Gridcoin vs. Bitcoin



Gridcoin vs. Bitcoin: What's the Difference between these Cryptocurrencies?

Gridcoin, despite being introduced before most other cryptocurrencies, is still unknown to many people. Bitcoin, however, as the first and oldest cryptocurrency, is already present in society and in the media. In addition, Bitcoin enjoys a very high priority in the market for cryptocurrencies. This is, above all other aspects, reflected in the following financial aspects. The current exchange rate above 6,000 US Dollars for one Bitcoin (as of June, 12,2018) is enormous, as is its market volume with over 115 billion US Dollars. In addition to these huge numbers, Gridcoin can currently only be associated with a very small fish in the ecosystem of cryptocurrencies. Gridcoin can not match the Bitcoin's numbers in terms of market volume or the echange rate, but there are other aspects than that. Instead of giving miners an incentive to use massive amounts of energy for keeping the Bitcoin system running, Gridcoin carries the basic idea of promoting and supporting scientific projects for the benefit of all humanity.

History of Bitcoin

Bitcoin, the oldest and best-known cryptocurrency, was released in 2009 as an open source code by Satoshi Nakamoto. In 2008, Satoshi Nakamoto already published a whitepaper describing Bitcoin as a standalone cryptocurrency, allowing transactions between people via a peer-to-peer network. This network should be decentralized and allow transactions without central institutions such as banks. In addition, the disclosure of his own personal information in transactions should be prevented. Transparency and security should characterize the new type of currency.

To ensure thrse features of transactions with Bitcoin, the revolutionary blockchain technology was invented at the same time. Based on the blockchain technology, all transaction data could be stored anonymously, decentrally and tamper-proof in digital form for the first time. In consequence, blockchain technology formed the basis for the development of cryptocurrencies such as Ethereum or Gridcoin.

History of Gridcoin

Gridcoin was released in 2013 by Rob Halförd as a new cryptocurrency. It was originally based on the Proof-of-Work algorithm, which should secure the blockchain network by mining coins, just like Bitcoin. However, the Proof-of-Work algorithm was later replaced with the more energy efficient proof-of-stake algorithm because of the high energy consumption in Proof-of-Work computations. In combination with the Proof-of-Research algorithm, it is possible to make computing power available for scientific projects and to be rewarded with Gridcoins.

How do cryptocurrencies like Bitcoin and Gridcoin work?

Bitcoin itself is based on the Proof-of-Work algorithm. That means the Bitcoin network is operated by high computing power of their users. The high computational power is needed to confirm transactions, generate blocks in the blockchain, and reward miners with coins as a result. Whether a miner is being rewarded depends on the user's ability to find a correct hash of the next block. Miners compete to find a right hash to complete and forward transactions. However, to get a reward you need a lot of energy and specific hardware nowadays. In 2013, the Bitcoin network already consumed electricity worth 15 million dollars - daily. Later, its consumption was comparable to the electricity demand of Ireland or Denmark.

The cryptocurrency Gridcoin, however, does not use electricity just for its network operation, as it is based on the energy-efficient Proof-of-Stake combined with the useful Proof-of-Research algorithm. The generation of Gridcoins rests upon the amount of computing power a miner provides, and not by purely finding a correct hash value of a block in the blockchain. The computing power can be used by various scientific and crowd computing projects such as cancer or AIDS research or the search for extraterrestrial life forms (SETI@home). All projects eligible to be rewarded with Gridcoins are listed on the volunteer computing platform BOINC. BOINC enables unused computing power to be made available from a variety of computers over the Internet. Thus, researchers are provided with computing power they otherwise had to pay for. In essence it can be stated that mining Gridcoins improves the quality of life by increasing the number important research results.

What are the advantages of Gridcoin over Bitcoin?

Gridcoin, as a cryptocurrency of science, has some special advantages over Bitcoin, that are explained in more detail below.

A major advantage of Gridcoin over Bitcoin is the lower need of energy to keep the network secure. This is due to the use of the Proof-of-Stake algorithm which is way more energy efficient than Proof-of-Work. In combination, the Proof-of-Research algorithm optionally allows Gridcoins to be mined with CPUs or GPUs, by providing them to scientific projects. In opposition to Bitcoin, there is no need to buy expensive, special hardware (such as ASICs) designed for coin mining only. Moreover, this specialized extra hardware is associated with high energy consumption. Thus Gridcoin, as a rewarding cryptocurrency, enables the miner to use his own hardware with it the associated energy consumption to do something good for humanity.

In terms of mining, Bitcoin works like a lottery to determine the miner who may generate the new block with a right hash every 10 minutes in average. The higher the number of generated hashes per second, the higher the chances to win. As the number of hashes per second within the whole network is huge, usual miners have to join a mining pool to have a feasible chance to get paid at all. Pools undermine the feature of decentralization that cryptocurrencies and blockchain technologies in general stand for. In the Gridcoin network, the need to join a pool is lower as research results and the according payments accrue up to 6 months until a block has to be found before losing owed Gridcoins.

Furthermore, Gridcoin has the advantage that transactions completed are confirmed in a much shorter time. Gridcoin generates a new block of transaction data in the blockchain almost every 90 seconds. In comparison, Bitcoin generates a new block about every 10 minutes. This makes it slower for Bitcoin as a payment option to receive a payment confirmation for products or services purchased with Bitcoins.

Finally, all the special advantages of Gridcoin compared to Bitcoin explained above are listed below:

  • Securing Gridcoin's network is significantly more energy efficient compared to Bitcoin
  • Participation in the BOINC network to help the advanced science generates additional Gridcoins
  • Using CPU and GPU, even smartphone resources is feasible for Gridcoin mining (no special mining hardware like the ASICs required)
  • No loss of mined coins within 6 months time frame
  • Individual mining of Gridcoins possible (need for pool mining reduced)
  • Gridcoin transactions are quicker to confirm (all 90 seconds a new block is generated in the blockchain)

Main differences between the cryptocurrencies Bitcoin and Gridcoin

 

Bitcoin

Gridcoin

Released:

2009

2013

Market cap (June, 12, 2008):

Over 110 billion

Over 12 million

Blockchain:

Proof-of-Work

Proof-of-Stake and Proof-of-Research

Scalable:

Not at the moment

Yes

Mining:

ASIC miners

CPU and GPU, even smartphones or Raspberry Pi

Block time:

Every 10 minutes

Every 90 seconds

Supply:

Over 17 million

Over 300 million

Actual Price (June,12,2018):

≈ 6800 US Dollar

≈ 0,03 US Dollar

More Information

Further information about blockchain and cryptocurrency can be found in the PiGrid Shop under "Learn more".

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