Bitcoin vs Ethereum

19 April 2021

What's the difference?

Recent studies would indicate that Ethereum has overtaken Bitcoin in popularity on YouTube, we cover the difference between the two technologies.

Since the first cryptocurrency boom toward the end of 2017, it seems like you can't flick through the news without reading about Bitcoin and the ever-growing list of altcoins trying to catch up.

To say that cryptocurrencies have exploded in recent months is a gross understatement. This time last year, the global cryptocurrency market cap sat at a little over $200B. Now, the combined worth of all cryptocurrencies sits at over $2.2T .

recent study by Total Processing shows that Ethereum has eclipsed Bitcoin in online popularity (on YouTube, at least). The statistics show that Ethereum related videos received more than 231 million views since April last year. Comparatively, Bitcoin-related videos received a little less than 200 million views.

By now, most people are aware of what Bitcoin is, how it works and why it's popular.

But, fewer people are clued up about Ethereum, how the platform works, how app builders currently use the platform, and what developers plan to use it for in the future.

Below we quickly cover a little about Bitcoin, and after that, we go into detail about Ethereum. 

A quick recap on Bitcoin

Bitcoin is the original cryptocurrency, or distributed currency, which functions as virtual money.

A blockchain, a distributed database or public ledger, records all the transactions, so everyone can see any Bitcoin transaction going back to its creation in 2009.

The 'point' of Bitcoin and many other cryptocurrencies is that they operate outside of anybody's control, like governments and banks.

Governments and central banks have been highly critical of Bitcoin to nobody's surprise but have since developed their own cryptocurrencies aiming to usurp it. The US Federal reserve is even considering a central bank digital currency to give US citizens faster access to money.

Civilians living in countries with unstable central currencies, like Zimbabwe and South Sudan, are already using Bitcoin to protect against unstable currency and government interference.

Many financial and business leaders like the investment bank JP Morgan see Bitcoin as a digital alternative to gold to hedge against currency inflation and market instability. 

Ethereum is different and even more complex than Bitcoin.

Ethereum emerged following Bitcoin's early success. Vitalik Buterin, a programmer, was intrigued by Bitcoin and the blockchain technology underpinning it. Buterin aimed to improve blockchain technology so the world could one day use it for purposes other than cheaper and anonymous digital payments.

Buterin believed that you could easily cut out the intermediaries in most business transactions by using decentralised technology like blockchains.

He describes this in his own words, "Whereas most technologies tend to automate workers on the periphery doing menial tasks, blockchains automate away the centre. Instead of putting the taxi driver out of a job, blockchain puts Uber out of a job and lets the taxi drivers work with the customer directly."

Currently, the Ethereum platform lets anyone build and run distributed applications, called ĐApps, without interference from third parties like governments or other businesses. Each ĐApp harnesses thousands of different computers' power rather than running on a single server like a conventional app. ĐApps enable developers to pool resources worldwide.

Technically, Bitcoin was the first-ever ĐApp, as anyone could download the open-source blockchain and join the network.

Using Ethereum, mobile games developers could sell their games online without the Apple or Google store taking a huge chunk of their profits. As platforms like Ethereum pose a huge threat to the status quo, many politicians and business leaders were quick to denounce Ethereum and ĐApps.  

What's the difference between ĐApps and the apps we use now? 

ĐApps look identical to our current apps from the user side but are made using smart contracts. Smart contracts are digital contracts that execute when predetermined criteria are met.

For example, a smart contract could release money into someone's account every year on their birthday. Smart contracts allow transactions between two parties who may not have trusted one another without a guarantee. In other words, they are trustless.

Ethereum is the name of the organisation. Confusingly, the cryptocurrency that powers the platform is often referred to as Ethereum, but its name is Ether.

Developers use Ether to pay people on the platform for running their operations, making Ether the fuel that powers ĐApps on the Ethereum platform.   Unlike Bitcoin and many other cryptocurrencies, Ethereums founders never intended Ether to replace cash or other currencies. 

What's currently happening in the ĐApp space?

There are many successful ĐApps available right now on the Ethereum platform, but it's still early days. There are digital asset exchanges such as LBank, games like Cryptokitties and Dark Forest, and even online gambling sites like PokerKing.

Finance is one industry that industry leaders believe will be heavily influenced by ĐApps. Finance ĐApps create monetary services using cryptocurrencies, such as lending, borrowing or earning interest but without users submitting any personal data.

AAVE is a financial ĐApp that enables people to earn interest on cryptocurrency deposits and borrow assets without intermediaries. The platform lets people with large amounts of capital delegate their money to someone else or a pool of people in exchange for interest. Anyone looking to borrow money must post collateral. The whole process is trustless and automated through smart contracts on the Ethereum blockchain. 

Could Ethereum shape our technological future?

Ethereum's broader aim is to unseat technological monopolies that insert themselves into global markets as intermediaries. The platform seeks to facilitate the building of ĐApps that look and feel exactly like the apps we use now but function differently under the hood, returning control of private data to users.

The first casualties could be the app stores, as Ethereum's blockchain allows developers to sell their apps without using the Apple and Google app stores taking a cut.

Another possibility is ending Google and Facebook's global monopoly on digital advertising. This could involve developers paying users tiny amounts of cryptocurrencies to view adverts instead of Google or Facebook profiting from users viewing ads, which is the current system.

One big upcoming upgrade is Ethereum's cryptocurrency ETH switching from a proof work system, which requires mining similar to Bitcoin, to a proof of stake system involving people holding the cryptocurrency validating transactions and being paid a reward. 

It's an exciting time in the cryptocurrency world right now, especially for Bitcoin and Ethereum.

As the Ethereum platform develops over time, you can expect to see some big changes in the cryptocurrency industry. Ethereum could quickly become a household name, and ĐApps could one day unseat our current apps. 

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Register for the prototype

The next step on our roadmap is to ask for your help. We want to hear from you what works and what does not, which features are more important to you and which ones are lacking. In short, we need your guidance.

To facilitate this, we are creating a beta of our platform and are looking for a thousand pioneers to put it through its paces. We will expect a lot of feedback and suggestions from these pioneers over the next two to three months. However, these pioneers are not volunteers, when we launch each pioneer will have bestowed upon them 10,000 edifyqs.

If you see yourself as a pioneer, register for the prototype and explore the future.

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