If you are still new to cryptocurrencies, it can be difficult to tell the difference between the different coins out there. But once you start digging in, you’ll start realizing how different cryptocurrencies can be in their implementation and objectives. Two of the most well-known cryptocurrencies are Bitcoin and Ethereum. And while both do share some similarities, they are also vastly different at their core. Let’s take a look at both cryptocurrencies, what differentiates them, and some predictions for the future.
What Bitcoin Is
Bitcoin was created to provide people with an alternative to fiat currency and the banking system. It uses cryptography and a new technology known as the blockchain to authenticate transactions. The blockchain is a system of distributed ledgers that broadcast transactions in real time to independent miners who have to solve complex logarithmic equations in order to provide “blocks” where authenticated transactions will be stored and strung together in chronological order. This allows everyone in the network to access a record of every transaction made on the blockchain, which makes it more secure and less prone to tampering.
What Ethereum Is
While Ethereum also uses the blockchain, this is pretty much where all similarities stop. Contrary to Bitcoin, Ethereum, or should we say Ether, was not created solely to make transactions. Ethereum is a sort of decentralized, blockchain-based operating system with its own coding language allowing developers to create decentralized apps and borrow the Ethereum network. Ether is supposed to be used as “fuel” to power these applications. While Ether is sold on the open market and is subject to speculation, its ultimate goal is to supply developers with an established network where they can build smart contracts, monetize work, and even launch their own cryptocurrencies.
What Does the Future Hold for Ethereum?
One of the main issues that have been raised with Ethereum was its scalability. And some of these issues were exposed when one of the first massively popular dapps, crypto kitties, nearly crashed the network when it was launched. In the beginning, the relatively small number of transactions the Ethereum network could handle wasn’t a problem, but now that it’s become popular, it is probably its biggest problem.
The future of Ethereum will largely depend on how they tackle these issues. One of the solutions proposed was sharding, which allows them to compress larger blocks and make them easier to process and store. Vitalik Buterin, Ethereum’s founder, also launched plasma protocol in order to simplify transactions and reduce the amount of unnecessary data being processed by adding a second layer to their blockchain.
But even with all its problems, many observers are still bullish about Ethereum, and people like Nigel Green of the Devere Group predicted that the value of Ether could hit the $2,500 by the end of the year. Those who wish to invest in Ethereum, however, should focus on getting the latest crypto news from reputable sources and take any predictions with a grain of salt.
What About Bitcoin?
Bitcoin also has to deal with scalability issues. As more people use the coin, more and more people have to wait in line for miners to authenticate their transactions. This not only slows down transaction speeds, but users now have to pay more to move in front of the line and get their transactions authenticated faster.
Many solutions have been proposed to deal with the issue, with the most popular being the lightning network. The lightning network is a separate network that allows people to conduct a number of off-chain transactions by opening payment channels between parties. This would put less of a strain on the network and allow it to run more smoothly.
As far as prices go, it’s really difficult to know which way Bitcoin will go in 2019. Most conservative forecasts predict that it should reach the $4,000 and gain more traction by the end of the year as ETFs and more regulation is being introduced. How high Bitcoin will go will also depend on how successful the lightning network is and if we start seeing more adoption from retailers. Transaction volume will also have to go up.
Bitcoin and Ethereum are two completely different projects and before you invest, it would be wise to do your homework and learn everything there is to know about them. Stay informed and only get your information from verifiable sources. Also, don’t be afraid to look at other cryptocurrencies and see what they have to offer as well.