Site Loader

Bitcoin was created in 2008 by Satoshi Nakamoto. We still don’t know who Satoshi Nakamoto is. Satoshi abandoned the bitcoin project while it was in its early stage and handed it to the developers. So Bitcoin has no real head figures who is in charge of the project.
Ethereum was founded in 2014 by Vitalik Buterin. Vitalik is a Russian Canadian programmer, who is still actively involved in the process of ethereum development. Unlike bitcoin, ethereum has real head figures from whom you can get feedback on what’s going on with the ethereum blockchain.

While ether allows its users to store and transfer money, ethereum allows its users to program money. On ethereum network a developer can upload and run a computer code which executes itself automatically when certain conditions are met. Bitcoin is good at storing value, that is why it is called digital gold. Ethereum has its own currency called ether. In order to execute smart contracts on Ethereum a small amount of ether must be paid for the use of network computing power. So ether is not just a currency it’s an essential part of the ethereum blockchain. That’s why ether is often referred to as digital oil.

Another major difference between ether and ethereum is that the way they validate a new block. Currently both blockchains are running on Proof of Work. But ethereum is soon to be functioning on Proof of Stake. Whenever a new block is created on the blockchain it needs to be validated. One way to validate a new block is by proving that enough computer power and energy has been spent on it. Proof of work requires a lot of computer power, energy, and time which is very expensive and energy inefficient. The miner who spent the most computational power in the fastest way gets rewarded. Since it’s very expensive to validate a new block those miners who can afford to operate expensive mining rigs may centralize their computing power and gain 51% majority of the blockchain. Then they can choose which blocks are valid for their own benefit. This is called 51% attack. The reason why Ethereum wants to switch to Proof of Stake is that it is a greener and cheaper solution and it reduces risk of centralization. Proof of Stake also known as PoS means that you don’t need to operate mining rigs in order to mine or validate a block. If you own a substantial amount of ether you can validate a block and get rewarded in return. The more ether your have the more mining power you have. If you own 51% of the cryptocurrency it wouldn’t benefit you to do any harm to the blockchain as you will lose your stake.

Post Author: admin