Why Ethereum Is Still the Main Competitor of Bitcoin
When it comes to the world of cryptocurrency, two leading cryptos are the most popular and widely traded. The two cryptocurrencies we are talking about are, of course, Bitcoin and Ethereum. Bitcoin was the first ever crypto ever created; however, Ethereum was not created until six years later. Below we will go through why Ethereum is the main competitor of Bitcoin.
What Is Bitcoin?
First of all, before we go into the similarities and differences between Bitcoin and Ethereum, it is crucial to understand what exactly Bitcoin is.
In January 2009, Satoshi Nakamoto launched Bitcoin, the first form of digital currency completely decentralized. It was created as an alternative currency that governments and financial institutions could not impact. What makes Bitcoin so attractive is that it does not exist in a physical form which means transactions can take place instantaneously and are completely secure due to the protection provided by blockchain technology.
Since its creation, the value of Bitcoin has increased significantly and is currently worth over $27,000 for a single Bitcoin as of May 2023. It is clear that cryptocurrency is the future, and many more people will likely get involved in the world of crypto. Ethereum is another cryptocurrency launched six years after Bitcoin in 2015. It functions similarly to Bitcoin – a digital currency that can be traded. Ethereum has unique utility compared to Bitcoin, including the ability to produce smart contracts that can be executed automatically. These smart contracts are also protected exceptionally well as they are secured on the blockchain, which reduces the chance of fraud and cyber-attacks.
In addition to this, Ethereum is also being used to create decentralized apps known as dApps with several uses. These include everything from social media, gaming, and finance, so there is a vast potential for using Ethereum. This is what sets it apart from Bitcoin and is a huge reason why it has become so popular and the main competitor of Bitcoin, as it offers things that Bitcoin does not.
Similarities between the two cryptocurrencies
Although there are some clear differences between Bitcoin and Ethereum, there are also similarities. Both cryptocurrencies function through blockchain technology and adopt the same network. This means that Bitcoin and Ethereum’s network sees the most traffic out of all other cryptocurrencies available on the crypto market. For this reason, Bitcoin and Ethereum are cryptocurrencies with the most value regarding market capitalization.
Bitcoin has much more adoption by institutions, whereas Ethereum is traded by many more people a lot more often. This means Ethereum sees a much higher daily trading volume than Bitcoin. Because Bitcoin and Ethereum are the two most popular cryptocurrencies that function on the same network, they are likely to stick around for a long time as the world of crypto continues to grow. This makes them considerably safer options when it comes to investing in cryptocurrency, as they are a lot less likely to see extreme volatility compared to many other cryptos out there.
Bitcoin’s main function was to create a new and easier way for people around the world to make quick transactions that were secure and didn’t require a middleman such as a financial institution. On the other hand, Ethereum was created to facilitate the production of smart contracts that were self-executing and secure. Ethereum uses something known as competitive validation, which allows transactions to be authenticated and confirmed.
Ethereum, much like Bitcoin, is a form of digital currency; however, this is not its’ main function. As of January 2023, the market cap of Bitcoin was around $300 billion. Ethereum, on the other hand, had a market cap of around $150 billion, just over half of Bitcoin. When it comes to flexibility, Ethereum takes the lead, so much so that some users have started holding their Bitcoin on what is known as the Ethereum Blockchain.
What makes ETH a strong competitor?
The main reason that Ethereum is such a strong competitor to Bitcoin is that it offers things that Bitcoin does not. It exists as a digital asset, but in addition to this, it has wide uses in facilitating the execution of smart contracts and digital apps. Ethereum is just as secure as Bitcoin as it also uses blockchain technology, meaning transactions are protected extremely well with almost no risk of cyber theft or fraud. Again just like Bitcoin, Ethereum is regarded as a decentralized platform, which means that it cannot be influenced by governing bodies and financial institutions.