What is the difference between Bitcoin and Ethereum? Where to reliably buy Ethereum or Bitcoin - personal experience. What is ether: fundamental features of the Ethereum system
With the increasing interest in bitcoin or ethereum, many people are thinking where it's safe. Quite a few articles and posts have been written about the reliability of purchasing these currencies. We will present our list of resources that we have tested in our own skin.
Why are people buying Bitcoin and Ethereum more often?
RUNet is full of stories and news about how the state does not support people investing in cryptocurrencies, This is true. But not everyone listens and some take risks and start trading or accumulating ether and bitcoin on their own. It is for such desperate people that we have prepared a list of resources (not prohibited!) where you can purchase currency .
Where to buy ether or bitcoin
- Kassa.cc- one of the first to advise. They change without any problems, they don’t make you wait or worry. The fairly simple and convenient design speaks for itself - the site is not a fly-by-night site and will not let your money go to waste. In the form below you can see the price of Bitcoin when exchanging for funds stored on a Sberbank card.
- 24paybank is one of the oldest sites that started exchanging various currencies, even before there were a ton of cryptocurrencies. For your peace of mind, we are showing you a photo of our currency exchange on this resource. In order to transfer bitcoins, the service can ask first to transfer money to the wallet specified in the message , then the money will come to you. There is no need to worry, everything will be done.
- Bitzlato P2P - this exchanger has also been tested. Convenient, easy to use, with many positive reviews, the site has no complaints. To check, we translated a little bitcoins to Yandex money. The transfer (purchase) was successful and without delays.
- Xchange.is - we did not exchange ether and bitcoin here, but we have no doubt about the reliability. Users have repeatedly voiced only positive reviews about the exchanger. in addition to ether and bitcoin, you can also buy or sell dash , zcash and other altcoins.
Who can name 10 cryptocurrencies from memory? How about 20? We won’t ask about a hundred - this is already for level 80 crypto-geeks :) But at present, much more attention is paid not to specific crypto money, but to the blockchain technology itself - or distributed registry - than before. In the blockchain framework, taken to the limit, any change in the states of system participants as a result of a transaction between them is automatically accepted by the system and its participants - subject to compliance with the rules on the basis of which participants are connected to this system, after which the transaction is recorded in the register of all participants of this systems.
We all left the blockchain...
Here, cryptocurrencies were a kind of first step. About 5 years ago, bitcoin acted as the main cryptocurrency out of several dozen that existed at that time. But over the past time, the Ethereum system has appeared and ascended, which is a kind of upgrade of Bitcoin, the creation of a significantly more expanded service based on the very idea of blockchain. And the editors will tell you what the difference is between them.
The fundamental difference here is that if the entire Bitcoin system is only and exclusively a mechanism for carrying out transactions with their recording in the blockchain with the added ability to generate new bitcoins with which transactions are carried out, then Ethereum expands this field to the ability to carry out any transactions of any kind, also without certification by any central authority or any third party. At least that's the theory.
Smart contract and EVM
This is realized by replacing a narrow purely monetary unit (bitcoin) with a programmable module called a “smart contract” or smart contract. The word “programmable” is not mentioned by chance - the Ethereum system itself supports several programming languages, with which you can create complex distributed applications. There are many of them, including prediction markets, decentralized exchanges, crowdfunding platforms, games, reputation systems, file storage and ownership services, content distribution systems, microtransaction services, etc., etc.
At the same time, the system also has its own internal currency - ether (ether), which is mined in the usual way - through mining, but, unlike bitcoins, which change owners in exchange for goods or services, it also has an initially prescribed application: the very use of smart -the contract requires the consumption of ether. Actually, this consumption is called gas price (fuel payment); in this case, ether is simply debited from the corresponding account.
Another innovation of Ethereum - virtual machine (EVM). It is Turing complete software that runs on the Ethereum network. It allows you to run any program, regardless of the programming language in which it is written, if you have enough time and memory. Thanks to the Ethereum Virtual Machine, the process of creating blockchain-based applications becomes much easier and more efficient. Instead of creating a new blockchain for each application, Ethereum allows you to develop thousands of different applications on one platform.
Advantages of the Ethereum platform
Since decentralized applications run on the blockchain, they have all the corresponding advantages:
- immutability: third parties cannot change data;
- protection against interference: Applications run on a consensus network, so censorship is impossible;
- safety: applications do not have a single point of failure, security is ensured through cryptography, so they are protected from hacker attacks and fraudsters;
- no downtime: Applications never sit idle or crash.
Instead of an afterword
“We had two bags of weed, seventy-five mescaline tablets, 5 packs of acid, half a salt shaker of coke, and an endless supply of tranquilizers of all varieties and colors, as well as tequila, rum, a case of beer and a pint of pure Ether. Not that this is a necessary supply for a trip, but once I start collecting dope, it’s difficult to stop. The only fear was about the ether - there is nothing more helpless, irresponsible and corrupted than ethereal zombies, but I knew that sooner or later we would switch to it...” Fear and Loathing in Las Vegas, Johnny Depp
Which currency should I choose for mining? Bitcoin or Ether
Since the summer of 2016, the value of cryptocurrencies has gone up. Bitcoin has grown more than 9 times in 1.5 years. And a coin like Ethereum showed an increase of 5000%.
Mining, which was forgotten during the years of “cryptocurrency stagnation” of 2014-2015, has again become a profitable way of additional and sometimes main income. Especially in countries with low electricity costs. In particular, in the Russian Federation.
Miners of the old school quickly took stock of the situation and began buying equipment for mining cryptocurrencies at competitive prices. The new wave of miners turned out to be so massive that ordinary Internet users became interested in mining.
In this article we will compare the profitability of mining two major cryptocurrencies – Bitcoin and Ethereum. These are the two leaders in capitalization among all virtual coins.
BTC and ETH mining equipment
The days of Bitcoin mining through desktop computers and laptops are gone 6 years ago. Let's say more. If you think that Bitcoin is mined through video cards (GPUs), then you are seriously mistaken. Special-purpose integrated circuits are used to mine cryptocurrency gold. They are called ASIC or “ASIC” in the Russian manner.
This small installation serves one single task - cryptocurrency mining. ASIC does not solve any other problems. At this stage (autumn 2017), such miners are the only profitable equipment for Bitcoin mining. GPU mining of BTC is not profitable.
Current models for Bitcoin mining: Antiminer S7, Antiminet S9, Antimner D3. These ASICs are produced by the Bitmain brand.
The key indicator for miners is power consumption and hashrate. The S9 model has a hashrate of 12,000 to 14,000 Gh/S (giga hash per second). Power consumption: 1300-1400 Watt. All these miners mine using the Scrypt algorithm. Approximate prices:
The running Antiminer S9 model with a hashrate of 13.5 Th/S and a consumption of 1400 Watts will cost $2,200-2,500 or 150,000 rubles. You have to buy miners from the Chinese - only they produce them on an industrial scale.
Ethrerum mining is possible on video cards. A different algorithm is used here – EthHash. Therefore, it is incorrect to compare the hashrate of ASICs and farms.
For efficient mining, miners combine GPUs into installations - farms. To operate this design, you need a processor with PCI slots (number of slots = number of video cards), a powerful power supply, and a frame. The operation of the farms is accompanied by the release of heat from video card fans and a characteristic sound. Powerful installations are equipped with a cooling system.
Due to the growing interest in mining, the cost of video cards in the Russian Federation has doubled since the beginning of 2017. Those who want to start mining ether or other currencies often order equipment from the USA or China due to a shortage of equipment on the Russian market.
Against the backdrop of the cryptocurrency boom, cooperatives have emerged to create ready-made farms. Groups of such entrepreneurs buy video cards, motherboards, frames wholesale abroad and then sell them to the general population at retail. The cost of ETH mining farms ranges from $1,000 to $15,000.
Popular models of cards for mining:
- NVIDIA GTX 1070
- NVIDIA GTX 1060
- ASUS RX 470
- ASUS RX 480
- ASUS RX 580.
Nuances when purchasing equipment
By purchasing an ASIC miner, you are forever tied to cryptocurrency mining using a specific mining algorithm. In the case of Antiminer S9, these are Sha-256 and Bitcoin. For profitable Litecoin mining, other miners have been implemented. If the difficulty of mining Bitcoin increases significantly, there will be no good options for changing direction. Only mining of Bitcoin forks is available.
Current ASIC models are produced in China. In the Russian Federation they sell used models with a certain level of wear. There are no guarantees for ASICs, repairs are almost impossible. Delivery of a miner from China takes 2-4 weeks. Due to tariffs on purchases over $1,000 online, miners often buy rigs from China itself.
Video cards give greater flexibility to the miner. It is possible to switch from mining one cryptocurrency to another. For example, from ether to ZCASH.
One of the problems is the growing cost of GPUs and the operation of the farm itself. The installation takes up more space compared to ASIC, requires cooling and operation control.
Advantages: warranty, possibility of repair and secondary sale.
Electricity costs
The profitability of mining depends on electricity tariffs. In the Russian Federation it differs in different regions. In Moscow – 5.38 rubles/kWh, and in the Irkutsk region – 1.01 rubles/kWh. The difference is significant. The average cost in the country is 3.1 rubles/kWh. We will use this indicator to calculate monthly electricity costs.
Let's compare popular installations: a farm for 8 GTX 1070 cards and two ASIC Antiminer S9 13.5 Th/S miners. The cost of the equipment in both cases will be approximately $4500-5500. You can invest 3-3.5 thousand if you try hard.
The consumption of the 8x GTX1070 farm averages 1.2 kWh. Two miners consume 2.6 kWh.
After calculations in the mining calculator, the following figures for electricity consumption came out:
A) Video cards
Servicing ASICs will require twice as much electricity.
Table of electricity costs for mining different amounts of Ethereum, Bitcoin, USD*
* — taking into account the current difficulty of production, cryptocurrency rates and electricity tariffs
How ETH and BTC rates behave
Bitcoin is not called cryptocurrency gold for nothing. This coin sets the tone for the entire market. If Bitcoin grows, then this is a signal for growth in other coins. Why is that? Firstly, Bitcoin is the leader in capitalization and the most famous cryptocurrency in the world. People associate the entire crypto trend with it.
Over the past year, BTC has been steadily growing. In the entire history of coins, there has only been one serious pullback. In 2013, against the backdrop of the general popularization of cryptocurrencies, the Bitcoin exchange rate reached $1,000. After which the “drain” began. A large percentage of investors worked for short-term profits. Therefore, by 2015, the rate dropped to $200. Over the past 1.5 years, BTC has grown more than 10 times. There were no serious setbacks during this period.
Vitalik Buterin announced the idea of creating an innovative cryptocurrency called Ethereum or ether back in 2013. The platform was launched only in 2015. She managed to survive the theft of investments from DAO, and in 2017 the coin rapidly rocketed upward.
Despite the investments and the second level of capitalization, ether is less trustworthy compared to Bitcoin. If only because this cryptocurrency has been around for only 1.5-2 years.
BTC is more reliable due to its popularity, history and higher capitalization.
What and how is it more profitable to mine?
Ideally, facts and calculations should provide an accurate answer to this question. Let's return to our chosen settings:
- Two ASIC S9 13.5 Th/s miners
- Farm 8x GTX 1070 8GB at 260 Mh/s
The cost of this equipment is about $5,000. The cost of electricity is 3.1 rubles/kWh or 0.055 cents. The total hashrate of ASICs is 27 Th/s, farms are 260 Mh/s. Calculations are carried out taking into account the current level of cryptocurrency exchange rates and the current difficulty of production.
With the given parameters, ASIC miners will pay for themselves within
Payback period = 5000/694.31 = 7.2 months
Calculation for the case of a video card farm
Payback of video cards = 5000/292.22=17.1 months or about 1.5 years.
Should these numbers be considered the last resort? No. This does not take into account such factors as the complexity of mining cryptocurrencies and fluctuations in their exchange rate. ASIC is not flexible, but the GPU has a choice of coins to mine. There are even automated scripts that select coins that are profitable for mining on the farm.
The second important point is that video cards are sold with a limited warranty and are subject to repair and further resale. These 8 video cards can later be sold for $2000 or so.
The advantage of ASIC is that it is easy to configure; there are no problems with “overclocking”, as is the case with GPUs. The latest generations of miners are produced with improved performance capabilities. They don't make noise and don't get hot. For video cards, this problem will remain relevant for some time.
There is one more BUT. Ether creator Vitalik Buterin gave an interview in which he spoke about future changes in ETH mining:
“When we switch to the Proof-of-Stake protocol, already at the first stage the need for ether mining will sharply decrease. Proof-of-Stake uses an algorithm that does not require a large number of computers to constantly make calculations. This is an algorithm that uses a coin within the platform itself. Consensus will become much cheaper and safer. And in fact, miners may lose their business,” said Buterin in an interview with Kommersant.
It is expected that receiving cryptocurrency will depend on the amount of ether in the wallet of network users. The more coins, the higher the dividends.
If you are a resident of the Irkutsk region and you have 5-10 thousand dollars available for investment, then it is more profitable to invest in ASIC. GPU mining provides more alternatives, but requires the active participation of the miner. If you want to gain experience and develop in this direction, then farms and ETH are a priority option.
Conclusion
With such favorable electricity tariffs, it would be strange if the population of the Russian Federation and other CIS countries were not interested in mining cryptocurrencies.
The possibilities for mining virtual currency do not end with BTC and ETH. These two coins account for 85% of the entire market capitalization. However, you shouldn't dwell on them.
In mining, as in any other type of investment, diversification is important. The mining of bitcoin and ether should be combined with each other and other currencies, and “physical” mining should be combined with cloud mining. In this situation, the return will be greater.
Although Bitcoin has long been a leader in the cryptocurrency market, it is not the only option for. Of particular interest is the Ethereum coin, which is no less reliable than Bitcoin, but at the same time has additional functions and applications.
The main distinguishing feature of Ethereum is that it is not just a digital currency. This is a multifunctional platform based on blockchain technology. It has smart contracts and an Ethereum Virtual Machine (EVM). Its currency, ether, is used for peer-to-peer contracts.
To facilitate negotiations and agreements, Ethereum smart contracts use applications stored on the blockchain. The advantage of such contracts is that the blockchain provides the ability to verify and execute them in a decentralized manner. This decentralization makes it incredibly difficult for fraud and corrections. Ethereum smart contracts are designed to provide higher security than traditional contracts and reduce associated costs.
Smart contract applications run on ether, the Ethereum cryptocurrency that uses the blockchain. Ether, like other crypto assets, is stored in Ethereum wallets, which allow the creation and use of smart contracts. An article in the New York Times described the system as "a single, shared computer on which network users work, with each user paying ether for the resources allocated to him."
Implementation of smart contracts using your own cryptocurrency
Ethereum allows the user to create tokens that can be used to represent virtual shares, assets, proof of membership, etc. Such smart contracts are compatible with any wallet, as well as exchanges that use the standard cryptocurrency API. You can copy the code from the Ethereum website and then use your tokens for a variety of purposes, including representing shares, various forms of voting, and fundraising. You can issue a fixed or varying number of tokens according to certain rules.
If there is Ethereum, Kickstarter is not needed
One of the interesting features of Ethereum is that it allows developers to raise funds for various applications. You can create a contract for your new project and ask for support from the community. The collected money will be kept until the required amount is accumulated or until the agreed date. Funds will be returned to those who donated them if the required amount is not collected. If the goal is achieved, they will go to the needs of the project. Getting rid of Kickstarter means eliminating the middleman and the rules and fees that come with it (including processing fees, Kickstarter can take up to 10% of the funds raised by a project).
Rejection of traditional management structure
Ethereum will help not only attract funding, but also get the organizational structure necessary to start implementing absolutely any idea. You can collect proposals from people who support the project, and then vote on issues of further development. This means that the costs associated with a traditional structure, such as those associated with recruiting managers and paperwork, can be avoided. Ethereum also ensures that the project is protected from external influence, as its decentralized network eliminates downtime.
More subtle differences between Ethereum and Bitcoin
The two projects under consideration, based on, also differ in many smaller aspects. The average block creation time in Bitcoin is approximately 10 minutes, while Ethereum tries to keep it within 12 seconds. The time was reduced thanks to the use of the GHOST protocol in Ethereum. Faster block production means faster confirmation of transactions. However, this leads to an increase in the number of stuck blocks.
Another key difference between these networks relates to the money supply in circulation. More than two-thirds of all possible bitcoins have already been mined, most of them by early miners. Ethereum raised its starting capital through pre-sales. By the fifth year of this system, only about half of its coins will have been mined.
Reward forBitcoin halves approximately every four years and is now 12.5 bitcoins. In Ethereum, miners are rewarded according to a proof-of-work algorithm called Ethash. For each block, 5 ether is issued. Ethash is a memory-intensive hashing algorithm that encourages decentralized mining by individual miners rather than the use of centralized, specialized ASIC devices, as is the case with Bitcoin.
Transaction costs in Bitcoin and Ethereum are also determined differently. In Ethereum, it depends on the memory requirement, complexity and channel load. In Bitcoin, transactions are limited by block size and compete equally with each other.
Ethereum uses its own Turing-complete internal code, which means that, given enough computing power and time, anything can be calculated. There is no such option in Bitcoin. While Turing-complete code has certain advantages, its complexity makes it difficult to ensure security, which contributed to the attack on the DAO in June of this year.
Ethereum and Bitcoin: two very different projects
Although comparisons between Ethereum and Bitcoin often focus only on the cryptocurrency aspect of these systems, these projects are actually very different from each other and have different goals. While Bitcoin appears to be a relatively stable digital currency, Ethereum tries to cover much more, and ether is just an element of the smart contract applications used here.
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When it comes to investing in a cryptographic currency, first of all you need to understand the financial asset, in other words, which cryptographic coin is appropriate to invest in? Today, the most suitable option would be Bitcoin or Ethereum.
First, you need to immediately learn a few unwritten truths. First of all, refuse to invest in forks, since this is obviously a losing option. Of course, the most sensible solution is to work with generally accepted assets such as Ethereum and Bitcoin.
Now we will comprehensively analyze the features of each cryptocurrency in order to ultimately determine what the prospects of both systems are, what is better to use as a means of payment, and which coin can become a profitable investment instrument.
Transaction confirmation speed
Bitcoin and Ethereum received very different press in 2017. Let's start with, perhaps, the Achilles heel of the currently most popular cryptocurrencies. The fact is that the main problem of Bitcoin is still the low speed of transaction confirmation.
We remind you that data about the transaction performed is recorded in a special block. As a consequence, system performance is clearly limited by the block size. The result is that the transfer details do not fit into a certain block, so the waiting time increases. The priority of a transaction is determined depending on the size of the commission, which is set by the sender. What's the result? Transactions that do not incur commission costs will take an incredibly long time to wait for confirmation, which negatively affects the network as a whole.
For Ethereum, such problems are also not an empty phrase, but still they manifest themselves to a much lesser extent. According to statistics from the Blockchain.info portal, the average performance of the Bitcoin network is about 300,000 transactions in 24 hours. For example, the Ethereum system processes 25 transactions every second, resulting in 2,160,000 per day.
This graph clearly illustrates how the number of transactions in the Bitcoin network has changed.
Thus, answering the question of what is more promising than Ethereum or Bitcoin as a means of payment, without any doubt, the first system will be considered more profitable. Of course, when assessing the investment attractiveness of an asset in the long term, one can come to the conclusion that this feature is not so significant. However, the fact remains that the low speed of transaction confirmation is perhaps the main drawback of the Bitcoin cryptocurrency.
Which is better to buy Bitcoin or Ethereum?
To answer such a difficult question, it is necessary to carefully analyze how susceptible the compared digital currencies are to depreciation, that is, inflation. We remind you that most cryptocurrencies, including Bitcoin, are characterized by a fixed number of coins. For example, the maximum amount of Bitcoin currency will never exceed 21,000,000 coins.
Based on this, we can say that BTC is a deflationary currency system. Today, only the shilling, which is the national currency of Somalia, can boast of such quality. Otherwise, not being subject to inflation is a characteristic feature of digital currencies.
However, let's return to the Somalia example. In the 90s of the last century, certain areas of the state were controlled by rebel groups, some areas were completely ungovernable, anarchism reigned there. As a result, the Central Bank of Somalia was liquidated. Since that time, the value of the national currency, after colossal inflation, has been moving exclusively upward.
As for , on the contrary, it refers to the number of assets that are subject to inflation. The emission volume is limited by mathematical laws. For example, if network users understand that the release of new ETH coins in a certain quantity will have a positive effect on the value of the cryptocurrency, then this plan will be implemented without a shadow of a doubt.
Of course, this is the biggest threat to the stability of the cryptocurrency rate. Do not forget that excessively high issuance may result in complete depreciation of the asset. The system developers assure users that over time, the rate of emission will, on the contrary, decrease. However, in the future their opinion may change, and accordingly, the emergence of new coins may have a negative impact on the value of the currency.
Assessing the prospects for growth and stability for the years ahead of Bitcoin or Ethereum, we are forced to state that the risk of inflation for BTC coins is lower. Therefore, this particular digital currency is considered profitable from the perspective of long-term investment.
What is better to mine Ethereum or Bitcoin?
To mine Bitcoin and make money, you need not only to have high-quality computer equipment, but also to use ASIC boards. As a result, this has led to the concentration of production capacities in one hand, which, of course, has a negative impact on decentralization and network security.
When 99% of digital currency is mined (experts estimate this will happen in about 10 years). Naturally, because of this, there is an unusually high risk that industrial miners will simply lose interest in the asset, as a result of which its value will collapse.
What to mine Bitcoin or Ethereum? Based on reliability and potential prospects, Ethereum looks more viable. In theory, the probability of a collapse of this digital currency is noticeably lower.
Versatility
Perhaps no one will argue with the fact that Bitcoin is simply a digital currency. Initially, this coin was created for making payments and a limited range of tasks. Based on this, the scope of use of cryptocurrency is limited. Nevertheless, the prospects for development specifically as a currency, a means of payment, have not become any less significant.
A highly specialized asset will cope with its original purpose more effectively than a universal tool. Judge for yourself, a professional camera will always take better pictures compared to a smartphone. However, this analogy can also be used in the opposite direction, for example, you cannot make a call from a camera, and accordingly, Bitcoin is deprived of additional functions.
The Ethereum system is a platform that is based on the use of Block Chain technology, in other words, it is not a digital currency in the traditional sense. For example, using this system you can work with Smart contracts, and this platform can also be used for the subsequent implementation of certain projects in a decentralized environment.
As a result, people are not just interested in Ethereum because it is a reliable means of payment. Of course, this has a positive effect on the investment attractiveness of the asset. However, the principle of “disservice” can always work. Therefore, no one can answer the question of what is more profitable, Bitcoin or Ethereum, with maximum accuracy.
Summarize
So, should you buy Ethereum or Bitcoin? In fact, each of these systems has certain strengths and weaknesses, so there is not and cannot be any unambiguous conclusion. However, you can still protect yourself; let’s remember the most important rule of investment activity: “Don’t keep your eggs in one basket.” Why not invest in both digital currencies?
Under no circumstances invest financial projects in a specific asset or just one project, as this is akin to a gamble. Serious business is based on different principles. In a casino you can take a chance and bet everything on red. In investment activities, such behavior will only lead to a drain on the starting capital.
Try to compare the advantages and disadvantages of both digital currencies analyzed earlier. Make your final decision based on the aspects that seem decisive to you. Try to look at the situation soberly and objectively, do not ignore the weaknesses of your preferred asset.
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