Ethereum Versus Bitcoin – Pros and Cons
Bitcoin is the pioneer cryptocurrency and was developed in January 2009. It has grown to dominate the market and command a huge following. Ethereum, on the other hand, was developed in 2015 and has fiercely challenged Bitcoin for the market’s pole position. These two cryptocurrencies share a lot of key features but are also quite different in other areas. The differences have created two legions of followers who sharply differ on which cryptocurrency is better and will be the king of cryptocurrencies in the long run.
Here are some of the pros and cons of Ethereum and Bitcoin.
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The hard cap
Both cryptocurrencies are mined and the miners get awarded fractions of the token. However, they follow different ideologies. Bitcoin has a hard cap of 21 million coins, which means that beyond that no more Bitcoins can be mined. This is advantageous in that once no more Bitcoins are mined; the demand will skyrocket pushing the price up. The disadvantage is that once the miners can’t mine any new Bitcoins, they will not have any incentive to render their services. Ethereum has no hard cap and 18 million coins are mined every year. The advantage is that miners are highly motivated to keep mining while the disadvantage is the danger of market saturation.
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Block creation time
Blocks in the Bitcoin blockchain are created every 10 minutes on average while those in the Ethereum blockchain are created every 15 seconds. This favors Ethereum greatly. Faster block creation enables for faster transactions.
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Blockchain use
Bitcoin is developed using C++ while Ethereum is developed using its own unique language known as Solidity. Solidity has given the Ethereum blockchain the ability to develop smart contracts, which Bitcoin is unable to do. Smart contracts are being applied in many industries including insurance and legal services. This makes Ethereum’s uses much more than just being a token.
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Merchant acceptance
This is an area where Bitcoin has a great advantage over its rival. Bitcoin is the dominant cryptocurrency and thus is accepted by way more merchants and retailers than Ethereum. Some of the merchants that accept Bitcoin include Virgin Group, WordPress, Tesla, Zynga, Overstock, Microsoft, eGifter, OkCupid, Square and Shopify. Bitcoin was also accepted as a legal form of payment by Japan. These endorsements have driven the confidence of many on Bitcoin quite high, which pushes the demand and the price up accordingly.
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Consensus algorithms
Both Bitcoin and Ethereum use a proof of work consensus model. This model awards the miner with the block reward depending on how much they contribute to the network. This gives an automatic advantage to the big institutional miners and is also quite capital intensive. Ethereum, however, plans on integrating the proof of stake algorithm, which would give it an advantage. Proof of stake requires less energy and processing power. This will make Ethereum much more efficient than Bitcoin.
Bitcoin and Ethereum are both strong in different areas and the battle for market domination will continue to heat up. As the teams behind both cryptocurrencies continue to re-invent their technology to stay ahead of each other, the real winner will be users. Only time will tell which cryptocurrency will become the ultimate king of the digital currency world.
