What is Ethereum (ETH) Cryptocurrency and how does it differ from Bitcoin?

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ethereum-vs-bitcoin
ethereum-vs-bitcoin

For the first four years after launch, Bitcoin was the sole leader of the blockchain industry. Other cryptocurrencies, like Litecoin, were forks of it. The developers of virtual coins took the program code of the bitcoin cryptocurrency as a basis, and by making some additions, they launched a new network. But this state of affairs did not suit all members of the blockchain community.

The features of the BTC program code limited the vector of using digital assets by the financial system and did not allow the full potential of the innovative technology to be revealed. The result was Ethereum, a cryptocurrency that has become the main competitor to digital gold.

Ethereum is a universal tool for running decentralized applications (DApps) powered by smart contracts. The ether cryptocurrency is the exchange unit of the ecosystem. Ethereum is sometimes called bitcoin 2.0, but despite a certain similarity, these projects have fundamentally different purposes.

The main value of the Ethereum network is not crypto coins, but the capabilities of the virtual platform. To gain access to the system is very simple, you just need to activate the MetaMask browser extension.

Why do you need Ethereum?

The Ethereum blockchain enables everyone to use all the advantages of distributed ledger technology when performing specific tasks. After the appearance of the Ethereum system, it is no longer necessary to create a personal crypto network. For a relatively small fee, you can use a ready-made solution.

Tens of thousands of computer applications written in different programming languages ​​could now run and interact with each other on one site, which significantly expanded the scope of blockchain technology.

The functionality of the Ethereum network allows:

  • Launch sophisticated smart contracts to manage logistics chains.
  • Create applications of any type (games, utilities, etc.).
  • Digitize physical assets (oil, gold, gems, manufactured goods).
  • Manage customer identification and document authentication services.
  • Organize decentralized trading platforms.

Difference between Bitcoin and Ethereum 

And now it’s time to make out all the differences between Ethereum and the first cryptocurrency Bitcoin. By and large, Bitcoin and Ethereum cryptocurrencies are not direct competitors. Ethereum is an internal means of payment for clients of a decentralized system, and bitcoin is an international financial instrument that allows you to make payments anonymously and with a minimum commission.

On the Bitcoin network, the cryptocurrency is the final product, it is the whole raison d’être of its blockchain. Bitcoin is a digital-analog of dollars, rubles, and other national currencies. ETH coins are more like digital shares of a company that provides services to clients within a peer-to-peer network.

What can you buy with Ethereum?

Ethereum is primarily intended to secure smart contracts, but it can be used as a means of payment. And you can also sell Ethereum for traditional money, on a marketplace or cryptocurrency exchange.

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