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Decoded: Here's how to tell the difference between Bitcoin and Ethereum

The two big names in the $2.2 trillion cryptocurrency market remain Bitcoin and Ether, the coin that fuels the Ethereum network. Bitcoin, the pioneer, has been on a tear, its value up about 500 per cent in the past year. Yet it’s Ether that has been showing its older brother a thing or two, with a price jump of around 1,500 per cent over the same period. While the top two digital coins share some attributes, they are different in many ways. Here’s the breakdown.

What’s Bitcoin?

Bitcoin was the first digital currency to successfully create a way to transfer value between two people anywhere in the world. Its pseudonymous and still-unknown creator, or creators, Satoshi Nakamoto made a crucial breakthrough by creating a digital, time-ordered ledger, called a blockchain, to record every Bit­coin transaction. This solved the “double-spend problem” — it ensured that people couldn’t send fake Bitcoin or Bitcoin that had already been sent to someone else. It also meant Bitco­in transactions take place independently from involvement — or interference by — typical financial intermediaries like governments, banks or corporations. Bitcoin was worth virtually nothing when it was first activated in January 2009. In April 2021, it reached a price of almost $65,000, its record at the time.

What’s Ethereum?

Ethereum was invented by Vitalik Buterin, a Russian-Canadian teenager who released his white paper on the subject in late 2013. Buterin first fell in love with Bitcoin, but soon became disaffected with its limits. Nineteen at the time, Buterin set out to craft a system that could do more than record static quantities. His vision was of a blockchain that could host what came to be known as smart contracts, self-executing agreements in which a chain of actions could flow from defined conditions and contingencies. The only limit to the transactions that can run on Ethereum is the imagination of the developers who build Ethereum applications.
How have they developed?

After spending much of its early years on the seedier side of the internet, as a tool for anonymous online transactions including drug purchases, Bitcoin has gained respectability as a form of “digital gold”. That is, as an asset prized for its ability to be a store of value like the precious metal. Of course, Bitcoin is famously volatile and has seen enormous price drops over its history. But it interests some investors as a hedge against inflation, since its supply is limited by its founding algorithm, and others as an asset that’s useful for diversification because it’s not correlated to stocks and bonds.

How about Ethereum?

It, too, has gone through an evolution, but the changes stem from how its network can deploy new ways of doing traditional things in finance and other industries:
The first boom came in 2017 when initial coin offerings, or ICOs, became all the rage. Since many of the new coins were sold for Ether, and they all made use of the Ethereum blockchain, the price of Ether jumped to its then highpoint of about $1,200. It proved that Ether­eum could be used to raise money for start-up development without a bank or venture capital firm being involved.
The next boom came in the summer of 2020 when decentralised finance, or DeFi, projects flourished. These were start-ups that offered to pay interest on Bitcoin or Ether deposits, that offered collateralised lending, or that would allow users to swap one of the thousands of new cryptocurrencies for another on what are called Dexes, or decentralised exchanges.
The latest and maybe wildest Ethereum development has been non-fungible tokens, or NFTs. They’ve been around since about 2017, and are usually a digital representation of an image or work of art that is linked to the Ethereum blockch­ain in a way that can be used to prove their uniqueness. That in turn can make them valuable to collectors, because unlike a song in an MP3 format, they aren’t able to be copied infinitely.
What’s going on with their prices?

The prices of both Bitcoin and Ether were relatively flat for a lo­ng stretch from early 2018 to the fall of 2020, a period known as the “crypto winter” by oldtimers. There are different reasons for each to have broken out of their doldrums so spectacularly.
Bitcoin has been gaining mainstream adherents who have been very public about their embrace of the digital currency. MicroStrategy Inc, a software and consulting company, had amassed about $2.2 billion of Bitcoin as of late February. Tesla Inc earlier that month disclosed it had bought $1.5 billion in Bitcoin.
Ether has been propelled by the flurry of activity that is occurring on the world’s most-used blockchain, as well as from a planned switch to how its network operates. Under the plan, set to go into place later this year, some of the Ether that must be used to complete every transaction on Ethereum would be destroyed during that interaction. This could cut the overall supply of Ether, putting upward pressure on its price.

Sourse: business-standard.com

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Category: News | Views: 159 | Added by: danyagames2007 | Tags: #Bitcoin #Bitcoin Price #BTC | Rating: 0.0/0
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