Bitcoin and Ethereum — Comparison of the Top Two Cryptocurrencies in Light of the Etheros Project.

8 min readSep 20, 2021

Bitcoin and Ethereum are the two largest cryptocurrencies built on blockchain technology. Both projects are often said to be turned against each other, while in reality, they are two distinct networks based on disparate assumptions.
Bitcoin can be compared to gold, while Ethereum seems like a more decentralised computer. Both systems are supplied and secured by a decentralised network of people from around the world (miners) who are paid for participating in the process of keeping the network secure.

Decentralization is the basic characteristic of blockchain technology, and this is what makes Bitcoin so unique. For instance, the US dollar is centrally controlled by the US government. When centralized entities failed the world in 2008, Satoshi Nakamoto created Bitcoin to decentralize control over money. Ethereum was inspired by Satoshi’s project, but it gave rise to entirely new possibilities.

Creating the Etheros world has given us the opportunity to know both networks very well, so we’d like to have a closer look at both projects. We’ll examine their similarities and differences.

What is Bitcoin, and how does it work?

In January 2009, the enigmatic person aliased Satoshi Nakamoto published a document entitled “Bitcoin: A Peer-to-Peer Electronic Cash System” online. In it, the creator presented the concept of electronic money that could safely work without any centralized control — without any banks and public institutions. Bitcoin gave rise to the idea of cryptocurrency — money protected by cryptography, which could be transferred between users without any intermediaries.

Bitcoin was not the first time the world thought about a decentralised, non-tangible form of money. However, it was the first time such an idea actually took hold. The value of all other cryptocurrencies (including Etheros) is generally correlated with that of Bitcoin and Bitcoin is still more often traded than any other digital coin.

The initial goal of Bitcoin was to create a real alternative to the traditional fiat currencies, managed by central banks. The Bitcoin community is still working on solutions boosting scalability, ones that would allow a higher number of transactions while maintaining the minimum transaction fees. At present, BTC is often treated as a store of value, but is being more and more frequently used as a medium of exchange.

What is Ethereum? What we should know before investing?

Ethereum is a global computing platform supplied by its native cryptocurrency, Ether (ETH). The demand for ETH grows as the need for computing power goes up.

The programming language employed in Ethereum is Solidity. It serves as a means to creating smart contracts, or forms of digital agreements, which can be stored on blockchain. Programmers decide to build their applications on Ethereum because it’s highly decentralised, and thus immune to censorship and hacking. Peer-to-peer applications functioning on Ethereum are known as decentralised applications (DApps). The ETH currency is required to start DApps on the “global computer”, or the Ethereum blockchain.

Ethereum was launched in 2015 as a way to improve the weaknesses of Bitcoin. Its use cases offered more possibilities for programmers to create novel applications, so it eventually became a separate and competitive entity. It was originated by Vitalik Buterin and his team. The platform is currently one of the most rapidly developing blockchain projects. It is not surprising, then, that there are a lot of projects supported by ERC20 tokens. It has even become a standard in terms of security and availability for users. The Etheros project is also based on the Ethereum blockchain.

What are the differences and similarities between Ethereum and Bitcoin?

Both Bitcoin and Ethereum are decentralised products, so they are not controlled by any government or other central authorities.
Both are built on distributed ledgers known as blockchain.
Blockchains are controlled by a decentralised network of users. They are rewarded for processing the data stored on each blockchain. Every person trying to tamper with the system will be immediately revealed and every attempt at fraud will be blocked.
Blockchains are resistant to changes and attacks as long as at least a half of the network follows the assumptions made in the algorithm.
Bitcoin was designed so as to allow users to transfer value under the veil of anonymity, without participation of a central bank or other intermediaries. In turn, Ethereum is a blockchain offering a much wider array of possibilities. In addition to the transfer of means, it allows designing all sorts of applications, the operating principles of which are governed by smart contracts.
Interestingly enough, some users are starting to hold their Bitcoins on the Ethereum chain, not on that of Bitcoin. Bitcoins on Ethereum are known as wrapped Bitcoins. On the other hand, Ether cannot be stored on the Bitcoin blockchain.

What is Consensus Mechanism?

Both Bitcoin and Ethereum use the Proof-of-Work (PoW) consensus algorithm. PoW is a method of safeguarding and achieving consensus and is based on data processing (doing calculations) with specialised equipment spread across the world. The process is referred to as mining. However, Bitcoin’s consensus mechanism has been left without major upgrades, while the Ethereum ecosystem is witnessing its considerable modifications.

The Ethereum project is planning to change the consensus algorithm into Proof of Stake (PoS). In PoS, the network will be guarded by validators. They will stake (meaning hold in wallets) some quantities of tokens to verify and create new blocks. The Ethereum 2.0 update will be the largest update in the history of the platform.

Block Confirmation Time — why is it so important?

In terms of transaction speeds and block confirmation times, Ethereum moves much faster than Bitcoin. The confirmation of every block in Bitcoin takes 10 minutes on average, while in Ethereum the job is done in merely 10–20 seconds. Bitcoin can handle 5–7 transactions per second, Ethereum around 10.

The latter can handle more on-chain transactions than the former. This is vital, particularly in view of the ecosystem of decentralised applications. Given the current trend, the number of transactions on Ethereum has outstripped Bitcoin by quite a distance.

With its Proof-of-Stake consensus algorithm, Ethereum 2.0 is to handle even 100,000 transactions per second, which will without a shadow of a doubt allow a lot of on-chain transactions in the Etheros project to be carried out in a fast and problem-free manner. It will be a huge step forward compared to the current throughput in the network.

What is the supply of Bitcoin? What is the supply of Ethereum?

Bitcoin has a constant supply of BTC 21 million. New Bitcoins are issued with every newly mined block. Therefore, the term “block reward” has been coined. After every 210,000 blocks, that is every 4 years or so, the rewards are reduced by fifty per cent. This is known as halving. The reward for Bitcoin’s genesis block was BTC 50. The last, third halving took place in 2020 and reduced the reward to BTC 6.25 per block.

Unlike BTC, Ethereum does not have a constant supply and is not deflationary. However, after the EIP-1559 update, planned for August 2021, Ether will become a deflationary token.

EIP-1559 will introduce a new mechanism, where one gas fee will be replaced with two: a base fee and an inclusion fee. The base fee will be fixed and will be subject to the mechanism known as “burning”. The inclusion fee will serve as an optional tip for miners. The mechanism will reduce the ETH supply over time.

Property Management

The Bitcoin protocol uses Unspent Transaction Outputs (UTXO) to manage the BTC ownership in the network. Each BTC in the network is such an output, which is linked with a private key and a public key. When an individual moves some BTC to another address, the coins not only leave the wallet but the ownership of UTXO changes as well.

Ethereum uses a model resembling a bank account. Your account is debited or credited based on outgoing or incoming transactions. The UTXO model employed in the Bitcoin network is costly in terms of the required computing power. In turn, the mechanism applied by Ethereum is simpler and cheaper.

Summary: Bitcoin vs. Ethereum — Two Fundamentally Different Ideas

The comparison of Bitcoin and Ethereum leads to a deeper discussion on what blockchain technology can do to improve many aspects of our lives. Those two platforms are becoming more and more important tools in many industries — finance, transport, tourism, medicine and more.

It is vital to understand that they are both two fundamentally different ideas. Bitcoin is a store of value, whereas Ethereum is a decentralised platform for handling smart contracts. Ether is a currency and a programmable value that drives the network. Both cryptocurrencies rely on blockchain, which protects the platform. It must be stressed here that the Etheros World uses both those networks at the same time to carry out the basic transactions between its users. Thanks to blockchain, we don’t have to share our personal data to strike deals. The technology enables us to exchange (not only financial) value in an entirely new way. We don’t have to trust any institutions, as everything is controlled by the algorithm and the decentralized community of users from around the world.

Surely, both cryptocurrencies — Bitcoin and Ethereum — have had an immense influence on the development of the industry. They have inspired a lot of programmers and business owners to create novel decentralized applications like Etheros, managed by the community.

You haven’t had the opportunity to join our community? All’s not yet lost! The Etheros world is being created before your very eyes. Obtain or buy our tokens and use them to your liking. Here, you can play, have fun, become the owner and user of any place or thing according to your own imagination as well as create value and make a profit. You can invest in land in New York, opal mines in Australia or a drilling platform in Norway. Or you can create entirely new places, devices or solutions for your futuristic world.

This is where you invest in your future! Mere ownership of space is already a “safe haven.” It secures your property and even gives you the right to appoint a successor. Noticing the needs of other users, you create solutions for them and generate profit in the process. Etheros is a store of value in a virtual world based on cooperation and fair principles of community life.