Ethereum

Bitcoin vs Ethereum

Should you buy Bitcoins or Ethereum? A common question, but not one that is simple to answer. First of all, Ethereum is not a digital currency in the same way as Bitcoin is (that would be Ether). So, comparing the two is like comparing apples with oranges.

Let’s have a look at the differences.

Bitcoin

Bitcoin was created with the sole purpose of being a peer-to-peer electronic cash system.

With the removal of intermediaries – financial middlemen - as its core objective, Bitcoin’s cryptographic proofing and authentication makes it possible for transacting parties to interact directly with each other in a secure and immutable manner.

The Blockchain concept – a secure ledger distributed over countless computers around the Globe – was part of Bitcoin’s invention to facilitate accurate accounting for all its transactions.

As first-mover, Bitcoin has been the subject of 99% of media attention directed at cryptocurrencies, not all of it good. So, it is by far the best known, most recognized and readily-accepted.

There are now major, worldwide initiatives in motion for the adoption of Bitcoin into the mainstream; many countries are increasingly allowing for Bitcoin’s existence within their official legislation and taxation regimes.

Ethereum

Ethereum Symbol

A keen follower and avid Bitcoin activist, Vitalik Buterin, invented Ethereum based on Bitcoin’s blockchain concept. In the whitepaper he described his invention as A Next-Generation Smart Contract and Decentralized Application Platform.

Putting it another way, Ethereum is an open-source, public blockchain that anyone can use as a decentralized ledger by paying (for the use thereof) in its own cryptocurrency called Ether.

There are many features to Ethereum’s platform, but attention is focused on Smart Contracts which use blockchain-stored applications for the creation and verification of contracts. This provides greater security for participants than traditional contracts because they feature a decentralized way to verify, and thus enforce, those contracts.

Ether, and other cryptocurrencies are held in an Etherium Wallet, which then allows the owner to create and use Smart Contracts.

Summary

Bitcoin is a global digital currency for everyday use by the masses, whereas Ethereum’s core objective is the pay-per-use adoption of its own public blockchain.

Whilst the potential for Ethereum is much greater than that of Bitcoin, the latter is far more established and useable.

It is for those reasons that financial writers such as The Economist suggest investors split their investments as 70% Bitcoin and 30% Ether. But if you only have a small sum to invest, some suggest you might be better off simply choosing Bitcoin.