We make a point of keeping track of online casino properties and how they operate. In recent months, we have noticed a growing number of casinos beginning to accept Ethereum for both deposits and withdrawals.

This got us to wondering about the differences between the many cryptocurrencies out there. At last count, there were thousands of cryptocurrencies (a.k.a. alt coins) on the market. We are especially curious about the Ethereum though. Why? Because there are some experts in the crypto space predicting that it will one day overtake Bitcoin as the dominant cryptocurrency.

Will it ever happen? Time will tell. For now, though, let us talk about how Ethereum differs from Bitcoin.

From this post you will learn the basic of both alt coins. Along the way, you will also pick up a little bit of knowledge regarding how online casinos work with cryptocurrency. You should have a better understanding of the fundamentals of cryptocurrency by the time you finish reading.

An introduction to Bitcoin

Bitcoin has been the clear leader in cryptocurrency since it was first conceived more than a decade ago. That stands to reason, given that Bitcoin was the first commercially viable cryptocurrency ever created. Just by virtue of its history, Bitcoin is considered the standard by which all others are judged.

The best way to understand Bitcoin as a digital currency is to think of it in terms of the dominant fiat currency where you live. For purposes of illustration, we will compare it to the U.S. dollar.

The dollar is the standard for all currency transactions in the U.S. There are multiple denominations ranging from the penny (1/100 of a dollar) to the $1,000 bill. Bitcoin works much the same way in this regard. A single Bitcoin, also known as BTC, is the standard of the currency. There are multiple denominations on either side of the single coin.

Currency value

The value of the U.S. dollar is determined partly by market forces and partly by government and central bank manipulation. That value is backed by the full faith of the U.S. government. This is where fiat currency differs from crypto.

Bitcoin's value is derived solely based on market forces. There are no central banks or government agencies involved. As such, Bitcoin is only worth as much as people are willing to pay for it. It is very much a supply and demand currency.

Spending Bitcoin

Everything else about Bitcoin is fairly straightforward from a consumer standpoint. You can spend it on anything you like just as long as you are dealing with merchants that accept it. Let's say you wanted to buy a new pair of shoes from a merchant who deals in cryptocurrencies. That merchant would give you a Bitcoin price. If the price is acceptable, you would transfer Bitcoin from your digital wallet into the merchant's wallet. The shoes would be yours and off you'd go.

There are some technical differences that separate Bitcoin from fiat currencies. These include decentralization, blockchain, and cryptography. But functionally speaking, Bitcoin works the same as the U.S. dollar for making purchases.

Just a currency

With all that knowledge, we are now ready to discuss one of the primary differences between Bitcoin and Ethereum. In a phrase, Bitcoin is just a currency. Ethereum is so much more, but we will leave that for later. Let us focus on Bitcoin for now.

Bitcoin was developed specifically to be a digital currency from the onset. Its original developers never had any ideas for Bitcoin beyond a currency that would level the playing field between buyers and sellers. As such, all the technology behind Bitcoin serves to make it useful as a liquid currency.

This is both good and bad. It is good in the sense that Bitcoin and its blockchain have been optimized for currency transactions from the very beginning. It is bad in the sense that, even though we now know there are plenty of non-currency uses for blockchain, Bitcoin's blockchain cannot be altered for such purposes.

This leads us to a discussion of Ethereum. What you are about to learn regarding this competing cryptocurrency should explain why some people believe it will eventually overtake Bitcoin.

An introduction to Ethereum

To say that Bitcoin is 'just a currency' implies that Ethereum is not. Indeed, Ethereum is a lot more. It was not designed to be just a cryptocurrency. In fact, the crypto we now call Ethereum (a.k.a. Ether) is really a derivative of the original technology.

Ethereum was originally developed as a blockchain platform. Forbes magazine explains it by saying that if Bitcoin represents blockchain 1.0, Ethereum is blockchain 2.0. That is a fairly good illustration.

The developers behind Ethereum took all of the principals birthed out of Bitcoin and improved on them to create a much more broad and practical blockchain platform. The platform can be used not only for cryptocurrency, but also for developing endless applications that require any sort of data tracking.

Practical uses for the Ethereum platform

Ethereum is a platform with a ton of practical uses. As just one example, a bank could use it as a more secure and robust ledger system to track its own activities. Think of what the bank does as one big accounting ledger. Moving that ledger to the Ethereum blockchain and then distributing it among every branch within the system creates a very secure and accurate way of accounting.

Moving outside of the financial sector, the Ethereum platform is already being used for software development purposes. Companies specializing in developing the complex apps that power modern society use blockchain to plot out and track the development process. Ethereum blockchain keeps everything together in a nice, neat, secure package that can be distributed among everyone involved.

You can't do that with Bitcoin

What was just described using a bank and a software development firm cannot be done with Bitcoin's blockchain. It is not possible. Bitcoin is just a currency; Ethereum is a complete blockchain platform. From this one primary difference flows all the others.

Among those other differences is the fundamental fact that Ethereum has inherent value beyond cryptocurrency. It has value as a platform for building software. As such, it can generate wealth by acting as a tool for creating software products that are then sold on the open market. Ethereum can continue generating wealth even after all the coins associated with it are finally in circulation.

The same cannot be said for Bitcoin. Once the very last Bitcoin is in circulation, no more wealth can be created from it. The entire value of a person's Bitcoin holdings will rise and fall based only on who actually wants the coin. In essence, Bitcoin will eventually be a zero-sum game. Ethereum is not subject to that same restriction.

Gambling with either one

The good news about both Bitcoin and Ethereum is that there is little difference between them from the gambler's perspective. If you want to play Mega Moolah at a casino that accepts both for deposits, you could choose one or the other at your discretion.

Bitcoin is obviously worth more than Ethereum right now, but that will not matter for gambling purposes. Why? Because you can only buy as much cryptocurrency as you can cover with fiat cash. It is no different than going to a cash exchange at the airport.

The amount you have available to buy crypto is what it is. You get less Bitcoin for your cash then you would Ethereum, but that will not make a big difference for gambling purposes. Credits are credits regardless of the currency that represents them. And when it comes time to cash out, you are withdrawing with the same cryptocurrency that funded your deposit.

Converting Ethereum to Bitcoin

Do note that some online casinos prefer to deal only in Bitcoin. If they accept other cryptocurrencies, they likely convert those currencies into Bitcoin at the time of deposit. For purposes of illustration, let us say you deposit Ethereum at one such casino.

The price of Ethereum at the time of this writing was equivalent to USD $106.97. Bitcoin was trading at $3,752.37. So Ethereum's value was roughly 3% of Bitcoin's. For every 10 Ether coins you deposit, you would get one-third of a Bitcoin in the exchange.

This is not necessarily a problem as long as the price of both coins tracks fairly equally. But if the price of Bitcoin falls while Ethereum remains flat or grows, you could lose money in the deal. This is one of the risks you take at casinos that convert all cryptocurrencies into Bitcoin.

To summarize, the biggest difference between Bitcoin and Ethereum is that Bitcoin is just a currency while Ethereum is a blockchain platform. For practical purposes, it doesn't mean much to the average consumer. You can buy, sell, and play your favorite casino games with Ethereum just as well as with Bitcoin. Ethereum might be the way to go if you are just getting started in the cryptocurrency space and don't want to pay Bitcoin's higher price.