Jul 26, 2022
Part 3: What is Bitcoin, Blockchain, and Crypto?
If Bitcoin and the Blockchain it uses are like vanilla ice cream, then Ethereum and the Smart Contract Blockchain are like the chocolate swirl of the crypto world. Bitcoin might be currently the most well-known and valuable cryptocurrency in the world, but Ethereum is trying to close that gap and take over the top spot. And there are some analysts who believe it eventually will.
The Basics of Ethereum
Ethereum takes the Blockchain tech to another level, with many in the FinTech industry regarding it as ‘Blockchain 2.0’. It is underpinned by smart contracts — basic code added to the Blockchain with instructions to execute an action if, and when, specific criteria are met. For example, a Smart Contract could be written to transfer funds from one user’s wallet to another if Liverpool FC wins the Premier League this season. The benefit of this is greater autonomy to fulfill agreements without the need for a third party to oversee them.
The idea was initially proposed by Vitalik Buterin in 2013. By 2014, £14 million in funds had been raised, and by 2015 Ethereum was launched. Since then, the value for 1 Ether (ETH) has increased from £0.24 to over £2000.00 today.
Similarities between Bitcoin and Ethereum
Both utilize Blockchains at their core, negating the need for a central authority or figure to facilitate transactions. They both currently use cryptography and Proof of Work protocols to validate and verify new additions to their Blockchain (although Ethereum is in the process of changing to Proof of Stake). Bitcoin miners are rewarded with BTC for validating new blocks and fees for each individual transaction, whilst Ethereum miners are rewarded with ETH. They’re also both used as a digital currency and a store of value, but that is about as far as the similarities extend.
Differences between Bitcoin and Ethereum
Whereas Bitcoin is solely an alternative source of money and currency, Ethereum was intended (read more)…
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