Ethereum vs. Bitcoin: What is the difference?
Ethereum vs. Bitcoin happen to be something many people want to know. The reason is that cryptocurrencies have become extremely popular and widely used. Although these two are the most significant projects in the industry, their initial aims are completely different. When looking at Ethereum vs. Bitcoin, you can see that, although their goals are not the same, the market statistics is pretty similar. In this review, we are going to explain what their fundamental distinctions are.
What Ethereum and Bitcoin are?
Before you learn more about their differences, it is important to get acquainted with these two. This will provide a better understanding of what is happening. When you learn more about them, the distinctions between Ethereum vs. Bitcoin become more obvious.
Bitcoin is a digital currency which was launched in 2009. It was the first cryptocurrency using blockchain technology. The aim of Bitcoin is to solve the global finance problems. Moreover, it requires no banks or PayPal. The digital currency was also developed as an alternative to ordinary currencies such as EUR, USD and other. It is possible for people to use it for many purposes besides gambling like receiving money and buying services or goods. Furthermore, the users can easily convert the cryptocurrency into cash, and such transactions are performed within a few minutes.
This one was launched in 2015 and makes use of blockchain technology as well. Unlike Bitcoin, it utilizes smart contracts program. Ethereum also requires third parties in the majority of the systems. There is also a platform provided to build smart-contract applications which are called dApps. The Ethereum blockchain obtains a programming language – Solidity and has its own currency which is Ether. The currency is highly liquid as well. In addition to that, the transactions take just a few seconds.
As you can see from the given above explanations, Ethereum and Bitcoin are different on many levels. Their concepts, purposes and even the speed of transactions differ. Moreover, the Bitcoin transactions are manual while the Ethereum ones are automatic.
More information you should know
It is hard to understand the differences between Bitcoin and Ethereum if you know nothing about some technical words that come with them. Here are some which need to be clarified:
Decentralized. Both of them happen to be decentralized. This implies that each of them is formed by several varying positions so there is no center. The server in a decentralized network is developed and maintained by several computers which belong to many different individuals or companies. The absence of central point decreases the possibility of hacker attacks because, in this case, they would have to hack a lot of companies to attack the network. This makes the system more reliable and safer.
Blockchain. This is another thing which is important to understand if you deal with Ethereum and Bitcoin. A blockchain happens to be a distributed ledger which includes blocks with transactional data. This ledger keeps growing as more and more blocks are added. They are placed in a chronological way through the usage of cryptographic techniques. A distributed ledger implies that there is a number of computer systems that operate together. The systems process the received data and verify it which means that they work as one big team. That is why it is impossible to get a fake transaction verified. Consequently, blockchain provides security as well.
Smart contract. This term was mentioned above when explaining Ethereum. Smart contracts happen to be a decentralized tool. Blockchain powers the smart contracts on Ethereum, so the creators have developed apps which never go offline. Moreover, it is impossible for the third parties to edit them.
Shorting on Bitcoin: How?
If you want to know how to short on Bitcoin, then you should understand what “shorting” means. This is a term which is applied in financial trading to provide a description for the process of getting benefits from the price fluctuations. It is easy to understand how to short on Bitcoin, if you understand what Bitcoin is. This will help you to comprehend the market better which will result in more successful banking on Bitcoin. For this purpose, you can read many articles which can be found on the internet or watch some videos. There is even “Banking on Bitcoin” that is a documentary about the cryptocurrency. It explains everything about the digital currency starting from its creation.
The next thing you need to do is to choose how you are willing to short Bitcoin. There is more than one way of selling the cryptocurrency such as traditional short-selling or derivatives trading.
You should also manage your risk you start banking on Bitcoin. There are always risks when it comes to trading. The more you are willing to get, the more you can lose. That is why when learning how to short on Bitcoin, you should consider the mentioned above tips and monitor the market. You have to be attentive and study the process carefully.
Which is better: Ethereum or Bitcoin?
It is obvious that both Ethereum and Bitcoin have benefits. Bitcoin, for instance, obtains a lower coin supply and happens to be more liquid than Ethereum. The latter offers more ways of usage and obtains better technology. Consequently, Ethereum can be more advantageous than Bitcoin. Moreover, the Ethereum transaction take less time.
Despite that, there are more cryptocurrencies these days which can be a better alternative to Bitcoin. This is because Ethereum and Bitcoin have different purposes. Furthermore, the alternatives run on newer protocols and technology.
Blockchain technology is still developing, so both Bitcoin and Ethereum are updated all the time. In spite of that, Ethereum is the clear winner at the moment. It utilizes smart contracts which can be used for numerous things. The Ethereum blockchain was developed in 2015; consequently, it is six years newer if comparing to the Bitcoin blockchain. This means that its blockchain happens to be a more advanced version. There is also a difference when it comes to the fees – Ethereum is cheaper. Consequently, it depends on what your own purposes are.