Last updated on May 18th, 2024 at 11:49 am
Ethereum, Smart Contracts, and the world of Digital Currencies
In terms of market capitalization and popularity, Ether, or ETH (the electronic coin of the Ethereum platform), is second only to Bitcoin. Ethereum is a blockchain-based digital platform used for smart contract-enabled transactions, including cryptocurrency trading.
Conceived in 2013 by Vitalik Buterin, ETH allows for the creation of two kinds of accounts: Externally Owned Accounts (EOA) and contract accounts. An externally owned account is controlled by a private key and influenced by human users.
And while the former has no associated code that is triggered to execution when it receives a transaction, the latter self-executes on receiving transactions from an externally owned account.
Smart contracts are by no means an exclusive feature of the Ethereum network. However, the feature is so robust on the ETH platform that it can be mistaken to be its invention. What Ethereum did was build on the technological successes of Bitcoin and the transitioning world of virtual currencies, introducing a platform with many rich trading options.
The Differences between Ethereum and Bitcoin
Bitcoin and Ethereum have more similarities than differences. Although few, the differences count and can easily be the defining revelations for investor or trader preferences. Here are some differences between both cryptocurrencies:
- Ethereum offers numerous exchange options, while Bitcoin is all about cryptocurrency trading. The former offers cryptocurrency trading, the EVM (Ethereum Virtual Machine, a decentralized system with millions of executable projects), and smart contracts. Ethereum is a more robust platform.
- Ethereum is an innovation that other companies can use to build new programs. Unlike Bitcoin, the platform is tailored to foster the building of decentralized platforms fit for companies in contemporary times.
- Ethereum and Bitcoin are secured differently. While Ethereum uses a proof-of-stake security protocol, Bitcoin uses a proof-of-work protocol.
- The ETH ecosystem grants permissioned and permission-less transactions. Bitcoin transactions must be censor-proof, permission-less.
- Ethereum has no issuance limit as of now and has a supply capped at 18 million ETH a year. Bitcoin, on the other hand, will never exceed 21 million in total.
Ether (ETH) Vs. Fiat Currency: Benefits of using Ethereum’s Digital Currency
Ethereum, like Bitcoin and other electronic coins, is redefining the concept of money and changing the way individuals carry out financial transactions.
As the cryptocurrency ecosystem thrives on, evolving and winning the hearts of all seeking financial freedom, we can’t help but compare them to the usual legal tenders we’ve been using.
Below, we present to you five key benefits of Ethereum over fiat currencies. They are:
- Ethereum uses smart contracts to approve and keep infallible digital records of transactions. The blockchain system, being decentralized, can be trusted. The same is not the case with fiat currencies—they leave you with no choice but to trust governments, financial institutions, and several other third parties.
- Ether (ETH) functions on ETH’s multi-functional platform. Fiat currencies don’t give you the options of numerous operations, especially virtual operations like smart contracts.
- Since electronic coins are a global currency, you can send them to or receive them from any nation in the world. Fiat currency, on the hand, differs from country to country.
- If ease, seamlessness, and speed are your thing, ETH is for you. No physical visits to exchange shops, no visits to financial institutions and other intermediaries. Just you, a mobile phone or computer, and the internet.
- For the services and operational options offered, transaction costs are super cheap with the ETH coin and other cryptocurrencies.
Related: 7 Reasons why Electronic Coins are better than conventional Currencies
As final thoughts, think of Vitalik Buterin’s conception (ETH) as a thoughtful improvement on the usefulness of Bitcoin. Think of it as an open-source network that leverages blockchain technology to create a platform that plays roles way beyond just ‘currency.’
Ethereum is just one among many electronic coins or cryptocurrencies. But even more, it is a multi-purpose home for the development of decentralized applications.
