Fundamental differences between Ether and Bitcoin

Both Ether and Bitcoin are cryptocurrencies based on blockchain technology. Aside from that, currencies are quite different and have different uses.

Bitcoin
Bitcoin is what most people think of when they hear the words ‘blockchain’ or ‘crypto’. It represented the first use for blockchain technology and reinvented what could be currency if it weren’t tied to a specific central bank or country.

Its technology also makes theft or tampering difficult as all machines on the decentralized network have to agree on the terms of any transaction. This primarily means confirming that the beneficiary is the rightful owner of the currency.

The coin can be traded on the open market or it can be lent as computing power to the network (mining) and obtain payment in Bitcoin for the use of one’s own machine (collection, or harvesting).

The maximum amount of Bitcoin that can be produced is 21 million, which introduces the argument of scarcity on the market. In order to prevent Bitcoin running out, halving events are incorporated into the protocol to pay miners less Bitcoin after reaching a collection milestone.

Traders commonly keep an eye on these events as some have created volatility in the market while others have not created any noticeable movement.

Ether
Shortly after Bitcoin’s release, Ethereum looked into how blockchain technology was being used and envisioned how it could be used beyond just currency.

Starting with Smart Contracts and decentralized applications (Dapps), it was soon realized that they needed a single currency for the Ethereum platform that could be trusted in line with their protocols. This led the Ethereum Foundation, an entity that oversees Ethereum’s business but cannot change protocols independently, to create Ether.

Ether is mined in the same way as Bitcoin, but unlike Bitcoin, Ethereum miners can charge a fee for confirming a transaction. Furthermore, there is no limit to the amount of Ether that can be released. This removed the perception of scarcity which could be a deciding factor in Bitcoin’s higher valuation.

Ether is the recognized currency that can be used in the Ethereum network but is not widely accepted elsewhere. On the other hand, Bitcoin cannot be used as a recognized currency on the Ethereum platform.

Protocols
Ethereum and Bitcoin operate on separate protocols and their processes are not related to each other. This means that some transactions allowed on one platform may not be allowed on the other. This becomes a fundamental question when considering both permissioned and permissionless transactions.