There has been much discussion about Ethereum since its advent was initially announced at the influential American Bitcoin Conference in 2014. As the currency has risen steadily in popularity, with many casino sites now offering it as the main transaction currency, it has naturally been compared constantly with its main rival Bitcoin, which was the first of the virtual currencies. However, it is important for all you Bitcasino players, as well as current and potential investors in online currencies, to understand the differences as well as the similarities between Ethereum and Bitcoin.
As the first virtual currency, Bitcoin hit the scene back in 2008 and introduced a then-novel idea – lower transaction fees than the online payment mechanisms that dominated the market at that time, operated by an authority that was decentralised. This was in sharp contrast to the normal currencies issued by governments, and moreover, these coins would not be physical objects but only exist in the form of balances that were associated with private and public keys.
In the years since Bitcoin came onto the scene, there has been a growing acceptance of the concept of an online currency in crypto gambling that has no physical counterpart by both government bodies and industry regulators. It has created a definite niche for itself and now coexists with regular physical currencies despite coming under increased scrutiny.
The success of Bitcoin on gaming sites, like here at Bitcasino, is underpinned and empowered by Blockchain, which is essentially a public ledger of every transaction ever executed in a system. Encrypted blocks are added to the chain as the system grows beyond the reach of intruders, allowing participants to access all network transactions and work at lower costs, reduced risk and greater efficiency.
This new and now-established technology set the scene for the launch of Ethereum in 2015. Ethereum runs on Blockchain, which enabled not just the support of a digital currency but also the creation of new applications, which are usually referred to as Bitcoin 2.0, Blockchain 2.0 or Crypto 2.0. Ethereum has fast become the biggest and most firmly established, decentralised, open-ended software platform to enable Distributed Applications and SmartContracts without any possibility of fraud and no downtime, as experienced by players of Ethereum casino games.
Ethereum is a platform like Bitcoin, but it is also a programming language that runs on Blockchain and helps developers to build new distributed applications. Its potential applications run on Ether, Ethereum’s platform-specific token that developers use to move around the Ethereum platform and develop new applications within it. Ether is not only used as a digital currency exchange like Bitcoin and other virtual currencies but can run applications inside Ethereum and effectively monetise work.
Both Ethereum and Bitcoin, used when playing various Bitcoin and Ethereum online casino games, are powered by distributed ledgers and protected by advanced cryptography, but there are many mainly technical differences between them.
However, from a player’s perspective, the two differ mainly in their purpose. Bitcoin, as used in any online Bitcoin casino, remains what it always was, an online alternative to the money used in the high street and in regular financial transactions. It is essentially a store of value and a medium of payment. Ethereum, on the other hand, was created as a platform to facilitate applications and peer-to-peer contracts using its own platform-specific currency. Therefore, they are both digital currencies, but Ether is not a payment alternative alone and was never designed to be one. Its primary purpose was always to monetise and facilitate Ethereum so that developers could build new distributed applications within it.
Different purposes of Bitcoin and Ethereum
Ethereum is built on the Blockchain principle, which also supports Bitcoin, but has a purpose that ensures that it does not compete directly with Bitcoin. However, as Ether has risen in popularity and in its market capitalisation, it has come into open competition with not just Bitcoin but with the whole range of cryptocurrencies, and this is especially true from the perspective of trading. Although it is still a long way behind Bitcoin, Ether’s market cap is already more than Litecoin and Ripple. Driven by significantly different intentions and both using the Blockchain technology, Ethereum and Bitcoin are both set to increasingly entrench themselves in financial systems.
This claim that Ethereum and Bitcoin are not direct competitors is worth looking at a bit more closely. They are said to be complementary aspects of the new virtual economy, Blockchain-based and distributed across global networks. The idea is that the World Wide Web is deep and vast enough for them both to carve out their own niches without coming into direct conflict.
In this oceanic virtual environment, the claim is that Bitcoin specialises as the equivalent of digital gold, offering an alternative monetary system on sites like Bitcasino that is dependable as well as free from political intervention and unlimited inflation. Ethereum, on the other hand, is slowly but inexorably evolving into what amounts to a world computer, using a programming language that is based on Blockchain and enables an unlimited number of decentralised applications to be developed along with new code-based contracts, the products of which are routinely now experienced in the Ethereum games played on Bitcoin gambling websites.
Convergence of the two cryptocurrencies
In the real world, matters turn out to be a little more complex than this. There is, in fact, a considerable overlap between the two in terms of their respective markets and functions, and there are no systems in place to prevent users from migrating between them at will. In short, neither Bitcoin nor Ethereum has its sphere of operations clearly defined yet. As they develop, this convergence will only become more apparent. For example, additional layers, such as Rootstock, have already been built on Bitcoin and threaten to surpass their equivalents on Ethereum. The promise from Rootstock is that it will provide all the functionality of Ethereum in addition to being more secure.
In the same way, Ethereum has become increasingly popular as an investment and trading tool, thereby steadily infringing on Bitcoin’s turf as dependable internet currency. Peaceful coexistence of the two is, therefore, something of a myth, and for the average user, they clearly compete with one another.
There are a few broad differences between Bitcoin and Ethereum users, with the former tending to be more economically and politically conscious. They tend to support established principles, such as free markets, and they are averse to control and central planning. As a result, Bitcoin is generally seen as something of a counterweight to governmental control and centralised banking.
Ethereum, on the other hand, attracts users who are rather less motivated, ideologically speaking. Their focus tends to be less on politics and established financial systems and more on Blockchain technology’s future development and its relevance to financial applications and technology.
Bitcoin and Ethereum from the player’s perspective
Although Bitcoin enabled the development of online casino games, such as Bitcoin poker and Bitcoin slots, Ethereum is now seen by many as the way forward for online gaming payments. The new Ethereum smart contracts, for example, allow players of Ethereum casino games to transfer funds between wallets automatically, so third parties are no longer needed for this.
From the average player’s perspective, it is, in fact, this lack of smart contracts that work against Bitcoin, as it means that winning bets still must go through a third party. However, it is still the case that it is easier to buy Bitcoins than Ethers currently because to buy Ethers, players must purchase Bitcoins first and then exchange the currencies. It is also easier to find web-based Bitcoin casinos, as Ethereum is still a relatively new kid on the block(chain). Fortunately, Bitcasino offers the choice of either using Bitcoins or Ethers on our website.
So, although gaming with Ethers is still a relatively new concept, and you’ll often have to purchase Bitcoins first to buy them, this is a fast-changing scenario. Recently, there has been a great increase in gamers looking to win Ethers rather than Bitcoins, and casinos like Bitcasino are now allowing players to earn them on a range of different games.
Bitcasino – the best of all worlds
Despite all the advances in technology, however, some of the old principles of gambling in general still apply. Whether betting in Ethers or Bitcoins, for instance, you should always mitigate your risk by using only smaller stakes. This is, in fact, built into the technology of whichever cryptocurrency you choose to play with, as it allows you to bet only very small amounts.
Whether you choose to play with Bitcoins, Ethers or any other of the numerous cryptocurrencies currently available, or indeed with regular currencies, Bitcasino is the one-stop-shop for all your online gaming requirements. We offer new and seasoned players alike a fun, fair and fast gaming experience on a fully functional site designed for players who want to use cryptocurrency to play a vast range of popular games, from classic slots to live dealer and table games.
Words: Sean McNulty
Images: Shutterstock and Bitcasino