Cryptocurrencies are one of the most popular and productive digital ways people use nowadays to make money. Cryptocurrencies are also used for purchases in the daily life and for that reason, new cryptocurrencies are being developed day in and day out. Bitcoin (CRYPTO: BTC) and Ethereum (CRYPTO: ETH) are two of the biggest players on the cryptocurrency market. New investors are often advised to choose their starting currency among these two. So what should you know to help you decide which one of them suits you better?
Ethereum and Bitcoin are similar in many ways. First, they are digital and non-centrally issued currencies. This means that they are not issued or regulated by a central bank or any other authority. Second, they all operate using the proof-of-work consensus. This means that for both Ethereum and Bitcoin, the verification and confirmation of transactions requires a network-wide consensus of nodes. Due to this condition, both of them are slow when it comes to transaction processing. They both use the distributed ledger technology known as blockchain.
Ethereum is slightly faster than Bitcoin: it normally processes 10 to 15 transactions per second, while Bitcoin processes 3 to 5 transactions within the same duration. At least, this is true for the current version of Ethereum. One of the big expectations in the market right now is that the upcoming 2.0 upgrade will provide faster transactions and other particularities.
However, the major point that makes a difference between Ethereum and Bitcoin is smart contracts. Smart contracts are digital contracts that have a variety of applications, and the term is more likely associated with Ethereum blockchain.
We should also keep in mind that the primary purpose of Ethereum is not to establish itself as an alternative monetary system, rather to facilitate and to monetize immutable, programmatic contracts and applications. Bitcoin, on the contrary, was created as an alternative to national currencies.