To date, Bitcoin is perhaps the most well-known blockchain platform, but others like Ethereum are starting to change that. Because users can build applications using Ethereum to transmit information quickly and securely, the platform is gaining a reputation as “the first global computer,” or a global network that anyone can program and use.
Ethereum is always on, secure, and public, but how does it compare to Bitcoin? The Blockchain technologies seem to be complementary rather than competitors.
What is Blockchain Technology?
Blockchain is a decentralized infrastructure used to transmit and store information. The technology can move values among parties, represent who owns those values, and maintain clear and accurate transaction histories to ensure transparency.
Ethereum: a Smarter Blockchain?
Because Bitcoin technology is limited to performing relatively simple transactions tailored mainly to financial transactions, Ethereum was created by Canadian developer Vitalik Buterin with the goal of expanding Bitcoin’s functionality and improving the platform generally.
At first, Buterin worked on creating protocols that affix to Bitcoin to add functionality.
In the end, Buterin decided to start from scratch, and created an entirely new protocol that is proving to be more complex and comprehensive than its Bitcoin predecessor.
Here’s a rundown of some of the major differences between Bitcoin and Ethereum, and why Ethereum is not a direct competitor for Bitcoin:
1. Programming Language
One of the essential differences between the two cryptocurrency platforms is the languages in which they are programmed.
Bitcoin relies on simple, stack-based script for processing transactions. Bitcoin is designed not to be Turing complete on purpose as a way to set specific parameters for transactions.
These parameters are essentially instructions for the transaction, and are flexible because they can be customized based on the particular transaction at hand.
“The fundamental difference between the two Blockchain technologies is what makes them complEmentary and not competitive”
Although the parameters are flexibile, the fact that each of the parameters must be met and approved before the transaction can be completed renders the platform less flexibile overall. It’s a feature that ensures security, but delays transactions.
Ethereum, on the other hand, is programmed using a dedicated language called Solidity. In contrast to Bitcoin’s script, Ethereum’s Solidity is a Turing complete language that allows for automating parameters in the form of “smart contracts”.
2. “Smart Contracts” Help Automate Transactions
They’re dubbed “smart” because they are programmed to execute automatically based on predefined and mutually agreed-upon terms. The platform automatically takes into account all of the terms and limitations that were set originally, and when the conditions for the contracts are met, the transaction is executed automatically.
Unlike Bitcoin, these contracts are not limited to financial transactions; they can be used for legal or business arrangements, or even to execute future contracts like Wills.
Complementary and not Competitive
The fundamental difference between the two Blockchain technologies is what makes them complementary and not competitive; Because Bitcoin was designed to require a blockchain-based currency to sustain its development, it is therefore highly specialized for and limited to mainly financial transactions.
Ethereum is not designed to require a blockchain-based currency to sustain its development, and, therefore, offers more flexibility in transferring information generally as a smart contract as opposed to a cryptocurrency specifically. Furthermore, transactions are automated, making them faster and more secure.