For a long time, BTC – short for Bitcoin was the undisputed king of the crypto world. Reports of Bitcoin’s successes and failures are often intertwined with how the world perceives the entire blockchain. However, like all empires, there is always a challenger to the throne. In recent years, new and faster technologies have expanded the concept of blockchain and what it can be used for.
In this article, we will talk about Bitcoin’s place in today’s crypto world and the role of Ethereum.
Bitcoin and Ethereum: The Story of These Two Technologies
When thinking about the differences between Bitcoin (BTC) and Ethereum (ETH), it is important to understand that they are similar but not exactly the same. Bitcoin and Ethereum are both used as fast and secure peer-to-peer payments, methods of guaranteeing and storing value, diversifying sources of funds, and paying retailers in exchange for products or services. service.
However, they are designed to serve completely different purposes.
The creator of Bitcoin, Satoshi Nakamoto, originally defined it as a form of currency, a way of paying for goods and services to make transactions without a middleman to reduce costs and time. transaction. On the other hand, Ether, the native cryptocurrency of Ethereum, powers many other blockchain applications.
Here’s how each works, what they were made for, and how they’re actually used today.
Bitcoin as a currency
In 2008, a mysterious figure named Satoshi Nakamoto published the whitepaper of Bitcoin: A Peer-to-Peer Electronic Cash System. As of this writing, the true identity of Satoshi Nakamoto has yet to be revealed. In fact, it remains unclear if this is a nickname or the name of a larger, organized group. Released as open source software, Bitcoin is the original cryptocurrency created through the process of mining. Bitcoin mining is the process by which powerful computers solve complex algorithms to generate new Bitcoins.
Cryptocurrency
In the beginning, Bitcoin was like digital cash — anonymous, secure, and fast. Because of these things, Bitcoin has a long and complicated history, especially in the dark web. Before it went mainstream, Bitcoin was the preferred payment method for the underground internet economy.
Combined with its anonymous creators and general lack of adoption, this is one of the reasons why Bitcoin struggled with legitimacy in its early years. However, despite the bad start, Bitcoin has changed its image over time.
Wide applicantion
Eventually, Bitcoin became mainstream and widely accepted by people and institutions worldwide. From tech companies, auction houses, fast food chains and businesses, Bitcoin is the most recognizable cryptocurrency today.
In 2021, Nasdaq reports that over 46 million Americans own Bitcoin. Currently, over 15,000 retailers accept Bitcoin as a payment method. It can be said that the number of Bitcoin users and retailers is growing exponentially every year.
Digital Gold
By design, only a certain number of Bitcoins are created. This is mainly to maintain the anti-inflationary properties that affect the currency. There will only be 21 million Bitcoins in existence, although many millions of Bitcoins are believed to have been lost.
Furthermore, the limited supply of Bitcoin has led to an unexpected consequence. Although Bitcoin was designed primarily as a currency, many users now use BTC as a store of value. Created as digital gold, Bitcoin has evolved to be more of an investment vehicle than for everyday use.
However, many crypto enthusiasts believe that Bitcoin is the foundation for the development of blockchain. In reality, however, one of the current stars of blockchain is Ethereum.
Ethereum as a Network
Launched in 2015, Ethereum is an open source computing platform run by the community. Currently, Ethereum is the largest and most established decentralized software platform. Using smart contracts, fraud control or third-party interference, Ethereum essentially puts power back in the hands of its users.
The Ethereum Virtual Machine (EVM) helps ensure that these transactions or smart contracts follow the rules in the network. To have the above privileges, users need to use Ether, the token of the Ethereum network. The Ethereum blockchain then stores the entire history of all transactions and smart contracts on the network.
In many ways, Ethereum ushered in the next generation of blockchain-powered technology. Often referred to as the world computer, here are some examples of its many uses.
Dapps
Decentralized applications, commonly known as Dapps, are applications that run on the Ethereum blockchain. Overall, Dapps are like most other apps you use. However, your interactions and transactions are recorded on the Ethereum blockchain. Since the Dapp runs on the Ethereum blockchain, it uses the same decentralized, distributed model, which means that the Dapp is nearly impossible to restrict or censor.
Decentralized Finance (DeFi)
Decentralized Finance (DeFi), a non-discriminatory or non-temporary financial system, is one of its more popular and practical applications for the Ethereum network. Using DeFi, Ethereum allows you to send, receive, borrow and earn interest from anywhere in the world.
To bypass the traditional banking system, users only need an Ethereum wallet and the internet. This will not only help people living in areas that do not have access to financial services, but will also help reduce the huge costs associated with transactions (although fees on eth are very expensive right now :v ).
Non-Fungible Tokens (NFT)
Besides that, Ethereum also allows non-fungible tokens (NFTs). NFT revolutionizes ownership on the internet and helps creators tokenize their art, allowing them to automatically earn royalties each time it is resold.
For this reason, creators can avoid having their work copied and even use their NFT as collateral for financial services. In addition, NFT helps to protect users from others taking advantage of them without their consent.
Invest in the right cryptocurrency for you
More than a decade since the first cryptocurrency launched, doors continue to open for the technology. While Bitcoin and Ethereum continue to compete with each other, they also complement each other. When it comes to technology, however, only time will tell who is at the forefront. In addition to Bitcoin and Ethereum, there are many burgeoning cryptocurrencies that are claimed to be even better.
In many ways, investing in cryptocurrency is like investing in the kind of world you want in the future. When you buy BTC or ETH, you’re essentially saying you believe in the problems it’s meant to solve. With developers still learning about what blockchain can do, it’s not easy to know which will ultimately win out and for which specific uses.