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Crypto Trading: Bitcoin vs. Ethereum – What Is the Difference?

Crypto trading is evolving. It attracts more and more beginners and professional investors seeking their chances to build wealth. Each crypto platform offers a variety of tools to trade. They include major coins as well as some less proven assets. Developers introduce new types of cryptocurrencies while crypto brokers try to attract as many new customers with special trading conditions as they can.

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Despite a growing number of new coins, Bitcoin and Ethereum are still one of the most popular assets to trade. Besides, they are the most solid and stable instruments that have been growing in value rapidly over the last few years. Which one is the best for cryptocurrency trading? What is the main difference between BTC and ETH? This is what we will try to find out in this article.

How BTC and ETH Are Different: Crypto Trading Basics

Before you choose a crypto platform and select an asset, you need to clearly understand what you are going to invest in. It is not only exploring the historical data with price moves but also the way an asset works, how it is developed and what it is backed with.

So, the key factors to consider when exploring the difference between BTC and ETH are as follows:

  1. BTC is a cryptocurrency. Oppositely, Ethereum is a stand-alone platform featuring its native token known as Ether that is used within the blockchain environment.
  2. Bitcoin has grown into the industry’s largest crypto asset by market capitalization. ETH comes with the second biggest market capitalization among other cryptocurrencies.
  3. ETH holders generally benefit from faster transactions compared to BTC.
  4. BTC holders primarily buy the coin to store it and benefit from the price growth while ETH serves mainly for blockchain purposes.
  5. Ethereum was developed and introduced not to oppose BTC but as a Bitcoin complement.
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To make the above-mentioned points a bit simpler, let’s have a closer look at each cryptocurrency.

What Is Bitcoin and How it Works?

Back in 2009, Satoshi Nakamoto brought to life the idea of a peer-to-peer system that was believed to let users maintain peer-to-peer electronic transactions. The system was designed as a decentralized environment. It means no central authorities to keep control over transactions. This is how the idea of cryptocurrency was born. We may now use money that actually does not physically exist.

In reality, BTC has turned into a store of value. People use it as an investment instrument rather than currency to maintain daily transactions considering pretty high commissions and fees. At the same time, it has proved the idea of centralized payment system implementation giving life to numerous more payment-oriented coins that appear today.

What Is Ethereum and How it Works?

Unlike BTC (initially a coin), Ethereum is a stand-alone computing platform that operates globally. The platform uses its native cryptocurrency Ether that is used to power the platform. The demand for ETH totally depends on the demand for computing power used top support Ethereum blockchain.

The platform was created on the basis of the Solidity programming language. It was designed to let users maintain smart contracts and deploy them on the blockchain. What’s more, many developers use ETH’s blockchain to create their applications thanks to its decentralized nature, which means high resistance to censorship.

Also known as dApps (decentralized applications), they are developed to deliver trustless services and products to the end users. These apps may serve different purposes ranging from financial, gaming, or social media services depending on the business specialization. To run dApps, you need Ether as the main supportive power of the Ethereum blockchain.

The Key Differences between BTC and ETH

The initial idea of developing BTC was to let people transfer value on the peer-to-peer basis (directly from one user to another avoiding third parties, intermediaries, and their commissions).

Ethereum was designed to let blockchain participants create and deploy smart contracts with limitless functions and no centralized authorities to keep control over their applications known as dApps.

On the one hand, it is possible to use ETH as a digital currency. However, it is not the primary reason for its development. It generally serves as a tool to monetize operations held through Ethereum smart contracts.

Another difference is the market cap. BTC made $550 billion back in May, 2022. ETH has twice lower market cap, which is approximately $20 billion.

This material does not contain and should not be construed as containing investment advice, investment recommendations, an offer of or solicitation for any transactions in financial instruments. Before making any investment decisions, you should seek advice from independent financial advisors to ensure you understand the risks.