Bitcoin and Ethereum: What's the difference?

Bitcoin seems like a tunnel vision when you look at Ethereum. The Ethereum blockchain technology inherently has much more potential than the more known bitcoin.

Meanwhile, everybody knows bitcoin: the digital coin based on blockchain and shaves high tops these days. Ethereum is widely unknown to the general public. Yet, the latter technology has far more potential in itself.

'Technology' is the most important word here. Unlike bitcoin, Ethereum is no coin. Like bitcoin, Ethereum is based on a blockchain. Bitcoin uses that blockchain technology exclusively to process payments. The Ethereum blockchain is a lot more flexible. Although a digital coin is linked (the Ether), the purpose of the blockchain is not to support that coin. Ethereum is a public blockchain that anyone can use to develop applications.

Transparency

The beauty of the blockchain is that it offers an ultra-secure transparent and shared digital logbook. Bitcoin uses that log to write off transactions and you could basically use it to build an app that can close smart contracts. Do it on your own, that's hardly your project. A blockchain is only interesting if shared by many people. A blockchain in the hands of one person is not worth the name. As a start-up, of course, it's not a feasible card to hit hundreds or thousands of people in a single click for a new blockchain application.

That's why Ethereum is in the game. That popular blockchain already has a lot of users, and you can just use your app to use the existing chain. Ethereum allows you to make a digital coin on the blockchain, but also to hold a Kickstarter project without the need for a Kickstarter entity. You can divide ownership, share shares, consolidate key data and more. Anything that a blockchain can be useful for, basically works with Ethereum. It's not just lovers who realize that. Intel and Microsoft believe in technology.

Bitcoin stands or falls with the popularity of the digital currency. That currency has some scale problems inherent in technology, and as such it can never grow into a true competitor for Visa or Maestro. We often found that specialists themselves believe that Bitcoin is not necessarily a caveat, but the blockchain technology does. Ethereum is the first practical incarnation of that technology. The network continues to be useful as long as people make applications for the blockchain.

Ether

However, the coin associated with the Ethereum network has value, just like bitcoin. You use Ether in principle as a means of payment for the use of the blockchain. Now, users of an Ethereum-based application need to own Ether, but it will be a lot easier next month. An update of the network will then ensure that only the provider of an Ethereum application actually comes into contact with Ether. Unlike bitcoin, the currency is not intended to purchase external affairs.

That does not mean investors. Besides bitcoin, Ether is the most popular currency for speculators. After all, rising interest in block-chain technology seems to suggest a rosy future for the Ethereum chain, and investors want to grab a grinder. Currently, a single Ether is worth about 280 euros. In contrast, the value of a bitcoin amounts to about 3,400 euros. With this, Ether looks like little beer against bitcoin, but market capitalization tells another story. Although Ether is only a fraction of bitcoin, the value of the total market is about 26 billion euros. For Bitcoin, it's hardly anything more than double: about 56 billion euros.

The most important thing to understand is that Ethereum and bitcoin differ fundamentally. Bitcoin is a very specific application of blockchain technology, Ethereum is a user-friendly version of a blockchain on which developers can build applications themselves. Bitcoin is the aim of the bitcoin blockchain in this respect, while Ether is a means for the Ethereum chain to function.