Ethereum was created as a complement to Bitcoin, not as competition. It provides a flexible platform to build applications using the solidity scripting language. Investopedia requires writers to use primary sources to support their work. These include white papers, government data, original reporting, and interviews with industry experts. We also reference original research from other reputable publishers where appropriate.

Instead, the blockchain continues to run through its network of miners. Changes and upgrades to the code can be proposed, and in order for them to be adopted, all of the miners need to implement them. PoW has been widely criticized as being unsustainable because it requires vast amounts of energy to run computer networks — known as mining rigs — to validate transactions and mint new BTC.

  • Bitcoin is created, stored, transacted, and distributed using a decentralized, distributed system known as Blockchain.
  • Ether could be decreed by the developers as finite tomorrow, but at any later point, the same cabal might reverse this policy, as they have in the past.
  • Visa handles approximately 1,700 transactions per second and claims to scale to 24,000.
  • The essential difference is that a developer can write programs that interact directly with the Ethereum platform, making it possible to provide services that Bitcoin could not.
  • They are both virtual currencies that are actively used for services, contracts, and as a store of value.

The primary purpose of Bitcoin was to establish itself as a viable alternative to traditional fiat currencies backed by countries. Bitcoin is a digital currency that can be transferred on a peer-to-peer network without the need for any central authority. It was invented by a person or group of people with the name Satoshi Nakamoto in 2008. All the transactions are stored in an immutable distributed ledger. Ethereum is a blockchain-based software platform with the native coin, ether. Ethereum smart contracts support a variety of distributed apps across the crypto ecosystem.

Proof of Stake

If one or a few entities control all or a significant majority of the nodes, they may be able to implement changes at will, degrading Bitcoin’s consensus. Hardness is of no importance however, if the monetary policy is not sound. Sound money is money that is not susceptible to arbitrary changes in its supply. A money cannot be sound if it is governed by a centralized entity or is otherwise subject to arbitrary changes. Ether could be decreed by the developers as finite tomorrow, but at any later point, the same cabal might reverse this policy, as they have in the past. Due to its decentralized nature, Bitcoin is censorship-resistant, meaning that any transaction which is valid according to the rules of the network can be included in a block.

You can send and receive Bitcoins using your wallet, or your public and private addresses. It is estimated that there are over one million unique individuals mining Bitcoin around the world. After all the Bitcoins have been mined, miners will continue to receive transaction fees to incentivize them to keep the network running.

Many Ethereum proponents believe Ethereum’s market cap will surpass Bitcoin’s market cap. This event is known as the flippening, since the #1 and #2 spots of the cryptocurrency chart “flip”. Blockchains serve as the foundation of modern cryptocurrencies, but they are capable of doing much more. Here’s a peek behind the curtains at how blockchain databases work and the real-world problems they are solving. Others claim that blockchain technology can be made more scalable through technical improvements.


In other words, it’s a simple language that known only how to do one thing – send money from A to B. Given the extensibility of cryptocurrency, neither coin has a clearly defined sphere of operation. There is considerable overlap between their functions and markets, with nothing to prevent user migration.

You can prepare by first learning about how cryptocurrencies work before investing any money. Bitcoin will always hold the distinction of being the first digital currency. Bitcoin is electronically “mined” by expending computing resources and electricity to put new coins into circulation, and has a limited supply just like a precious metal. The former is the first cryptocurrency, designed as a store of value and medium of exchange—but today mostly employed as a speculative risk asset. The latter was designed as a decentralized computing network, which has given rise to the decentralized finance space.

Is Bitcoin or Ethereum Right For You?

The blockchain consists of blocks containing transactions with inputs and outputs. The totality of inputs and outputs, amounting to hundreds of gigabytes of data, is sufficient to determine how much Bitcoin each address owns. Smart contracts are self-executing contracts that are agreed by buyer and seller and directly written into the lines of code. Some people buy Bitcoin because they want to store their money somewhere other than a bank. Some buy Bitcoin as an investment, believing that its price a few months or years from now will be substantially higher than it is today.

Once you’re ready, you may find that it’s easy to get started with crypto investing. Both ethereum and bitcoin are widely supported, including by major cryptocurrency exchanges. But as cryptocurrencies, bitcoin and ethereum have some noteworthy differences. Bitcoin’s consensus mechanism blockchain was designed to solve the double spend problem. It employs validators to ensure that each crypto unit can only be spent once, and to record each transaction on a distributed ledger for all of the world to see.

Bitcoin Decentralization vs. Ethereum Decentralization

Because every Ethereum transaction consumes computational resources, transactions come with a cost. Currently there is a limit of about 18 million ETH that can be mined each year, simply based on the amount of time it takes for miners to confirm transactions. The first Bitcoin product transaction happened in May of 2010, when someone purchased two pizzas with 10,000 BTC.

ethereum vs bitcoin difference

It also depends on the risk factor of the market for each investor. Both the cryptocurrencies have potential to grow their value globally. ethereum vs bitcoin Ethereum’s native cryptocurrency, also known as Ether, can be used to pay for services or transaction fees on the network.

Key differences between BTC and ETH

Tampering occurs when a different version of the blockchain is detected and rejected by other network participants. Another way to invest is through derivatives such as bitcoin or ether futures and options. You could also invest in bitcoin by purchasing bitcoin futures exchange traded funds or buying stocks of companies such as Riot Blockchain, that are involved in bitcoin mining.

As a substitute, they rely on computers running replicas of their networks, called nodes, to guarantee that each network user is aware of the latest developments. Bitcoin is a decentralized, peer-to-peer digital currency that enables instant, global payments to anyone, anywhere. Bitcoin employs cryptography to secure and safeguard transactions and the Blockchain to record them. Network nodes validate transactions, which are then recorded in a public distributed ledger .

ethereum vs bitcoin difference

DAOs are often built on top of decentralized blockchains like Ethereum. Decentralization eliminates the oversight of a central authority or intermediary, so there’s no entity to regulate or manage the blockchain and its users’ actions. Remember, Bitcoin and Ethereum both function on decentralized blockchains.


You hold an Ethereum wallet and transact using public and private keys. Although Bitcoin has now become a household name, many people have not purchased Bitcoins because they either don’t understand the technology, or they think it is too difficult to figure out. Meet our panel of SoFi Members who provide invaluable feedback across all our products and services. Comparing Bitcoin to Ethereum is a bit like comparing oranges to apples. While they are both cryptocurrencies, they serve inherently different purposes. Back in June 2017 Ethereum’s market cap indeed reached over 80% of Bitcoin’s market cap.

ethereum vs bitcoin difference

In this article, we’ll be taking a look at the key differences between Bitcoin vs Ethereum, as well as the advantages and disadvantages that each of these currencies has. Bitcoin and Ethereum are the two biggest forms of cryptocurrency currently in circulation. The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy. The performance of BTC and ETH often serves as a benchmark to gauge the overall health of the crypto market. Despite their dominance, these cryptos function very differently from one another.

What is an Enterprise Blockchain Smart Contract?

The process is known as “mining,” and it makes it possible for participants to receive cryptocurrency rewards in exchange. Mining uses a huge amount of energy, which has led to significant criticism of cryptocurrency in general. Overall, a long-term investment in either represents the hope that their underlying technology will achieve worldwide use, increasing the demand for the limited supply of their cryptocurrency. Whether to buy either — or both — depends on your market analysis.

Bitcoin Developers vs. Ethereum Developers

The main goal of any consensus mechanism to to solve what’s known as the “double spend” problem. Bitcoin was the world’s first cryptocurrency, created and launched by Satoshi Nakamoto in 2008. There were numerous attempts to develop a practical and widely recognized cryptocurrency before Bitcoin came along. However, Bitcoin has held firm and catapulted cryptocurrency into mainstream popularity in recent times. In contrast to stocks, commodities, or even centrally-regulated currencies, a cryptocurrency’s underlying value is unclear.