Irrespective of the fact that countless cryptocurrencies are now available, the world is still dominated by the likes of Ethereum (ETH) and Bitcoin (BTC). Besides their swift advancement and prominence as the digital assets with the highest trading volumes, the similarities more or less end there. A few experts in finance and cryptocurrency are optimistic that Ethereum will overtake Bitcoin by 2026, so keep an eye on the ETH coin price because the “flippening” might happen sooner than expected. In the world of cryptocurrency, Bitcoin used to be king, but since Ethereum’s genesis, it’s started to lose its luster.
The question now is: How can Ethereum match up to Bitcoin in terms of features, uses, and more? Well, if you really must know, please continue reading.
Bitcoin Is Digital Gold, While Ethereum Is Digital Silver
Bitcoin functions as a store of value, just like gold, substituting the original narrative as a medium of exchange. BTC has all the necessary characteristics to be a store of value, namely limited stock, a decentralized blockchain, divisibility, and inflation hedging. Most likely, investors will gradually increase their Bitcoin holdings to the detriment of their holdings in other digital assets. This is the rational way forward. People have always sought assets that the government doesn’t control, so it doesn’t come as a surprise that Bitcoin is the 21st-century gold. Its market capitalization is significantly higher than Ethereum’s, which offers many applications and use cases.
If Bitcoin is often referred to as digital gold, then Ethereum would be digital silver. Attention must be paid to the fact that these are just opinions, not universally accepted facts. Ethereum, too, can provide a hedge in a potential economic or market downturn (or during sustained periods of high inflation). ETH tends to be cheaper than BTC, making it more accessible to small retail investors who want to diversify their portfolios. It’s less scarce and, therefore, less valuable, but Ethereum can quickly adapt to the needs of application developers. Ethereum aims to connect people globally to a smart contract system that facilitates interoperability.
Ethereum Uses a Proof of Stake Consensus Algorithm, While Bitcoin Relies on Proof of Work
The consensus algorithm is the blockchain’s basic technology – it establishes which nodes can record transactions and authorizes them to agree on the information included in the block. Originally, Ethereum used the same consensus algorithm as Bitcoin, Proof of Work, that is. On 15 September 2022, the network implemented a Proof of Stake consensus mechanism, drastically reducing energy consumption and paving the way for shard chains. The Ethereum Mainnet merged with the Beacon Chain, completing the Merge. Under Proof of Stake, transactions are confirmed by addresses that have staked to a smart contract with lots of ETH.
Bitcoin currently uses a Proof of Work consensus mechanism by which miners are rewarded for the amount of computational power used to help validate transactions and add them to the blockchain. It’s necessary for the ledger’s security and prevents any third party from compromising it. Regrettably, Proof of Work wastes resources and involves a high level of energy consumption, with miners receiving fewer and fewer BTC for their efforts. The halving is ingrained in Bitcoin’s protocol, with halvenings occurring every 210,000 blocks, roughly every four years. Only miners with the lowest energy costs and most efficient equipment will survive.
Ethereum Is Designed to Be Faster and More Efficient Than Bitcoin
Ethereum transfer times take anywhere between 15 seconds and 5 minutes, but the average transaction speed can vary based on factors like blockchain fees and network congestion. Ethereum transaction fees are referred to as gas prices. When sending ETH, interacting with a smart contract, or sending ERC-20 tokens on the blockchain, there’s a fee associated with every transaction. The gas fees act as fuel for the entire ecosystem. By contrast, it takes Bitcoin around 40 minutes to complete the process, which could be influenced by block time, transaction fees, and network traffic. Waiting so long for a transaction to be confirmed is far from ideal.
Transaction speed is important because it highlights what cryptocurrency is more efficient. Ethereum is more efficient than Bitcoin, which basically means the underlying technology is capable of transferring data from one party to another and confirming transactions in a timely manner. Even if Bitcoin is ranked as the best digital asset in existence, its transaction speeds are relatively low compared to other contenders. Ripple, for instance, is capable of settling transactions in just 3 or 5 seconds. While many traders prefer Ethereum, the experts argue that Ripple is a much better alternative.
Ethereum’s Hash Rate Is Higher Than Bitcoin’s, So It’s More Secure Against 51% Attacks
Ethereum, similar to Bitcoin, leverages cryptographic technology to secure transactions and prevent fraud, yet it boasts additional features and capabilities that make it more secure. Ethereum Improvement Proposals (EIPs) are one such example. They’re formal proposals to alter or upgrade the network, which must be agreed upon by the entire community. It goes without saying that EIPs play a key role in addressing security vulnerabilities and improving the overall resilience of the Ethereum blockchain. Let’s not forget that Bitcoin has a large, established user base, not to mention a more mature development community.
The hash rate is a crucial metric for measuring the strength of a blockchain network. Given that Ethereum and Bitcoin use different consensus algorithms, their hash rates aren’t directly comparable, but it’s worth noting that Ethereum’s hash rate is higher than Bitcoin’s, meaning it can withstand a 51% attack. Owning 51% of the nodes in the network gives the controlling parties the power to alter the blockchain. Following Ethereum’s transition to the Proof of Stake consensus mechanism, undertaking a 51% attack is more expensive. It’s highly unlikely someone will get hold of 51% of the staked ETH.
Conclusion
Ethereum, as well as Bitcoin, can provide lasting value, enabling a healthy, mature, and diverse cryptocurrency ecosystem. There’s never been a better time than now to invest in cryptocurrency, so do your due diligence and research – it’s up to you to decide which one is a better buy over the long haul.
