The biggest digital currency Bitcoin is on everyone's lips - but Ethereum is also catching up. Both cryptos have now become a billion-dollar market capitalization. What characterizes the cyber-taler and what do they differ?
The hype about cryptic stimuli began in 2009, when the Bitcoin concept was developed. In the meantime, up to 700 different digital currencies have developed. With market capitalization of billions of dollars, Bitcoin and Ethereum are particularly noticeable . Both are digital, but they differ in some aspects. These are the biggest differences.
Digital currency on the advance
Bitcoin was introduced in 2009 with the aim of creating an independent money system in which transactions should be carried out more quickly and quickly. The concept met with great popularity worldwide. The value of a bitcoin has risen by nearly 600 percent in the past twelve months, with a record high of around 4,480 dollars. If Bitcoin were not a currency but a stock, it would be well ahead of big stocks such as BMW or adidas with their market capitalization of 71 billion dollars in the DAX .
Another crypt diet, which is currently making great competition with Bitcoin, is Ethereum. Within seven months of its launch in July 2015, the second-most popular digital currency market reached a market capitalization of over 500 million dollars. Only a few weeks later the 1 billion barrier had already been exceeded. Today, Ethereum has a market capitalization of approximately US $ 32.2 billion. Ethereum is particularly popular with start-ups, which use Initial Coin Offerings (ICO) to deal with the strict processes in the allocation of capital by banks and to provide capital in this way.
Cryptography is not the same as cryptography
What both forms of digital currency have in common is the fact that they can only be bought and sold digitally and are independent of banks or public institutions. However, with them, real things can be paid, in many countries digital currency is allowed as a means of payment. They are subject to blockchain technology, which makes a decentralized connection of all computers in the network, thus enabling secure and counterfeit-free data transmission. Transactions on such a network are public and can be accessed at any time by all parties.
Although Bitcoin and Ethereum are assigned to the digital currencies, they still differ in some aspects. The biggest difference is that Bitcoin was designed as a currency from the beginning. Ethereum, on the other hand, serves primarily as a platform on which two parties can enter into a contract, the so-called Smart Contracts. To this end, distributed apps are distributed on the platform, the so-called Distributed Apps (Dapps), which are used to simplify contract negotiations. The currency of the Ethereum Blockchain is Ether, with which Smart Contracts can be created and managed.
Ethereum and startups
Ethereum can be used as a currency, but it also stands for a number of other things, and it can, for example, represent virtual shares or membership certificates. This is done by start-ups by gathering funds by means of ICO processes by crowdfunding. Here, they offer investors tokens, which can be paid by them with Ether. This financing method involves third parties as well as their rules and fees. Thus, start-ups have the opportunity to circumvent the strictly regulated processes of banks in the allocation of capital.
This form of funding not only allows funds to be collected, but also ideas and suggestions for the company's further approach. By consulting their supporters on the Ethereum platform, entrepreneurs save money on managers and formalities, creating a new corporate structure.
The subtle differences
Bitcoin and Ethereum also differ in many other aspects. For example in the processing period of a block. While with Bitcoin the processing of a transaction from A to B takes an average of ten minutes, Ethereum is only about twelve seconds in comparison. This is made possible by Ethereum's GHOST protocol. There is also a difference in the amount of money provided. Two thirds of the maximum of 21 million available bitcoins are currently in circulation, most of them in the hands of early miners. The makers of Ethereum, on the other hand, were able to earn a million-strong start-up capital through a pre-sale of their currency, which greatly influenced the amount of money emitted by Ether. 72 million Ether Coins could be created at this time. Today, five Ether Coins per Mining are created and distributed to Miners. Nevertheless, the number of ethers is not unlimited. In 2014, it was agreed that a maximum of 18 million ethers would be distributed per year.
Conclusion
Bitcoin and Ethereum are therefore two different projects that have been conceived with different backgrounds. While Bitcoin has established itself as a stable currency, Ethereum aims to establish a complete technology. Which of the two is the better investment? This is where the personal interests of investors are pursued. If you only want to secure digital money as an investment, Bitcoin offers itself as an investment form. However, if you are interested in the FinTech industry, Ethereum may be a more appropriate investment.
The platform not only attracted private investors, but also enjoyed great popularity among entrepreneurs, which has accelerated the success of the second most popular crypt diet. Earlier this year, large Wall Street and tech companies such as JPMorgan Chase , BP , Microsoft and others joined forces to form the Enterprise Ethereum Alliance. The aim of the project is to integrate the Ethereum platform into one's own company. In addition, evaluate - a survey of the New York Timesaccording to - 94 percent of the companies surveyed said that ether was positive. In comparison, Bitcoin received only 49 of the positive votes. Nevertheless, one should not focus on a single form of investment. Those who invest their entire investment capital into a system runs the risk of losing everything. Consequently, according to the diversification principle, it is recommended to keep a close eye on various projects. This is also true and especially in the still young market for digital currencies.