What is the difference between ETH and BTC, with a market value of $170 billion?

What is Ethereum?

First, what is the Ethereum? Simply put, the so-called Ethereum (ETH) is a kind of digital currency that comes with the Ethereum blockchain system. Just like Bitcoin in the Bitcoin system, it can be obtained by mining miners who maintain the Ethereum network. There may be a small partner to ask, is Ethereum not a blockchain version of the operating system? Then why do you still have to do digital currency? This is starting from another mechanism (Gas mechanism).

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We all know that the core point of Ethereum's application is smart contract. You can write a rule and you can do it without the participation of a third party. It is safe and convenient, but the smart contract wants to be executed and media is needed. Through the Ethereum network, a thing called a virtual machine is executed, and this virtual machine is maintained by all participating miners in the network to form a computing network belonging to Ethereum.

When you want to execute a smart contract, or do other things, such as trading on the Ethereum network, you need to use this network to calculate and process. It is bound to consume certain network resources, so you need to run this smart contract. Cost, you can't always use it for no reason, and this cost is called Gas in Ethereum.

In the Ethereum setting, Gas is similar to a fuel that can drive the movement of smart contracts. When Ethereum executes transactions on the blockchain, the fuel is gradually consumed according to specific rules. But the problem is coming again. There are so many users in Ethereum, scattered around the world. When they use the Ethereum platform, they can't buy gas through legal currency. Such cross-border transfer is a big problem, and it may also cause gas to generate large price fluctuations and affect the operation of the network.

Therefore, Ethereum simply designed a digital currency, which can be used as an incentive mechanism, mined by miners to mobilize the enthusiasm of the miners, and can be used as a medium to purchase gas, which serves as a handling fee. Therefore, although the location of Ethereum itself is the operating system of the blockchain version, it also does its own digital currency.

What is the difference between Ethereum and Bitcoin?

After you understand what Ethereum is, let's talk about it. What is the difference between Ethereum and Bitcoin:

1, ETH and bitcoin are different directions

First, ETH and Bitcoin, both of which are completely different in the direction of the blockchain system. Bitcoin's positioning is purely digital currency and can be considered a peer-to-peer electronic cash. It was born to replace the legal currency and solve the financial crisis, mainly used for payment and value transfer. Therefore, the entire blockchain network behind Bitcoin is mainly based on currency, solving transaction and payment problems.

ETH is different. Although it is also a digital currency, it has certain trading attributes. However, the Ethereum blockchain network positioning behind ETH is a world-class general-purpose computing platform. It only borrows the blockchain technology in Bitcoin. Based on the development of operating system-level applications that favor the Internet.

You can create smart contracts and build decentralized applications through Ethereum. Mainly solved the problems of trust, security and so on. Therefore, Ethereum is not simply a digital currency. It is more like an Internet operating system platform. It not only has the attributes of trading assets, but also its service value.

2, ETH and Bitcoin have different effects

Second, due to the different orientations of Ethereum and Bitcoin, the role of digital currency in the two is also different. The direction of Bitcoin is currency and you want to be a substitute for regular currency. Therefore, in the Bitcoin system, its digital currency BTC is an extremely important part, which can be said to be the final embodiment of the whole system. Its role is to serve as a medium for payment transactions and a carrier of value storage.

The goal of Ethereum is the operating system-level computing platform, which is more biased towards Internet services. Its value lies in how many users use the Ethereum platform and how much service you provide to me. Therefore, this determines that ETH is only an important link in the Ethereum platform, but it is not the value of all platforms. It is just a currency tool for improving service quality and processing transactions in Ethereum, so that the point-to-point occurs on the platform. Trading and applications are more convenient.

Therefore, although Bitcoin and Ethereum are both digital currencies, Bitcoin is intended to be a substitute for French currency. As a decentralized electronic cash system, the whole system is more like using blockchain technology. a specific application.

While Ethereum also has transactional properties, its main goal is not to become a substitute for legal currency, but as a tool to enable developers to more easily develop and run distributed applications, and the entire system is also focused on running. A series of programming code for decentralized applications.

3, ETH and bitcoin mechanism principle is different

Third, Bitcoin is different from Ethereum's consensus mechanism. In the Bitcoin blockchain network, the consensus mechanism for data maintenance is the PoW mechanism, which is the workload proof mechanism. It works by everyone, who works together, who handles the fastest and best, who can get the power to record data, and then get Bitcoin rewards.

Because the application direction of Bitcoin is currency, the usage scenario is point-to-point payment and transaction without the participation of centralization agencies. Therefore, Bitcoin strongly needs two attributes of decentralization and security, while the PoW mechanism processes the transaction speed. It's slow, and it takes a lot of resources, but it's very secure and decentralized, so it fits in with Bitcoin.

The Ethereum adopts the PoS consensus mechanism, which is the equity proof mechanism. Its working principle is that everyone participates together. Whoever holds more Ethereum, the easier it is to obtain the power to record data, and then get the ETH reward.

The application direction of Ethereum is the operating system, which is to let everyone deploy smart contracts and develop decentralized applications on its systems. Although Ethereum also needs to be decentralized, it needs more efficiency and lower cost than Bitcoin. Otherwise, the efficiency of your platform data processing is too slow, and the handling fee is still high. Who wants to develop on your platform?

Therefore, Ethereum adopts the PoS mechanism. Although the decentralization of PoS is not as strong as the PoW mechanism, it is more efficient and does not require very large resources for processing data.

4, ETH and Bitcoin pass the same ecological

Fourth, ETH and Bitcoin are different in ecology. Because bitcoin is a currency, the value of its ecological support lies in the value of consensus, that is, how many people recognize it and use it to trade. Therefore, the design of Bitcoin's certificate is actually an economic model of currency contraction, which limits the bitcoin to only 21 million, so because of the scarcity attribute, the price will become higher and higher, and it is easier to achieve consensus value.

The difference between the Ethereum and the value ecology is the product, that is, what kind of service is provided by the whole platform, and what kind of service points are solved, such as Android, WeChat, etc., Ethereum Ethereum platform A tool that can be used to purchase gas for other usage scenarios such as fees, fundraising, etc. Therefore, in Ethereum's certificate design, there is no limit on the amount of Ethereum, and the maximum amount of circulation is 18 million per year. The difficulty of mining will increase with time, and the relative inflation rate will decrease every year.

In general, although ETH and Bitcoin are digital currencies, the entire blockchain system represented by each has different functions, principles, and ecological values. The essence of Ethereum is an operating system-level computing center. The Ethereum breaks the positioning of the original digital currency and creates a new direction based on Bitcoin. In addition to its own monetary value, it also contains the value of the entire product. This is unprecedented, only understanding this. One point is to understand why Ethereum is the representative of Blockchain 2.0. (OK Blockchain Business School)

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