The Primary Difference Between Ethereum And Bitcoin: A Beginner's Guide

Authored by Samantha Radocchia via Quora.com,

Today’s hype surrounding Bitcoin, Ethereum, cryptocurrency, and blockchain technologies rivals the dot-com bubble in the 90s. There is a lot of money pouring into this space, and it doesn’t seem to be slowing down anytime soon.

Unfortunately, while the masses may be able to say, “Yeah, I’ve heard of Bitcoin,” a large percentage of people still aren’t quite sure what it is - and are even more confused about Ethereum.

If you’re even remotely interested in this space, consider this your beginner’s guide.

Bitcoin

The easiest way to define Bitcoin is to call it a “digital dollar.” That’s really all it is - minus all the formal regulations that come with a bank (which is what makes it such a disruptive concept). It’s not a technology. It’s not a company. It’s your money, held in a digital form.

Anyone can create an account to buy and sell Bitcoin through websites like Coinbase. The price of Bitcoin then fluctuates based on supply and demand. However, now people are beginning to convert their Bitcoin into what are called “tokens,” which companies issue during an ICO, or Initial Coin Offering, which allows people to invest in a company by purchasing tokens with their Bitcoin. Based on the supply and demand of those tokens, their price (just like a share of stock after a company holds an Initial Public Offering, otherwise known as an IPO) goes up or down. These tokens operate on a secondary market, separate from the rise and fall of Bitcoin’s market as a currency.

Some people buy Bitcoin because they want to store their money somewhere other than a bank. Some buy Bitcoin as an investment, believing that its price a few months or years from now will be substantially higher than it is today. And some people purchase Bitcoin as a means of investing in companies that raise money through an ICO, since equity in those companies cannot be purchased with traditional currency. You can only purchase tokens with Bitcoin or Ether, which is Ethereum’s cryptocurrency.

Ethereum

Ethereum is another cryptocurrency, and one many people see as potentially overtaking Bitcoin as the dominant coin in the market.

In any economy, currency is relative. Since Bitcoin has been the leading coin since the beginning, the price of every other “altcoin” (and there are a lot of them) is measured against Bitcoin. Take Litecoin, for example. It is a currency that has its own market and holds its own merit, but while Bitcoin is priced at over $3,000 per, Litecoin currently sits around $45 per. So, while it has its own value, it is by no means a market leader.

What makes Ethereum different is its technology, not the fact that it’s yet another cryptocurrency. Ethereum’s coin value is referred to as “Ether,” and just like Bitcoin is bought and sold, and used by investors to buy into ICO opportunities.

The difference between Ethereum and Bitcoin is the fact that Bitcoin is nothing more than a currency, whereas Ethereum is a ledger technology that companies are using to build new programs. Both Bitcoin and Ethereum operate on what is called “blockchain” technology, however Ethereum’s is far more robust. If Bitcoin was version 1.0, Ethereum is 2.0, allowing for the building of decentralized applications to be built on top of it.

In a nutshell: it’s great for innovation.

Furthermore, there is heavy support behind Ethereum’s technology in what is called The Enterprise Ethereum Alliance. This is a super-group of Fortune 500 companies that have all agreed to work together to learn and build upon Ethereum’s blockchain technology—otherwise referred to as “smart contract” technology. In this case, “smart contracts” mean that demanding business applications can automate extremely complex applications.

What has so many people - including me - excited about Ethereum’s technology is its potential to impact IoT projects and processes. It’s by no means a perfect technology yet, but it has absolutely opened the door for all sorts of unique innovations. For example, my firm, Chronicled, recently worked with a 3D-printing company, Origin, to develop a ‘smart tag’ for sneakers and luxury goods that could guarantee their authenticity. This was done leveraging Ethereum’s blockchain technology.

All in all, and if you’re as curious and excited about this space as I am, the major difference between Bitcoin and Ethereum is their separation of roles—and the fact that they are aiming at parallel but different goals. This article on the topic summed it up perfectly, by citing that early adopters are beginning to see the separation as such: “Where Bitcoin is disrupting currency, Ethereum is disrupting equity.”

Comments

Buckaroo Banzai 813kml Mon, 12/18/2017 - 19:50 Permalink

Ethereum is an interesting idea, and kudos to the then 19-year-old Vitaly Buterin for inventing it. Unfortunately, unlike BitCoin, which has been around for over seven years, Ethereum has only been around for three years--and it has some serious implementation flaws. The DAO hack is a great example--that was a huge fuckup.If you think Ethereum is interesting, you need to take a hard look at Cardano (ADA). Because that is Ethereum implemented properly. Charles Hopkinson, who was one of the early developers on board at Ehtereum, is the guy behind ADA and he sure seems to have his head screwed on right. Is Cardano the Ethereum killer? Maybe, maybe not. Maybe ADA will kill ETH, or maybe they will figure out a way to coexist, but one thing is certain: ADA is the superior implementation of the ideas that originally spawned Ethereum.

In reply to by 813kml

in4mayshun Hyjinx Tue, 12/19/2017 - 00:42 Permalink

Initially I totally dismissed the hypothesis that Bitcoin was really a CIA/NSA creation, released to grease the skids for digital currency acceptance. The more I think about the evolution of crypto though, the more credibility I give to this theory. Knowing that much of western society would resist a Government created digital money, releasing BC as a way to “stick it to the man” would be a brilliant way to entice interest. Letting every Tom Dick and Harry create their own crypto is a guaranteed way to absolutely ruin the crypto space thereby necessitating a future need for Government to step in and “regulate” the market with a sanctioned offering. With a major portion of people around the world already engaged in crypto based transactions, it would be much easier to migrate the populace to a digital money system, especially during a currency crises/collapse. It seems very convenient that this scenario would solve two big issues for globalists: 1) total wipe out and reset of trillions in debt and obligations and 2) establishing a world currency based on digital transmission only which would give them complete control over every human.
Something to contemplate the next time you’re congratulating yourself on being a Crypto investor genius; maybe you’re actually the sucker and a pawn of the globalists.
Gold: the only honest money, which is why the globalists despise it

In reply to by Hyjinx

Citxmech in4mayshun Tue, 12/19/2017 - 01:42 Permalink

I don't understand why anybody thinks "there would be resistance" to any digital currency.  Go to the store and tell me how many people use cash.  In the past year, I have literally seen only one person pay with a check and maybe 20 pay with cash (and I was probably 8 of those.).  There is no significant resistance to digital anything these days.

In reply to by in4mayshun

PolishAmerican Agstacker Mon, 12/18/2017 - 22:37 Permalink

BTC cannot be INFLATED...huh... it CAN and HAS BEEN FORKED a number of times already generating additional several batches of additional 21million separate coins again again Bitcon CASH, Bitcoin GOLD. not to mention LTC which is an altcoin deriviative almost IDENTICAL ...the crazy MINDLESS rush will render BTC useless very fast The entire BTC network is CHOKING itself under 7tx/s-10tx/s it is not scalable and BTC will be UNUSABLE. NO EMP from North Korea needed when it needs energy of SWEDEN to operate at INITIAL SEED STAGE of blockchain as you claim.... stupid VISA does 3000tx/s...(centralized systems do not need that much energy - opposite of that!) it would take energy of the SUN to run all those things blockchains will run people claim! Bitcoin is NOT SCALEABALE to where they want it to be for ENERGY and protocol reasons. so long as people can wait 24h, 48h, 78h...later 7 weeks for txs to settle on BTC network..it will grow...at a point they will consider it illiquid and useless. GOLD can sit in your pocket. no energy needed. Why? precisely..it was the energy spent to create it billions of years ago that sits in its density and it needs no more ENERGY. BITCOIN unlike GOLD requires CONSTANT ENERGY INPUT to operate the network. EVEN if we have NUKE PLANTS generating almost free energy in backyards... it will never have the same ENERGY in its network as GOLD has. Basic physics. So to make BTC go to the level of GOLD here is how much energy you need to put into the NETWORK to make it on par: https://www.reddit.com/.../comments/2xzfzc/how_much_ener...? Bottom line. It is all an illusion and a deriviative of ENERGY put into an ASSET. The BTC network is not scaling and RIGHT NOW while seldom and few USE it other than BUY and KEEP, it requires energy use of SWEDEN TO operate. If ALL as you claim runs on blockchains no civilization will be EVER ABLE to produce energy to support it. This also explains the value of GOLD. ENERGY USED to produce it (not mine as this is miniscule discovery energy not PRODUCTION of GOLD) is IMMENESE. NO civilization will ever be able to produce GOLD - unless we can SHUT DOWN STARS. SO we would have to reach a point where we can tap energy sources beyond SCI-FI. BTC will collapse. Did I ride it and am I also riding it? Sure I am. But exchanges shutdown show the demand side problem of traffic... this is not even a big deal...that is NOTHING compred to the block chain problem of energy usage on the back side and how SLOW it is getting and how it is CHOKING. Scalability problem will render entire network defunct. sooner or later. THis just does not scale. This is the most simplicit way of explaining why this cannot work long term. It all defies basic laws of physics and anyone understanding software and protocol speeds needed to have a functional networks understands this. You will see its value when it will take months to settle TXs how useful bitcoin is and when exits start getting crowded Madoff stunt will seem an innocent scam. And I BET this is whty Satoshi Nakamoto vanished into MISSING IN ACTION and no one can establish what entity or individual or group that is. He knows how it shall end and does not want to be dragged from court to court.SN knows, that with the scope of the scam no money can guarantee safety when this bubble bursts. it will be EPIC. No bubble EVER had the scope of this one based on ephemeral sense of trust in such system. Additionally when BTC is no longer used for currency like it used to be, then TX numbers will go down, as they go down, miners will be paid less, when miners stop being incentivized to mine, the system will grind to a HALT. The end of bitcoin will be EPIC. They will switch to other profitable coins that are actually being used. this has already been happening by them moving back and forth mining between BTC and BTC cash.

In reply to by Agstacker

Buckaroo Banzai 813kml Mon, 12/18/2017 - 19:56 Permalink

Are you a fucking kike? Or maybe a shabbos goy? It would be a better world if the Winklevoss twins had managed to retain control of Facebook. Of course, they lost it to the kike (((Zuckerberg))) who was backed by the CIA/Mossad, so that didn't happen.Frankly I'm thrilled that the Winklevoss twins have come back strong with BitCoin. The fact that they are a major force behind BitCoin is a huge credibility enhancer. The fact that you are countersignaling the Winklevoss twins tells me you are a kike piece of shit.

In reply to by 813kml

tion FreeShitter Mon, 12/18/2017 - 20:27 Permalink

From the white paper>A launched blockchain that uses the EOS.IO software does not require its users to pay the blockchain directly for its use and therefore does not constrain or prevent a business from determining its own monetization strategy for its products. This is exactly what I mean by the value/utility of any given blockchain/platform will not directly translate to the value/price of its token (cryptocurrency) when its platform's primary function isn't to serve strictly as a currency.  So though I've tossed a few sheckles here and there at some various tokens I think have good utility potential that will include token usage, their prices are based only on speculation.  Riding the bitcoin spec wave? How will the usage of their various platforms end up translating into need for the tokens?  Of course I'm not assuming that price will ever be attached only to fundamentals.  But this is starting to get a little retarded.   

In reply to by FreeShitter

Buckaroo Banzai FreeShitter Mon, 12/18/2017 - 20:13 Permalink

ZCash is a Jew scam. It's fucking run out of Israel. Never mind the fact that Zcash is completely unauditable, that's bad enough. The one weakness with the Zerocoin protocol (which Zcash is based on) is that it is dependent on a trusted setup, and ZCash was setup by fucking kikes in Israel--do you trust Jews? I don't. If you like the Zerocoin protocol, go with ZCoin, they had the good sense to use the RSA-2048 parameters generated in 1991 from the RSA factoring challenge, which gives actual credibility to their trusted setup. Unless somebody invents a time machine, and uses it to go back to 1991 and compromise the RSA factoring challenge, ZCoin is rock solid.

In reply to by FreeShitter