Ethereum Versus Bitcoin: Read Our Head-To-Head Comparison


The Ultimate Guide
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Ethereum is a computing platform that produced the cryptocurrency token ether. Ether is the second most valuable digital currency after Bitcoin.


On this page, we cover some Ethereum essentials, like how it's mined, how it compares to Bitcoin as a cryptocurrency, and how experts see the future of ETH prices unfold.

You can also head straight over to our Ethereum Trading Guide.

To kick things off, here are 5 interesting facts about Ethereum.

5 Interesting Ethereum Facts You Might Not Know

  1. Vitalik Buterin, the co-founding of the Ethereum was a co-founder and contributing author of the early Bitcoin Magazine.
  2. Ethereum was founded in 2014 and was the first blockchain to offer robust Smart Contract capabilities.
  3. Hundreds of cryptocurrency projects are crowdfunding via Initial Coin Offerings (ICOs) on the Ethereum platform.
  4. A new craze for virtual kittens known as “Crypto Kitties” is slowing down trade on the Ethereum platform.
  5. Ethereum hosts Decentraland, a virtual reality environment where users can purchase blockchain secured virtual real estate.

Also, in 2016, Ethereum forked into two separate blockchains – Ethereum Classic (“ETC”) and Ethereum (“ETH”).

Ethereum vs Bitcoin

How does Ethereum compare to Bitcoin? What are the key differences? See below for our head-to-head comparison:
 Ethereum (ETH)Bitcoin (BTC)
PurposeDesigned to allow users to program specialized “smart contracts” that allow for more flexibility than coins like Bitcoin
Decentralized digital currency
Founded20152009
FounderVitalik ButerinSatoshi Nakamoto (alias)
Market CapOver $70 billionOver $250 billion
Current Price
All time High$827 (December 2017)$19,908 (December 2017)
All Time Low$0.43 (Oct 2017)$0.06 (July 2010)
How long did it take to hit $100?22 months51 months
Notable SupportersEnterprise Ethereum Alliance
Balaji Srinivasan (co-founder of 21.co)
William Mougayer (Blockchain expert)
Jeff Currie (Goldman Sachs)
Peter Theil (Venture capitalist)
Christine Lagarde (IMF)
Marc Andreessen (Early internet Pioneer)
Supply CapAround 100 million soft cap21,000,000
Initial DistributionICO (initial coin offering)Mining
Mining MethodGPUASIC
Consensus MethodProof of work currently, with a plan to switch to the Casper proof-of-stake protocol Proof of work
Network Hash Rate*Over 700 Ether per hourOver 40 BTC per hour
Difficulty increaseThe blockchain uses the "ice age" protocall to make mining prohibitively difficult which will come into effect at around block 4.8 millionEvery 2,016 Blocks

How is Ethereum Mined?

Just like Bitcoin, Ethereum is mined in blocks by miners who solve cryptographic problems to claim a block reward. New ethers are minted in each Ethereum block and eventually get distributed by the miners to the network. The miners also collect transaction fees with each block.

The block reward, together with the transaction fees are the incentive that a miner has to invest in network mining equipment. Many Ethereum miners operate mining rigs with multiple graphics cards connected to a ‘mining rig'.

 

Ethereum uses a hashing algorithm called Ethash. Miners that solve block hashes participate in a process called Proof of Work (PoW).

This is an essential part of securing the network as a miner that wanted to attack and overpower the network would need to produce more PoW than the honest miners.

Could a Miner Overpower a Network?

The cost involved for a miner to overpower the network would be so high and the capital investment in mining equipment would be so intensive that the attacker would be better off using this computing power to profitably mine on the network as an honest miner.

This applied game theory that makes use of financial incentives is what keeps the network secure from external threats.

The Ethereum block reward is currently set at 5 ether per block, and a new block is found on the network every 20 seconds on average.

What Is The Price Outlook For Ethereum And What Do Experts Say On Prices?

Its limited trading history makes technical analysis of price charts for ETH impossible. An ETH chart shows a virtually parabolic rise since it began trading. Such a chart doesn’t lend itself to traditional technical analysis where high and low trading levels provide clues about future movements.

Similarly, there are few fundamental data points that analysts can use to value ETH.

Supply And Demand Fundamentals Of Ethereum

The best way to forecast the future price of Ethereum is to examine supply/demand fundamentals for the cryptocurrency. According to Investing Haven, there is a supply of 92 million ETH coins.

This figure is expected to grow over the next one to two years and then flat line as the number of new coins mined equals the number of coins taken out of circulation.

Once supply stops growing, the demand side of the equation will drive future price moves for ETH. The key is the Ethereum platform and the many applications it supports.  Specifically, the platform’s ability to handle and execute smart contracts will create increasing demand for ETH in the financial services space.

Mainstream Smart Contracts: Barclays Bank

Barclays is using smart contracts, for example, to trade derivatives contracts. A group called the Enterprise Ethereum Alliance (“EEA”) facilitates the development of applications on the Ethereum platform by large corporations in finance and other industries.

According to Investing Haven, Ethereum’s usage in blockchain applications could grow conservatively between 20 to 30 times over the next five to seven years. The increasing value of the platform to corporations could spur investment demand.

The Ethereum Investment Trust: ETFs On The Way?

The creation of the Ethereum Investment Trust and the likelihood of an Ethereum ETF and Ethereum IRA will also serve to bolster investment demand. The upshot is that an Ethereum investment could easily increase several fold over the next two to three years as more traders learn how to buy Ethereum.

Experts are divided about the price of Ethereum.

William Mougayar-CNBC
William Mougayar via CNBC

Blockchain investor William Mougayar believes Ethereum has enormous potential because “Ultimately, it's about building a whole eco-system and what Ethereum has going for is a very strong eco-system of developers. It has about 35,000 developers worldwide.”

Mougayar sees the shrinking gap between the value of Bitcoin and Ethereum as a validation of ETH and a reason that ETH should trade higher.

Mike Cagney CEO of lending startup Sofi via Fortune.com
Mike Cagney — Sofi via Fortune.com

Mike Cagney, CEO of lending startup SoFi sees “fascinating infrastructure applications” with Ethereum and believes that ETH has much greater upside potential than Bitcoin.

Other experts are less sanguine about the returns on an Ethereum investment.

Jamie Diamon via CNBC
Jamie Diamon via CNBC

Jamie Dimon, chairman and CEO of JPMorgan Chase, argues that governments will shut down cryptocurrencies if they get too big. Charles Haytar, CEO of market analysis platform CryptoCompare, believes that a lack of rationality about value has created a bubble for cryptocurrencies in general.

However, notwithstanding its CEO’s pessimism, CryptoCompare released data that bodes well for the future price of ETH. Purchases of ETH with Bitcoin declined from 83% to 32% in the last year, while purchases of ETH with fiat currencies rose sharply.

In other words, it isn’t just cryptocurrency enthusiasts who are making Ethereum trades; mainstream traders, as well, are increasingly seeking exposure to ETH.

Further Reading

If you want to trade Ethereum, see our exclusive Ethereum Trading Guide.

If you'd like to learn more about cryptocurrencies in general, see:

And for other cryptocurrency-specific guides, see:

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