Lately it seems money has been growing on the internet. Yes, we live in the age of digital currencies, with crypto currencies rising within the decade. Yet, already there are more than 800 crypto currencies in the market and at least one new currency almost everyday. As we embrace the new avenues of market, it’s important to understand a little about these currencies. So we have tried to compare and contrast the two popular currencies Bitcoin and Ethereum here.
Bitcoin is the name of the network whose currency is also called Bitcoin(BTC) and was invented in 2009 by Satoshi Nakamoto. Ethereum is the name of the network whose currency is called Ether(ETH) and was invented in 2015 by Vitalik Buterin.
Both the currencies can be bought at exchange platforms like Coinbase, Gdax or Kraken and the price denotes the price of the tokens. To keep the network running, both the systems allow individual nodes to participate and compete with each other to receive currencies as awards. Every 10 minutes, 12.5 BTC tokens will be generated to reward the participant who mines the next block. ETH rewards a participant with 5 tokens every 10-20 seconds.
What’s the difference?
The purpose of ETH is to facilitate Smart contracts like ownership of property, lawyer’s contract, etc whereas BTC is created to compete against the gold standard & fiat currencies.
Bitcoin is very popular and can be used for purchasing goods and services. Some retailers and diners accept BTC as payment. It can be traded in exchanges. Japan recognizes BTC legally as a payment medium. ETH can be used only for making decentralized apps on the Ethereum blockchain.
The supply cap of BTC is 21 million in total whereas ETH is 18 million every year. So this shows that there are only finite number of Bitcoins whereas Ethereum is inflationary in style and more tokens can be made over time. The price of BTC is $6140 whereas ETH is $308.
As you know, for BTC the supply cap is fixed at 21 million. The circulating supply currently is 16,653,787 BTC.
The rule is when Bitcoin blockchain reaches every 210,000 blocks, the reward will be halved. It started with 50 BTC as reward per new block. We have seen that approximately in every 4 years the reward is halved and it is 12.5 BTC now at 487,000 block. When it reaches 630,000 block, the reward will be halved again to 6.25 BTC.
ETH has a rule that the tokens rewards every year cannot exceed 18 million but there is no limit on the total supply. The current circulating supply for ETH is 95,409,087 ETH.
It is an evolving market and with so many crypto currencies, it is difficult to separate the good ones from the noise. But if you identify the worthy ones on total trade volume over the past week, you will find that BTC and ETH are on the top. Yet, we should remember that the cryptocurrency market will inevitably be different next month or week.