Bitcoin vs Ethereum – What You Need to Know
Unless you are living life completely disconnected from the internet, financial news and basically the rest of humanity, the you most likely have heard of Bitcoin. What’s the difference between Bitcoin and Ethereum? How are they the same? You may or may not have heard of Ethereum. Bitcoin and Ethereum are the most numerous of the cryptocurrencies. They have many similarities; however, they have a few key differences as well.
How are Bitcoin and Ethereum Similar?
That’s not the only commonality between the two. Neither Bitcoin or Ethereum Ethers are backed by any governmental organization. Both cryptocurrencies are created through a process called mining using blockchain technology.
Both use blockchain technology to produce more coin. A blockchain is a digital ledger of transaction data arranged in groups of data called blocks. They are related to one another a hashing function. When linked together blocks form a blockchain. Blockchain ledgers are decentralized by nature and that is why it is used for cryptocurrencies. The records inside this chain aren’t stored together in one location. They cannot be accessed by one person or organization because they are under the control of an unlimited number of people, called nodes. Because it is time-consuming and the computing power needed to mine cryptocurrencies is expensive, groups of miners together in pools to make the process more cost-effective. Pools of miners produce groups of transactions referred to as blocks. The blocks of transactions are broadcast to other nodes for validation and so the full nodes can add the new blocks to their ledgers. Network nodes validate earn a fee for their work and are paid in Bitcoin.
Bitcoin is the most popular cryptocurrency based on price and volume mined. At the end of October 2017, there were 16,658,325 BTC mined. Ether has maxed out in price just over $400, whereas Bitcoin was reached the $800 USD mark. Bitcoin can be exchanged for other cryptocurrencies or traditional currencies (like the US dollar or the Euro) through Cryptocurrency exchanges which work the same way that foreign exchanges do. You can buy, sell, or trade cryptocurrencies for other digital or traditional currencies like the US dollar, Euro, and Singapore dollar.
Both Bitcoin and Ethereum have limits
The number of Bitcoin is limited. The number of Bitcoins generated per block is set to decrease by 50% for every 210,000 blocks mined which occurs about every four years. The number of Bitcoins in should not exceed 21 million BTC. Ethereum mining is also limited. The maximum number of Ether was predetermined in 2014. The maximum number of Ether produced per year cannot exceed 18 million. This serves as a system to reduce inflation.
Michelle writes about cyber security, data privacy focusing on social media privacy as well as how to protect your IoT devices. She has worked in internet technology for over 20 years and owns METRONY, LLC. Michelle earned a B.S. in Engineering from Rensselaer Polytechnic Institute. Michelle published a guide to Cyber Security for Business Travelers