To the average onlooker, all cryptocurrencies may seem alike. It can be difficult to understand the differences between Bitcoin, Litecoin, Monero, and others. When it comes to the difference between Bitcoin and Ethereum, the answer is relatively simple.
Bitcoin is a Currency and new Money
The concept of Bitcoin‘s creation by Satoshi Nakamoto is simple” addressing financial inefficiency and inequality. That has proven to be more challenging in recent years, even though Bitcoin has carved out its own legacy in the past decade. For a project that many expected to come to an end within the first few years, things have certainly progressed nicely.
The same basics still apply to Bitcoin eleven years later. Creating a viable currency without banks or governments intervening has always been the selling point. That applies as much today as it did eleven years ago. It is, in this modern day and age, the only modern form of money on the market. Banks and governments have been playing catch-up ever since. Most of these efforts have not yielded any major success.
In fact, it is safe to say governments now see the merit of Bitcoin and its technology. Decentralized currencies are not going away. While official recognition remains elusive at this stage, there is a completely different sentiment among regulators. There are still a lot of aspects to figure either before any major changes will occur, though.
So what is Ethereum?
If Bitcoin is the payment solution, Ethereum can be seen as the technology stack to revamp the financial industry. Unlike Bitcoin, Ethereum has a strong focus on technology, primarily for the purpose of building new products and services. All of those solutions could eventually incorporate Bitcoin as a monetary solution, although it remains to be seen how things will evolve.
At its core, Ethereum is the embodiment of empowerment through blockchain technology. It is an ecosystem where public decentralized projects can be built and used without specific access or requirements. Particularly its smart contracts have proven to be of great interest. Although other ecosystems offer such functionality too, developers are primarily interested in Ethereum.
Similar to Bitcoin, Ethereum has its own currency, called Ether. It is used on exchanges for trading and speculation, but also pays for network transactions and running applications. Whether it will ever become a global payment standard, is a different matter. For now, it is all about building things on Ethereum, and paying for things with Bitcoin.
Bitcoin, Ethereum, or Both?
For years, there has been a lot of speculation among cryptocurrency enthusiasts as to which is “better”. The simple answer is: neither, as they are very different and cater to a unique crowd. When Ethereum and Bitcoin would work together as one unified ecosystem, interesting things can happen. Whether that will ever be the case, is very difficult to predict. Interoperability between blockchains and cryptocurrencies is a rarity, even under the best of circumstances.
In the end, it all comes down to personal preference. Speculators will often explore both markets in search of financial gain. Developers will favor Ethereum, due to it providing more appealing concepts. Anyone in the business of handling payments may want to pay more attention to Bitcoin. A lot of changes loom on the horizon, but it may take a while until they are all realized.