You have undoubtedly heard of cryptocurrencies, and have probably also heard all about Bitcoin if you’ve been following its progress over the past few years. But its competitor, Ethereum vs Bitcoin comparison, is making just as many strides, and, in fact, goes even further in its offering than Bitcoin in some respects.

Below, we go into three of the key ways that Ethereum is different from the competition. We’ll mostly be looking at it compared to its greatest competitor, Bitcoin. Don’t forget that you can easily stay up to date with the latest insights from the cryptocurrencies if this is something you’re interested in. It’s never been easier to get involved in the ever-growing world of cryptocurrencies.

What’s a cryptocurrency?

Both Ethereum vs Bitcoin and Blockchain are cryptocurrencies. These are a kind of digital currency that are powered by blockchain technology. It’s this blockchain technology which ensures the integrity of each transaction and thereby allows for relatively anonymous, encrypted transactions, as the blockchain technology records each and every transaction. As there’s no physical imprint, the transaction is less likely to be targeted by fraudsters.

All cryptocurrencies are also characterized by the lack of a middleman, as they’re decentralized. Usually, when you’re looking to invest, there’ll be a central authority managing the process – but with cryptocurrencies, there isn’t one. Critiques of cryptocurrency have focused on their extreme volatility and vulnerability to market fluctuations, and the risk of their use for illegal activities. Undoubtedly, however, cryptocurrencies are more transparent, resistant to inflation, and portable. But what sets Ethereum apart from its rivals?

Smart contracts

The main difference between Ethereum and its competitors is what’s known as smart contracts. These don’t just track transactions but in fact work to program them – they work independently, so that you can get involved in greater investments and exchanges in more exciting assets like stock and property.

In essence then, whilst Bitcoin is essentially digital money, Ethereum is a ledger technology that’s programmable. It’s therefore more innovative and exciting. Ethereum allows developers to build other cryptocurrencies like Chainlink, and to introduce digital assets such as non-fungible tokens (NFTs) into the investment world.

Community size

Like Bitcoin, Ethereum also runs on a peer-to-peer basis – there’s no middleman. The idea is to ensure greater security and minimal fraud, scams or other hacks as a result. There are inevitably some risks to this; as reported by Creighton University, these agreements are contingent on consumers putting their trust in the code of the smart contract.

These smart contracts make Ethereum much more appealing. They have greater application in real-world industries, such as gambling and banking. Additionally, Ethereum boasts the largest community of developers among cryptocurrencies. With 250,000 members, it is about four times the size of the nearest competitor. This strong community provides unparalleled online support.

This is a key point in the Ethereum vs Bitcoin comparison. It highlights Ethereum’s adaptability and strength in real-world applications.

Ethereum 2.0

One of the biggest criticisms levelled at Bitcoin is the amount of energy that the infrastructure underpinning it consumes. Every transaction must be verified by “mining” bitcoins, which is a labour-intensive process that requires a significant amount of computer processing power. This “proof-of-work” concept means that Bitcoin actually consumes more energy than some entire countries.

Ethereum also uses a “proof-of-work” system. However, it is currently transitioning to Ethereum 2.0. This new version will adopt a “proof-of-stake” framework. In this system, transactions will be verified by community members who stake their tokens. This change makes Ethereum much more energy efficient. Once the upgrade is complete, it will distinguish Ethereum from Bitcoin and other “proof-of-work” cryptocurrencies.

Ethereum is the second-largest cryptocurrency after Bitcoin. However, it has unique features that set it apart from its more famous competitor.