Bitcoin Vs Ethereum: How Ethereum is Different from Bitcoin

Bitcoin Vs Ethereum - Bitcoin Logo

Bitcoin vs Ethereum is always interpreted negatively. Therefore, it is very important to understand the difference before investing in cryptocurrencies. Every cryptocurrency in the market is either an imitation or an inspiration of bitcoin. Being the first cryptocurrency, bitcoin has a direct or indirect influence on almost every project related to cryptocurrencies and the blockchain technology.

How Ethereum is Different

Bitcoin Vs Ethereum - Ethereum blockchain app platform

There is a very common misunderstanding about Ethereum. People usually think that Ethereum is a cryptocurrency just like the bitcoin. As Ethereum ranks second on the cryptocurrency markets, people immediately assume Ethereum as a direct competitor to Bitcoin.

Although, Ethereum uses the same blockchain technology, it is not a digital payment system like the Bitcoin network. Ethereum is more than just a cryptocurrency, it is a complete platform to create smart-contracts. It provides all the necessary tools to create and run decentralized applications based on those smart-contracts. The first Decentralized Autonomous Organization (DAO), known as The DAO was also based on the Ethereum platform.

Ethereum is the first project after bitcoin that has effectively demonstrated some of the most novel applications of the blockchain technology.

Ether

Ether is the native token of the Ethereum platform. It is a cryptocurrency that can only be used on the Ethereum network to perform certain important functionalities. According to Ethereum’s co-founder, Vitalik Buterin, “Ether is like gas that runs the Ethereum network”.

Ether can easily be bought from almost any cryptocurrency exchange. People who buy Ether essentially invest in the Ethereum project. Holding on to more Ether means that you get the opportunity to do more on the Ethereum network in terms of smart-contracts and other functionalities.

Creating your own Tokens

Another very important functionality provided by the Ethereum platform is the ability to create and publish your own cryptocurrencies. In fact, many cryptocurrencies on the market are completely based on the Ethereum platform.

This functionality essentially makes Ethereum platform a complete blockchain based decentralized, ecosystem for blockchain based applications. Therefore, considering Ethereum just like another cryptocurrency payment system is not fair.

Bitcoin Vs Ethereum

Bitcoin is the first cryptocurrency with a complete decentralized online payment system, that is based on the blockchain technology. Ethereum on the other hand is the first decentralized, smart-contract based platform to create decentralized applications.