Ethereum Vs Bitcoin: What’s The Main Difference?
While Bitcoin has long been dominant in the cryptocurrency scene, it is certainly not alone. Ethereum is another cryptocurrency related project that has attracted a lot of hype because of its additional features and applications.
By / originally published on Huffingtonpost.com
Ethereum: More Than Just Money
The first thing about Ethereum is that it is not just a digital currency. It is a blockchain-based platform with many aspects. It features smart contracts, the Ethereum Virtual Machine (EVM) and it uses its currency called ether for peer-to-peer contracts.
Ethereum’s smart contracts use blockchain stored applications for contract negotiation and facilitation. The benefit of these contracts is that the blockchain provides a decentralized way to verify and enforce them. The decentralized aspect makes it incredibly difficult for fraud or censorship. Ethereum’s smart contracts aim to provide greater security than traditional contracts and bring down the associated costs.
The smart contract applications are powered by ether, Ethereum’s blockchain based cryptocurrency. Ether, as well as other crypto-assets, are held in the Ethereum Wallet, which allows you to create and use smart contracts. The system has been described by the New York Times as..
“a single shared computer that is run by the network of users and on which resources are parceled out and paid for by ether.”
You Don’t Need Kickstarter When You Have Ethereum
One great feature of Ethereum is that it gives developers a means to raise funds for various applications. For your new project, you can set up a contract and seek pledges from the community. The money that is raised will be held until the goal is reached or until an agreed upon date. The funds will be released back to the contributors if the goal is not met, or go on to the project if it is successful. Kicking out Kickstarter means that the third party is taken out, along with their rules, and also the fees they charge (when you include processing fees, Kickstarter can take up to 10% of a project’s budget).
Not only can Ethereum help you source funding, but it can also help to provide the organizational structure to get your idea off the ground. You can collect proposals from the people who backed your project and then hold votes on how you should proceed. This means that you can skip the expense of a traditional structure, such as hiring managers and doing paperwork. Ethereum also protects your project from outside influences, while its decentralized network means that you won’t face downtime.
There are also many smaller aspects that differ between the two blockchain-based projects. Bitcoin’s average block time is about 10 minutes, while Ethereum’s aims to be 12 seconds. This quick time is enabled by Ethereum’s GHOST protocol. A faster block time means that confirmations are quicker. However, there are also more orphaned blocks.
The reward for mining Bitcoin halves about every four years and it is currently valued at 12.5 bitcoins. Ethereum rewards miners based on its proof-of-work algorithm called Ethash, with 5 ether given for each block. Ethash is a memory hard hashing algorithm, which encourages decentralized mining by individuals, rather than the use of more centralized ASICs as with Bitcoin.
Ethereum features its own Turing complete internal code, which means that anything can be calculated with enough computing power and enough time. Bitcoin does not have this capability. While there are certainly advantages to the Turing-complete, its complexity also brings security complications, which contributed to the DAO attack in June.
Ethereum and Bitcoin: Two Very Different Beasts
While many will compare the cryptocurrency aspect of both Ethereum and Bitcoin, the reality is that they are vastly different projects and have different intentions. Bitcoin has emerged as a relatively stable digital currency, while Ethereum aims to encompass more, with ether just a component of its smart contract applications.