Which technologies will overtake Ethereum's blockchain technology?
What is the difference between Ethereum and Bitcoin?
Ether, the currency used for transactions on the Ethereum network (learn more), and Bitcoin have many fundamental similarities. Both are cryptocurrencies that are rooted in blockchain technology. This means that independent computers all over the world offer to keep a list of transactions, with which the history of every coin can be checked and confirmed.
Both are virtual currencies that are actively used for services, contracts, and as assets. Their popularity has drawn the attention of the news media and investors alike, interested in how blockchain technology is transforming the financial landscape over time. That's where most of the similarities stop.
Their decentralized nature represents a significant change from traditional currencies, but they are not widely accepted. While Bitcoin is more widespread and recognized as an international digital currency, Ether is only accepted as a currency for digital applications (Dapps) transactions on the Ethereum network.
Fundamental differences between Ether and Bitcoin
Ether and Bitcoin are both cryptocurrencies based on blockchain technology. In addition, the currencies are quite different and appear in different areas.Bitcoin
Most people think of Bitcoin when they hear the words "blockchain" or "crypto". Bitcoin was the first application of blockchain technology and allowed completely new ideas of how currency could work if it weren't tied to a specific bank or country.
This technology also makes theft and fraud difficult because all machines in the decentralized network must agree to the terms of each transaction. This mainly concerns the confirmation that the payee is the legal owner of the currency.
The coin can either be traded on the open market, or computing power can be made available to the network (mining) and paid for in Bitcoin for the use of the computer (harvesting).
The maximum amount of bitcoins that can ever be generated is 21 million; this creates a shortage on the market. To prevent Bitcoin from being depleted, halving milestones are set in the log, after which less Bitcoin is paid out to miners when a harvesting milestone has been reached.
Investors often keep an eye on these events because sometimes they add to market volatility and sometimes they don't trigger market movements.Ether
Soon after the appearance of Bitcoin, Ethereum observed how blockchain technology was used there and found ways how it could also be used outside of the currency context.
It started with Smart Contracts and Decentralized Applications (Dapps), but Ethereum soon realized that the platform needed its own currency that could be used in accordance with the platform's protocols. The Ethereum Foundation, a body that oversees the activities of Ethereum but cannot independently make protocol changes, created Ether.
Ether is mined in the same way as Bitcoin, but unlike Bitcoin, Ethereum miners can charge a fee to confirm a transaction. In addition, there is no limit to the amount of ether that can be released. This resolved the perceived scarcity, which contributes to the higher value of Bitcoin, for Ethereum.
Ether is the accepted currency across the Ethereum network, but ether is rarely accepted elsewhere. Similarly, Bitcoin is not a recognized currency on the Ethereum platform.Logs
Ethereum and Bitcoin work with different protocols and their processes are not related to each other. That is, some transactions may be allowed on one platform but not another. This becomes an issue when it comes to permissioned vs. permissionless transactions.
Will Ethereum Overtake Bitcoin?
Ethereum's Ether and Bitcoin are both subject to many factors that add to their respective worth.
To make assumptions about the value of cryptos like Bitcoin or Ether, investors need to clarify key questions such as:
- How are the coins used?
- How widespread are they being accepted today? How widespread will they be adopted in the future?
- What can past records tell us about this financial instrument?
Although Bitcoin has traditionally had a higher monetary value than Ether, it is important to know that the cryptocurrency market has been extremely volatile so far and is likely to continue to be. In contrast to stocks, commodities, or even centrally regulated currencies, the underlying value of a cryptocurrency is unclear.
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