It is a crypto currency ( A virtual currency), a decentralized currency that means no bank will have control or regulation over this money and its associated transactions. Bitcoin actual concept is said to be invented by Satoshi Nakamato in 2008. If a person pays bitcoin to another for some goods, then this is a transaction and such transaction is recorded in a public (Open) ledger called blockchain(we have already discussed blockchain in previous session). Unlike normal currency bitcoin don’t have a specific value and it keeps on changing its value continuously and behaves like a currency stock. For each ledger or transaction to be completed, a math and special key is to be guessed by the participants and there are persons ( called minor nodes) who use special software to solve this math problem(authorization of the transaction should be done by the network between source and destination users as there is no third party gateway). Minor who solves transaction math will be rewarded. After certain transactions,these miners will receive newly minted bitcoins for the work. There is a limit of 21 million bitcoins that can be generated all together in the network, thus this allows more persons to solve math problems and earn more bitcoins and eventually this will increase the complexity of the system and so in certain terms it also increases security. Minors use powerful computers with graffic-cards to solve the increasingly complex algorithms associated with each and every transaction
- As It is virtual money, you do not need a bank or third party gateway for transactions.
- Transactions are made online and uses blockchain technology, hence they are secure.
- When compared to cost of transactions with banks, bitcoin transactions require less or no charge.
- As these are not backed by any bank, still there is no regulatory authority over it.
- For generating bitcoins we need complex algorithms and complexity will increase day by day but will never decrease.
- There is lot more to invest on this algorithm-solving, computer commodity and of course on electricity costs incorporated which can led to increase of transaction cost but its minimal.
- There could be no use of trade if this investment exceeds the value of bitcoin.
- It is also a useless task if the trader do not accept bitcoin in exchange.
- Because of absent of regularity authority, there prevails always a doubt in the minds of investors that this bubble may burst any time and also investors have certain unclear doubts over its security.
- Ethereum is based on 7 languages like java script,c++, Pascal where as bitcoin is on c++only where as both uses blockchain as common base structure
- Ethereum has better blockchain concept implemented in comparison with bitcoin.
- Bitcoin blockchain allows tracking of transactions, where as in ethereum, it not only tracks transaction but also programs it.
- Bitcoin is a payment technology but ethereum has its real applications.
- Bitcoin takes 10 minutes for a transaction whereas ethereum takes 10 – 12 seconds.
- In bitcoin cost of transaction depends on block size where as in ethereum in depends on per block of ether(a kind of open ledger block).
- Ethereum encourages ico to raise funds and there is no such option in bitcoin.
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