Ethereum vs Bitcoin: How is Ethereum different from Bitcoin?

BTC and ETH are the two of the most popular cryptocurrencies worldwide. They have significantly influenced the growth of the crypto blockchain space. Bitcoin was the first cryptocurrency and is often seen as digital gold. Whereas, Ethereum is a truly innovative decentralized computer.

Bitcoin and Ethereum are neither issued nor monitored by central banks or financial institutions.Instead, they depend on computer nodes running copies of their networks to ensure transaction legitimacy. In terms of functionality, Ethereum and Bitcoin are fundamentally different.

In this article, we will delve deep to understand the differences between Bitcoin and Ethereum.

What is Bitcoin?

Bitcoin was the first cryptocurrency designed to be a peer-to-peer (P2P) electronic cash system. It allows transactions without the need for a central authority. Satoshi Nakamoto wrote the concept that laid the foundation of Bitcoin’s blockchain in his 2008 whitepaper. The first block of data, known as the genesis, was mined in January 2009.

Bitcoin is the first cryptocurrency that was based on blockchain technology. It lets users manage money not controlled by any government, bank, or financial entity. A decentralized network of users runs the blockchain software and follows rules that each network participant accepts.

Learn more about Bitcoin and how it functions here.

What is Ethereum?

Ethereum is a decentralized open-source blockchain network. Its native cryptocurrency is Ether. ETH is used to interact and execute transactions on apps created on top of the network. Ethereum was launched in July 2015 as one of the most ambitious projects. Its goal is to decentralize everything on the internet.

Vitalik Buterin, Ethereum’s co-founder, published a white paper in 2013 outlining the use of smart contracts. Smart contracts facilitate the development of decentralized applications. DApps are programs that operate without the intervention of a central body.

Ethereum, like Bitcoin, has no central authority that manages it. Ethereum also uses the same methods to prevent anyone from tampering with its blockchain data.

Ethereum vs. Bitcoin

This Bitcoin vs. Ethereum debate has gotten much attention recently. Bitcoin has become the most universally adopted cryptocurrency. It also has the highest market cap from any cryptocurrency today. On the other hand, Ethereum’s creators learned from Bitcoin and created additional functionalities based on Bitcoin’s concepts. Ethereum is currently the second-most valuable cryptocurrency on the market.

Applications of BTC and ETH

Bitcoin and Ethereum both have a native currency that performs various functions. While Bitcoin (BTC) is named after its blockchain, Ethereum’s native currency is Ether (ETH).

Bitcoin mainly serves as a medium of exchange and a storage of value. Unlike Bitcoin, Ether’s primary purpose is to connect with Ethereum apps. ETH has been powering smart contracts and DApps. These dApps frequently create native currencies based on ETH. Dapps use these currencies for operation, governance, value evaluation, or production. As Ether’s value climbed, it has also become storage of value.

Consensus mechanism

Currently, both Bitcoin and Ethereum use a Proof-of-Work consensus mechanism. A decentralized worldwide network of computers uses cryptography to confirm network transactions and mint new currency.

However, Ethereum’s developers are now working to transition the network to Proof-of-Stake (PoS). This mechanism relies on users staking tokens as collateral to validate and produce blocks. This much-anticipated upgrade is known as Ethereum 2.0. With this, Bitcoin and Ethereum’s consensus mechanisms are expected to differ significantly.

While the Bitcoin protocol has remained constant since its creation, Ethereum has shown to be more dynamic. It is also continuously improving to increase network efficiency.


While Bitcoin’s blocks are usually confirmed and created every 10 minutes, Ethereum’s process takes 10 to 20 seconds. This improved throughput allows Ethereum to handle on-chain transactions faster. This speed is essential for DApps to serve a wide range of functionality.


Bitcoin’s transaction costs are entirely voluntary. Users can pay more to get special attention to their transactions. Nevertheless, it will proceed even without a fee.

For a user’s transaction to be successful on Ethereum, the user must pay Ether. The Ether will be transformed into a unit known as ‘gas’. This gas fuels the computation required for the transaction to be added to the blockchain.

Currency supply

Bitcoin has a maximum coin supply of 21 million. With each successfully mined block, a new BTC is created. The total number of Bitcoins that miners receive as block rewards are slashed in half every 210,000 blocks. This process is called “halving”.

Ethereum currently lacks a hard cap on the total amount of ETH. The unlimited supply can concern investors who value a deflationary monetary system. Several suggested modifications, such as EIP-1559, include built-in deflationary processes that may solve this issue.

Which one is better?

Many people directly compare Ethereum and Bitcoin since they are the two most well-known blockchains and cryptocurrencies. In reality, they fulfil different goals. They can be viewed as complementary forces in many ways.


Bitcoin and Ethereum are critical components of the rapidly expanding world of digital goods. Although rivalry exists within their respective communities, they play distinct roles within the blockchain ecosystem.

Bitcoin and Ethereum are well-positioned to deliver long term benefits in fostering a healthy, mature, and varied crypto ecosystem due to their enormous popularity.

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