Ethereum Vs Bitcoin – Differences and Similarities
Ethereum Vs Bitcoin – it comes up often.
People come to us with questions, novices and professionals alike. One questions arises often; Ethereum Vs Bitcoin – what’s the difference?
Here we’ll lay out simply, clearly and concisely the key differences.
Ethereum Vs Bitcoin – Key Similarities
Ethereum and Bitcoin are both open blockchain systems. They sit on their own P2P networks. Anyone is free to view transactions and participate. Both networks require tokens for access.
Anyone can contribute code to the underlying technology or build higher level applications. Both systems are built using open source software. This software is maintained by volunteers, globally.
Actually, Ethereum is a descendant of Bitcoin. It was born out of a specific frustration with Bitcoin’s limited scripting language. This can make it difficult to build higher level applications on Bitcoin.
Ethereum was conceived to fix that. It exists as a platform for decentralised applications.
Ethereum Vs Bitcoin – Key DifferencesThe key differences are in core conception.
Bitcoin was conceived as a P2P digital cash system. In the process of achieving this end, the first blockchain was created. Whereas Ethereum was born out of a desire to create more complex applications for these networks.
So Ethereum exists as an all purpose platform for creating decentralised applications.
The other key difference is that Bitcoin uses an Unspent Transaction Output (UTXO) architecture. To make an application for Bitcoin you must program these UTXOs. Further, user balances are stored as the sum of a user’s UTXOs.
UTXOs are stateless, so they can make decentralised applications difficult. As a result the Ethereum approach is very different. It uses an account based system. The Ethereum ‘World Computer’ maintains a list of accounts and associated balances, internal change, and any code.