedly, Bitcoin. And why not? After all, it is the pioneer of electronic money. Back in 2009 when good ol' Bitcoin came into being, nobody had a clue of what it had in store. Now, eight years after its discovery, new clones of Bitcoin have emerged. Surprisingly, some have even grown so tremendously that today, I believe that they have far more benefits than the originator, Bitcoin itself.

Ethereum is a relatively new electronic currency that has become widely popular since its creation back in 2015. What's really great about it is that it serves as a massive computing platform.

So, What's different between Ethereum and Bitcoin? 
Well, the underlying differences are numerous. Some of the major differences are:

  • Ethereum was written in a Turing complete programming language. This means that anything can be done with it provided enough time and computing power is allocated. Bitcoin, on the other hand, was written in a stack based programming language. Stack oriented languages handle data in a very narrow way. Therefore Ethereum has a far broader platform to build on than Bitcoin as it doesn't just have to act as a value transfer account book.
  • Ethereum uses Ethash whereas Bitcoin uses SHA256; The former allows individuals to compete in mining it because it is memory hard (It requires memory to run) and it also works more efficiently on a GPU. On the contrary, Bitcoin mining involves the use of ASIC chips that have led to the concentration of mining power and a so-called "Moore's Law race".
  • Transactions are processed by Ethereum significantly faster than Bitcoin. With Ethereum, on average a transaction is confirmed within 20 seconds whereas with Bitcoin it usually takes about 10 minutes.
  • Ethereum costs transactions based on how complex the computation was, how much bandwidth was used and how much storage was needed. Bitcoin treats every transaction equally as if each of their computational complexities, bandwidth requirements and storage needs were equal.
  • Bitcoin's economic model and Ethereum's economic model vary slightly. Bitcoin's rewards are halved after every 4 years whilst Ethereum provides the same amount of Ether every year.
  • Bitcoin was launched whereas Ethereum was funded by the crowd. For Bitcoin, early miners own most of the Bitcoins that will ever be mined. It is said that with Ethereum half of all the coins will be possessed by miners by 2020.
Have something interesting to add to this? Feel free to drop it in the comment section below!


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