Ethereum vs Bitcoin – Similarities and Differences – Finextra – Finextra

Ethereum vs Bitcoin – Similarities and Differences – Finextra – Finextra

Ethereum is similar to Bitcoin in the sense that they are both cryptocurrencies – non-centrally issued, digital currencies. Another similarity between the two is that the both operate using the proof-of-work consensus. This means that for both Ethereum and Bitcoin, the verification and confirmation of transactions requires a network-wide consensus of nodes. Due to this condition, both of them are slow when it comes to transaction processing.

Ethereum is slightly faster than Bitcoin: it normally processes 10-15 transactions per second, while Bitcoin processes 3-5. At least, this is true for the current version of Ethereum. One of the big expectations in the market right now is that the upcoming 2.0 upgrade will provide faster transactions, among other things.

But the major point that separates Ethereum from Bitcoin are smart contracts – the term most closely associated with Ethereum blockchain. Smart contracts are digital contracts that have a variety of applications.

Without going too far from the topic of Ethereum 2.0, it makes sense to mention Beacon chain., that is used to provide an upgrade to Ethereum’s features. Beacon chain makes use of a proof-of-stake consensus algorithm rather than proof-of-work – this means that it uses tokens instead of traditional computational power in order to process transactions.

Beacon chain employs shardchains, smaller groups of nodes that process their own portions of transactions in parallel, without needing to achieve a consensus across the entire network. This is meant to improve Ethereum’s scalability and vastly increase its throughput rate. At CEX.IO, we expect that the