If you’ve heard of Bitcoin, you’ve probably also heard of Ethereum, and might be confused about the difference.
While both Bitcoin (BTC) and Ethereum’s coin Ether (ETH) are cryptocurrencies, mined on their respective blockchains, the way they operate is quite different.
Let’s start with the basics.
Bitcoin is the world’s first and most popular decentralized digital currency, launched in early 2009. Over the past decade it has proven to be the most successful attempt to create virtual money using cryptography — the science of protecting information through codes (that’s why it’s called a cryptocurrency).
Bitcoin transactions are recorded and stored on a public ledger known as the blockchain. Blockchain technology is being used for more and more purposes, but digital currency is the first and most well-known.
Bitcoin is created when Bitcoin miners with powerful computers run complex programs that confirm groups of transactions stored on the blockchain; it takes about 10 minutes to form each block of the chain, which is rewarded by paying the miner a set amount of Bitcoin. This reward is halved over time, known as “halvening.”
Ethereum/Ether/ETH (this will make more sense in a minute) was designed to be more flexible than Bitcoin, and to go well beyond its purpose. “Ethereum is a global, open-source platform for decentralized applications,” states Ethereum.org. “On Ethereum, you can write code that controls digital value, runs exactly as programmed, and is accessible anywhere in the world.”
Bitcoin is mined on the Bitcoin blockchain, and Ether is mined on the Ethereum blockchain. So, the blockchain is Ethereum, and the currency is Ether. With Bitcoin, both the blockchain and the currency are Bitcoin (although, well, technically, bitcoin the currency is usually spelled with a lowercase b, whereas Bitcoin the network usually has an uppercase B.)
If you mistakenly call Ether coin “Ethereum” or spell Bitcoin the currency with a capital, you’ll be forgiven — unless you’re talking to a hardcore crypto crowd. And even some of them get it wrong. But you’re reading this because you wanted to know the difference, so let’s dive a bit deeper.
The biggest difference between Bitcoin and Ethereum is that Ethereum is a programmable blockchain, used to run smart contracts. A lot of other digital currencies (like stablecoins) and hundreds of decentralized apps (DApps) are built on Ethereum. In fact, it’s by far the largest and most popular smart contract blockchain. Others include Tron and Loom.
A smart contract uses “If This Then That” (ITTT) logic to execute various actions, programmed on the blockchain. Once a contract is executed, the code is updated on the blockchain ledger and can’t be reversed or tampered with.
Ethereum smart contracts have built-in regulation, on-chain logic, go through multiple audits and are closely watched to maintain security.
Ether is more than digital currency; it’s a digital commodity. It’s the fuel that powers the Ethereum platform, and in the crypto world you’ll hear ETH equated with “gas”. Ether runs the applications and smart contracts built on the Ethereum blockchain, and it’s basically programmable money.
While Ethereum has a lot of different applications, Ether only has one designated function: to enable operations on the Ethereum blockchain. And yet, like BTC, more and more places are accepting ETH for purchases off-chain. So, it’s still OK to refer to it as a digital currency, virtual currency or cryptocurrency (it’s all three).
Did you know that you can buy or sell BTC or ETH for cash (as well as close to 30 other digital currencies) at any CoinCloud?
Yup … while other Bitcoin ATM companies allow you to buy (and usually JUST buy) bitcoin, and sometimes a few other coins, CoinClouds all let you trade both ways, and with a larger selection of virtual currencies.
To find out more about these and other digital currencies, download our free Ultimate Guide to Digital Currency.
Disclaimer: The information and views supplied on the Coin Cloud blog are for educational and entertainment purposes only. We are not financial advisors, so please do your research and consult with a trusted financial specialist before investing your money.
Founded in 2014 in Las Vegas, Nevada, Coin Cloud is the leading digital currency machine (DCM) operator. With over 4,500 locations nationwide, in 48 states and Brazil, Coin Cloud operates the world’s largest and fastest-growing network of 100% two-way DCMs, a more advanced version of the Bitcoin ATM. Every Coin Cloud DCM empowers you to quickly and easily buy and sell over 40 cryptocurrency options with cash.
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