Cryptocurrencies have exploded in popularity in the last couple years. A few years ago, Bitcoin was your only choice, and even that wasn’t too reliable as far as stability of price went. Today, you have several choices, with Ethereum being one of the more popular Bitcoin alternatives. The number of choices that you have now may make the process a bit more confusing for you if you are thinking of getting started in digital currencies of any sort, so here we’ve broken down your choices for you.
So, which one is best for you? Bitcoin or Ethereum?
Bitcoin has a reputation for being the oldest and most trusted of the cryptocurrencies. This is a big benefit of being the first major cryptocurrency in the market. Bitcoin was released in 2009 by a developer under the pseudonym Satoshi Nakomoto. It operates on an open source software, which allows anyone to participate in its improvement.
Bitcoins are created through a process called mining, and as time goes by, the process through which mining occurs becomes harder and harder. That means that if you were mining Bitcoin in 2009, you would have been able to crank out a lot more Bitcoin with the same piece of equipment than you currently could.
Ethereum is widely lauded as Bitcoin’s number one competitor. It was first made available to the public in 2014. The initial ether tokens were crowdfunded in a public presale, helping the currency to boost itself before it went into effect. This helped to create a supply and a demand for the currency, giving it value immediately after the launch. Because of the already large usage of Bitcoin at this point, much of the crowdfunding for Ethereum was done with the Bitcoin currency.
The currency arose because of a handful of developers that were involved working with Bitcoin were concerned about a few of the processes that went into Bitcoin development. It was believed that Bitcoin needed its own scripting language to improve security and performance.
Bitcoin miners cannot get very far unless they work together as a team. This is called a pool, and as each individual contributes to the mining pool, Bitcoin is released, and then split according to how much each member of the pool contributed. This allows consistent progress to be made with encryption even if a few individuals are unable to pull their weight. It allows for a more secure currency.
Bitcoin also has a lot of name recognition. There are some privileges that come with being the first, and even if it has a tinge of notoriety along with it, the word Bitcoin is pretty much recognized as a cryptocurrency. Many online stores and even some brick and mortar shops are now allowing Bitcoin to be used as a valid mode of payment. Other currencies, including Ethereum, do not have the same fluidity within the market.
Ethereum encourages individuals to mine. There’s no benefit to working in a pool group, which is a strong point if you have the proper hardware setup and have adequate knowledge on your side. For those that do not like to be dependent on others, Ethereum is often viewed as superior because it stresses individual success.
It’s also worth pointing out that Ethereum holds far more potential right now for people new to cryptocurrency than Bitcoin does. In Bitcoin, early miners hold a huge advantage. Because of the limited supply of Bitcoin and the early ease of access to it, those who started out as Bitcoin miners in the early days of the currency hold far more wealth than new miners will. It is estimated that around 50 percent of Ether tokens still have not been released, giving those who want to build wealth quickly but are new to digital currencies a greater reason to use Ethereum.
Thanks to the acceptance that Bitcoin has gained over the last few years, Ethereum has caught on as a widely used currency with a lot more ease. Bitcoin, thanks to the trials that it has gone through, has likely helped pave the way for its competition. Right now, Ethereum is benefiting in a big way from this.
Both Bitcoin and Ethereum use their mining process to increase the amount of Bitcoin in circulation and to keep their transactions secure. But when it comes to mining, to be successful with Bitcoin, you must belong to a pool, and you must have powerful enough hardware to process the blockchain (the string of transactions that need to be processed). This processing needs to be done faster than current transactions are occurring, or else you will never make any progress. Unfortunately, most computers used for personal reasons are not powerful enough to do this. A special mining computer is needed, which can be costly when you’re first starting out.
With Ethereum, because it is still new and because the blocks come in various sizes, special equipment can be helpful, but it is not needed. This creates an easy of entry to mining that Bitcoin currently does not have. In fact, there are safeguards built into the coding of Ether tokens that prevent those with powerful ASIC computers to have a huge advantage like they do in the world of Bitcoin.
Bitcoin has been in the news a lot over the years, and most of the mainstream attention that it’s been given has been negative. There have been reports about wild price swings and stolen or hacked coins. But the currency has grown a lot, and it now has a solid reputation, with the caveat that those who use it need to use proper safety protocol.
Ethereum has also seen price swings and volatility, but those that have helped develop it have also had a good starting point of reference from Bitcoin. Many of the security concerns that Bitcoin had to overcome through experience, Ethereum was able to overcome through its initial design. This has certainly helped to boost Ethereum’s reputation. However, when it comes to reliability, Bitcoin has the edge if only because Bitcoin is more universally recognized and accepted as a form of payment. This may not be the case forever, but for right now it is.
There is a lot of overlap in the world of digital and cryptocurrency. Many of those individuals that use Ethereum also use Bitcoin, and vice versa. However, it’s becoming clear that there are some big distinctions in the utility of each. Hopefully, this guide has helped clear up some of the points of confusion that those new to these currencies face.