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Bitcoin may have been a technological breakthrough, but Ethereum has taken bitcoin’s place as the technology of choice for business. What’s so different about Ethereum? How does it compare with bitcoin? Is Ethereum better than bitcoin?
Ethereum’s technology allows for a decentralized network that provides added security and a more trustworthy environment than blockchain applications using bitcoin. Bitcoin’s transactions happen through the broadcast of transactions to all nodes on the network. This method can be wasteful and slower than other options available with other blockchains.
For companies like Starbucks, who are on their way to implementing blockchain technology, there is an opportunity to implement multi-signature transaction methods via Ethereum’s technology. Ethereum’s developers developed a new way of signing transactions that incorporates separate keys for each party involved.
In contrast, bitcoin allows anyone to sign any transaction without having multiple signatures required. However, there’s modified version of the bitcoin blockchain can confuse the bitcoin and Ethereum communities.
Advantages of Ethereum over bitcoin
Decentralized applications are written on the Ethereum blockchain, enabling the business to make automated contracts, identity management, insurance, personal data management, etc.
Using Ethereum’s smart contracts, businesses can automate back-office operations, reduce or eliminate many transactional intermediaries, reduce transaction costs and improve transparency. For example, in the Ethereum network, the more currency held on the network determines how much weight is given to verifying transactions.
However, in the case of bitcoin, all currency is added equally, creating a bottleneck for the network as it can only handle a finite number of transactions.
Ethereum’s technology will give businesses access to an extensive decentralized network of computers that can provide security through artificial intelligence and machine learning, in addition to making transactions faster than the secure bitcoin network. However, as with all blockchains, there will be issues with regulation and security, so Ethereum needs to continue improving its technology and user experience.
Differences that make Ethereum better than bitcoin
1. Ethereum has a much lesser transaction fee
A transaction fee is a small commission charged to the sender or recipient of a transfer. The transaction fees are part of the protocol that ensures that no coins are spent twice. Bitcoin has capped its transaction fees at 0.5–1%.
At the same time, Ethereum runs on intelligent contracts based on Ether, the most common currency in Ethereum’s network, with no transaction fees. While executing smart contracts, some fees are involved, like gas and storage.
2. There is no limit on the number of transactions
The bitcoin limit is 1MB block size, which ensures that the network can process about seven transactions per second. Depending upon the situation and network congestion, it may be more or less than this rate.
On bitcoin, if you want to add a new transaction block to the blockchain, it needs to wait until the miner mines a block with a large enough size for your transaction. Ethereum uses gas in its smart contracts, which are recorded in the system and cannot exceed 250KB of data, so there is no limit on how many transactions can be added to the blockchain.
Furthermore, you can interact with other people in the Ethereum network by adding your contract to the network; then, you can call these functions whenever you want.
3. Ethereum can handle more transactions
Ethereum is different in this sense, as it can process more than 21 transactions per second. To add a new transaction block to the blockchain in Ethereum, it needs to be executed with a smart contract.
4. Ethereum is way more environment friendly
Bitcoin has been widely opposed and criticized for its demand for high energy utilization. Therefore bitcoin transactions are not environmentally friendly. After the Ethereum merge, proof of stakes will take over the existing consensus mechanism, significantly impacting its energy utilization.
Ethereum’s mining process is highly low-powered and has a low level of energy consumption compared to the energy required for bitcoin mining.
5. Ethereum has more utility in businesses
Ethereum’s capabilities are more useful for businesses than bitcoin. It is because of its innovative contract properties. Businesses can customize their smart contract and modify blockchain rules to fit the needs of a business.
Ethereum can be used by businesses in many ways, from digital voting to complex value transfers such as asset tracking and identity management, so it will get a lot of use from different companies worldwide.
Ethereum technology is robust and does offer benefits over bitcoin. For example, Ethereum’s blockchain provides added security by allowing for decentralized applications, multi-signature transactions, and other features that could make it more appealing to businesses than bitcoin.