How Does Ethereum Differ From Bitcoin?

In the world of cryptocurrencies, which incidentaly is this world, Bitcoin has long been dominating. However, said dominance has not been without its challenges. Ethereum is another cryptocurrency which has attracted significant attention due to its additional features and applications.

It's not Money, Per Se

This is rather a block-chain based platform that features a digital currency, ether. Its additional aspects make the facilitation of good and services exchange a by-product of the system, instead of just the core. Users are able to commit smart contracts all denoted in ether under blockchain stored applications to facilitate contract negotiation and facilitation, as well as the Ethereum Virtual Machine.

These contracts stand to benefit the user because they are decentralised in by nature making enforcement somewhat easier and incredibly tough for fraud or censorship. Ethereum’s smart contracts exist to ensure greater security than traditional paper-based or even digital contracts at a much lower cost.

Ether along with other Ethereum's other crypto-assets, are held in the Ethereum Wallet, from where you are able to create and use smart contracts. The New York Times has described the system as

“a single shared computer that is run by the network of users and on which resources are parceled out and paid for by ether.”

Smart Contracts in Smart Tokens

The tokens created on your Ethereum Wallet can be used to represent virtual shares, assets or proof of ownership among many other things. They are compatible with any cry[tocurrency wallet as well as exchanges that use the standard coin API available opensource from Ethereum's website. From there, the tokens are multi functional, including the representation of shares, as well as forms of voting and fundraising. Users are able to either either have a fixed or flactuating amount of tokens in circulation based on strict predetermined guidelines.


Ethereum allows developers a means with which they can raise funds for various applications. Should you have a new project, you are able to set up a contract and appeal to the community for pledges which when raised will be held eitehr until the target is met or until predetermined date, at which point the funds will either be released back to the contributors or go on to the project depending on whether the set target has indeed been met. This is in contrast to present crowd funding platforms that act as a third party and may become a deterrence by their rules and processing fees, 10% in some cases.

A Democratic System of Currency?

Yet, Ethereum isn;t only good to help projects get funded; it can also assist with the organizational structure required in jump starting your idea into a business. Proposals are collected from the people who backed the project and votes (yes, votes) are held on how the business will proceed. Traditional structures tend to get tedious, not to mention expensive, Ethereum offers an opportunity for stakeholders to have an equal say on how best to get return on their investments. Ethereum also protects your project from outside influences, while its decentralized network means that you won’t face downtime. No paperwirk, and no hiring managers. Just the pooled resources of stakeholders brain power.

Sounds Like Bitcoin and Blockchain Technology?

The difference between the two cryptocurrency isnt just the accessibilty and range of use, you have to pay attention to the minute details as well. Ethereum has runs a GHOST protocol which means that it's block times of 12 seconds, are substantially faster than Bitcoin’s average block time of 10 minutes allowing for much quicker confirmations.

Ethereum's supply is abound at present as opposed to Bitcoin which has been mined to near exhaustion. Nearly twi-thirds of Bitcoin are owned by early miners. At it's fifth year of existence, only about 50% of Etherieum's coins will have been mined off because its launch capital was raised by a presale.

It is estimated that the return on investment of mining Bitcoin is reduced by 50% every four years. At 12.5 bitcoin, that means Bitcoin might not be a mineable currency after the year 2025. Ethereum on the other hand rewards its miners on a proof-of-work, memory hard-hashing algorithm called Ethash. Awarding 5 ether for each block encourages decentralized mining by individuals, rather than the use of more centralized ASICs as with Bitcoin.

Ethereum costs its transactions by a system called Gas which depends on their storage requirements, complexity and bandwidth usage. However, Bitcoin's transactions are limited by the block size and they compete equally with each other, regardless of size.
Ethereum features its own Turing complete internal code, which means that anything can be calculated with enough computing power and enough time where Bitcoin does not have this capability.

Tale of Two Beasts

There seems to be many people who in theor attempt to discredit cryptocurrencies altogether, will compare the cryptocurrency aspect of both Ethereum and Bitcoin. In reality,these are two vastly different beasts with different intentions. With ether operating only as a component of Ethereum's vast network of aims, Bitcoin is for all intents and purposes a relatively stable digital currency.

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