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Even though most people believe that Ethereum is a cryptocurrency, it is not precisely true. Ethereum is an online platform that allows people to conduct their day to day transactions and to draw up contracts using a form of currency known as ether. Cryptocurrencies are a type of digital currency made through encryption. The currencies have no physical form, like coins or banknotes, and are not issued by government authorities or banks. On the internet, cryptocurrency units exist in form of data and people make and manage them through blockchains.
Blockchais are fundamentally a form of digital ledger shared among many computers. Whenever a transaction occurs, it is recorded in the blocks. For the blocks to land in the ledger, computers linked to the blockchain network have to validate them.
Initially proposed in 2013, by Vitalik Buterin, Ethereum is a digital currency that people use to operate smart contracts on Ethereum networks. Just like Bitcoin, Ethereum network and the Ether tokens are not issued or controlled by any government or bank. We can therefore simply call Ethereum an open network managed by the users.
What are smart contracts?
Smart contracts are computer protocols that verify, facilitate and enforce performance and negotiation of contracts or that create contractual clauses. Smart contracts emulate contractual clauses logic.
In simpler words, smart contracts represent a Blockchain technology that is likely to replace lawyers in addition to saving people conflicts and time where the need to engage intermediaries does not exist. That is among the reasons why most banks and government agencies are turning to them. They are also cheaper, faster and more secure than a large percentage of the traditional systems.
With Ethereum, developers are able to create and spread decentralised applications. Any centralised system remains vulnerable mainly because it has just one governing element that can become a good target of attacks. Ethereum has a vision of decentralising the internet by building a platform where developers can create and run applications of decentralised networks. Decentralised systems can never fail and in case any of the elements go down, the other elements remain intact. Therefore, some people will also refer to Ethereum as the World Computer.
Before Ethereum development, developers created blockchain applications to help accomplish limited operation sets. Put differently, the developers experienced many difficulties. They had to either expand the functions Bitcoin offers or other applications a task that was both time consuming and difficult. The other option was to develop new blockchain applications in addition to new platforms.
With Ethereum, they do not have to build an original blockchain for every new application. That is because Ethereum allows development of thousands of various applications on a single platform. In fact, Ethereum stands out from the other altcoins. That is because it is a basically a world computer distributed across numerous machines, known as nodes, that run applications in uncensorable, unstoppable and trustless manner. What’s more, Ethereum extends the uncensorable cryptocurrency nature such as Bitcoin to every application you can imagine. Most cryptocurrency experts believe that Ethereum has surpassed Bitcoin.
Differences between Ethereum and Bitcoin
A strong competition between Ethereum and Bitcoin has always existed. Within the last few years, Ethereum has attracted more people than Bitcoin. Any person who experienced problems using Bitcoin has opted for Ethereum. The following are the key differences between Ethereum and Bitcoin.
Ethereum is technologically smarter
Most people believe that Bitcoin is better than all the other currency platforms. Actually Bitcoin is among the first primary crypto currencies and it has existed for over 9 years. On the other hand, Ethereum is a newer currency platform that was launched a few years ago. Compared to Bitcoin, Ethereum offers several interesting technological facts. Its platform operates on smart contracts that are a new revolutionary technology and the technology is likely to form part of Bitcoin’s platform. Bitcoin lacks decentralised applications.
Ethereum has no fixed supply cap
Ethereum is comparatively a new platform and therefore, you should expect the availability of coins to be high. Today, coins are scarce in the Bitcoin world. The coin supply cap in Bitcoin stands at 21 million BTC. The number of coins circulating in Ethereum platform stands at 92 million. One thing that most individuals overlook is that Ethereum will remain to be an inflatory currency. It has no fixed maximum cap.
Ethereum offers a better donation and fundraising medium
Ethereum based fundraising and donation platform has been gaining exposure faster and it is already a better medium for fundraising and donations. The platform helps in gaining more exposure through the economically incentivized efforts. One of the popular fundraising and donation platforms on Ethereum is Grace. It has been raising funds and collecting donations at no extra costs. Grace also allows audit to ensure that the donations lands on the right hands and to eliminate chances of fraud.
On the other hand, Bitcoin is a decentralised global currency that allows people to send money to others without the interference of third parties or banks. To send money, you just need a computer to complete the transactions. Bitcoin operates on Blockchain technology – one of the accurate and more protective security systems.
Ethereum has a higher value than Bitcoin
Both Ethereum and Bitcoin have contributed to significant gain of value within the last few years. However, if you compare the gain of value in the two cryptocurrencies, you will realise that the gain in Bitcoin is lesser. And even though Bitcoin has existed for a longer period than Ethereum and its value has been increasing steadily, Ethereum’s value has highly increased in the short period it has been in existence. Its values shot up within a shorter period and surpassed that of Bitcoin. In addition to that the value has been rising constantly and we expect the trend to continue for many years to come.
Actually, Ethereum is better than Bitcoin. Currently, it is a new cryptocurrency running on regularly updated technology. The availability of coins on the platform is higher. Lastly, it is gaining momentum and speed faster than Bitcoin.