(POST CREATED FOR BRAIN CHANGE)
With the hype over Facebook I doubt anyone wrote these words: “Instead of social media, you should invest in cryptocurrencies.” As it turns out, that’s exactly what you should have done. Bitcoin and etherium are experiencing an intensive inflation which the world has never witnessed before.Bitcoin has been dominating most of the market but now faces a tough competition from the 2015 introduced etherium.
Coexistent or in a state of Competition
Pacific coexistence is a tale, both Bitcoin and etherium are competing against each other to get new users every day every minute. Ethereum has grown into a modern trading and investment instrument, causing the danger to the bitcoins dominance. Ethereum’s daily trading volume is currently about 1/5th that of Bitcoin.
Block Time.
Bitcoin has a Proof of Work blockchain which is currently composed of 1-megabyte blocks. These blocks are mined on average every 10 minutes by SHA-256 hashing. Bitcoin mining is primarily performed by ASIC devices. Bitcoin’s blockchain can process around 3 transactions per second.
Ethereum currently has a Proof of Work blockchain, although a proposed fork will switch it to Proof of Stake (PoS). The Ethereum blockchain is composed of blocks of variable size. Blocks are mined on average every 15 seconds by hashing a modified Dagger-Hashimoto algorithm. The most significant contrast between the two block chained projects is that the mediocre block time. Bitcoin's the routine blockchain is about 600 seconds whereas in etherium it is about 12 seconds.This authenticates that for instant transactions etherium is better than bitcoin.
Supply.
In Bitcoin, more than two third of the available coins have already been mined and most of it has gone to early miners leaving less space for monetary supply whereas in etherium lanced its initial capital by presale and only half of the coins have only been mined since its debut. Bitcoin’s total supply will be strictly limited to 21 million coins. Bitcoin’s issuance is halved roughly every 4 years. As of the next halving in July 2017, Bitcoin’s inflation rate will drop to an annual rate of ~5%. Future halving events, combined with coins lost through user error, will ultimately result in a deflationary currency.
Ethereum’s issuance by miners is capped at an annual rate of 18 million ETH. This represents an inflation rate of ~20% at the current supply. As ETH is not consumed by running programs but instead sent to the miner of the associated transaction, Ethereum’s value is likely to decline in the long term.
Economic Model.
Both cryptocurrencies have two separate economic models. Bitcoin rewards in four years and is currently valued at 12.5 bitcoin. In etherium miners are rewarded on the basis of its proof-of-work algorithm called Ethash with each block comprising of 5 ethash.
Ownership.
The majority of the ownership of the coins in Bitcoin that will ever be mined is to the early miners. That means the individual who mined bitcoins when bitcoins were introduced are the owners of half of the bitcoins in existence.Since bitcoins supply is limited to 21 million people who are new to bitcoins will find it very difficult to get any bitcoins in etherium the year 5 miners will have 50 percent of the coins.
Mining.
Ghost Protocol in etherium fends off the use of centralized pool mining, wherein Bitcoin pool mining concept is used.Bitcoin is only profitable when mined with specialized ASIC hardware running on very low-cost electricity.Ethereum is profitable to mine on high-end GPUs, especially given low power costs.
Programing Language.
Bitcoin transaction data doesn’t just confer ownership of coins; it also conveys certain instructions relating to a transaction. For example, a recently-implemented change allows sent coins to be locked for a custom time period. The set of possible instructions is known as Bitcoin’s scripting language and it’s intentionally limited to transactional processing. Ethereum’s primary innovation was to expand this set of instructions into a fully-featured programming language such as JavaScript, which Ethereum’s language closely resembles. This is what is meant by Ethereum being “Turing-complete.”
Decentralization.
Hashrate distribution among mining pools is fairly equal between Bitcoin and Ethereum on a percentage basis.The majority of Bitcoin mining occurs in China due to favorable economic factors. This raises a red flag in terms of the potential pressure the Chinese state could exert on the Bitcoin mining network. While Bitcoin could alter its mining algorithm to thwart any takeover attempt, this “mining hardware reset” would doubtless prove tremendously destructive.Although Ethereum mining in its current state resembles the glory days of individual-level Bitcoin mining, its planned switch to PoS will likely increase centralisation. Gavin Andresen, the former Bitcoin lead developer, succinctly critiqued PoS thus: “I think proof-of-stake is hard coded, ‘the rich get richer’ and is deeply unfair.”
The Cost of the Transaction.
Costing of the transaction is quite distinctive in Bitcoin and ethrium.in bitcoin, the transaction has their limit.They are restricted by the block size and compete justly with one another whereas in etherium transaction cost depends on the storage need, complexity, bandwidth usage and is titled as gas.
Cultural level.
Bitcoin users tend to be politically and economically conscious. Many users support certain principles, such as individual sovereignty and free markets. There exists a definite aversion to central planning and control, so Bitcoin is often revered as the counter to central banks and big governments. Ethereum users tend to be less ideologically-motivated. They are generally content to vest ultimate authority in Vitalik Buterin, inventor of Ethereum. The community’s focus tends to be on the technology’s future business and financial applications.
Dominance, Pricing, the Market capital.
Bitcoin ranks first 1 in cryptocurrency and is worldwide accepted which shows the commanding feature but with Microsoft Azur backing etherium it is explicitly giving Bitcoin a feared competition, As the leading digital currency, Bitcoin without a doubt is the most expensive cryptocurrency in the market with 1 bitcoin costing around $2729.50 whereas 1 ether fetches $224.16.
Bitcoin has a capital of $45 billion whereas ethetrium has a market capitalization of $35 billion.
(As on 24/07/17)
Stats from www.coinmarketcap.com
The Verdict.
While many will compare the cryptocurrency aspect of both Ethereum and Bitcoin, the reality is that they are vastly different projects and have different intentions. Bitcoin has emerged as a relatively stable digital currency, while Ethereum aims to encompass more, with ether just a component of its smart contract applications.
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