Bitcoin and Ether together command the lion’s share of the crypto market. Due to their massive market share, people often pit them against each other. However, they are both designed to perform different tasks and achieve different goals and even complement each other in many ways.
What is Blockchain Technology?
Bitcoin and Ethereum are both based on blockchain technology. This means that information is stored in blocks and connected through permanent chains. Each block contains information about a set of transactions within a specific period. As the time frame changes, the block changes, and a new one is added to the chain, each block reliant upon the preceding block. This is why it is called Blockchain.
Put simply, a blockchain is a large digital ledger. In blockchain technology, a network of independent computers scattered around the globe maintain a list of transactions, allowing them to be checked and validated.
The Bitcoin blockchain was created in 2008 as a P2P (peer-to-peer) electronic cash transaction system, which means all intermediaries were eliminated and there was no central governing body (as opposed to traditional currencies that are regulated by the respective nation’s central bank). This feature made the bitcoin blockchain a decentralised system and became the basis for the evolution of blockchain technology. Therefore, bitcoin is also called the first-generation blockchain.
Speed: Each block on the bitcoin blockchain is verified and created at an interval of 10 minutes.
This eliminates the need for manual inputs and makes modifications on its own, thus leading to the coining of the term ‘Smart Contracts.’ This is also why Ethereum is commonly referred to as the second-generation blockchain.
Speed: Each block of information on the Ethereum blockchain is verified and created every 10-20 seconds. This makes Ethereum a much faster blockchain network than Bitcoin. This is a vital aspect considering the extensive network of dApps working in tandem to implement a multitude of tasks at the same time.
Token supply: Unlike bitcoin, there is no limit on the supply of ETH in the market. Developers are working on a system to ensure that ETH retains its value over time.
The creation of both blockchains has been instrumental in the evolution of Decentralised Finance (DeFi). The strengths of the bitcoin blockchain have been built into and improved upon in the Ethereum blockchain, thus adding speed and functionality. Both, Bitcoin and Ethereum, seem well poised to add value to financial processes in the future.
(Edited by : Yashi Gupta)
First Published: IST