Ethereum vs Bitcoin : What's the difference?

Ethereum Vs Bitcoin: Overview

Ether and Bitcoin are comparable in many ways:

  • Both are digital currencies that can be exchanged on internet exchanges and kept in various types of cryptocurrency wallets.
  • Both of these coins are decentralized, which means they are neither issued nor governed by a central bank or other governmental entity.
  • Both uses blockchain, a distributed ledger technology.


However, there are several significant distinctions between the two most prominent cryptocurrencies in terms of market capitalization.

  • Bitcoin signaled the birth of a completely new type of digital currency that functions independently of any government or organization.
  • People gradually realized that one of bitcoin's primary breakthroughs, the blockchain, could be utilized for other purposes. Ethereum advocated for the use of blockchain technology to enable not only a decentralized payment network, but also the storage of computer code that can be used to create tamper-proof decentralized financial contracts and applications.
  • Ethereum apps and contracts are powered by ether, the Ethereum network's currency.
  • Although Ether was designed to complement rather than compete with Bitcoin, it has still emerged as a rival on cryptocurrency exchanges.


Focusing on below image, in the Bitcoin protocol addresses map the transactions from sender to receiver. The only program that runs on the blockchain is the transfer program; given the addresses and the key signature, this program can transfer money from one user to another.

Ethereum generalizes this concept by placing an EVM at every node so that verifiable code can be executed on the blockchain. Here, the general scheme is that an external account will pass arguments to a function, and the EVM will direct that call to the appropriate contract and execute the function, granted the appropriate amount of ether and gas are supplied. As a consequence, every transaction in Ethereum can be considered a function call.

Ethereum vs Bitcoin : What's the difference?


Bitcoin Fundamentals

Bitcoin was first introduced in January 2009. Satoshi Nakamoto proposed a novel concept in a white paper. Unlike government-issued currencies, Bitcoin provides the promise of an online currency that is secure without the intervention of a central authority. Bitcoins are balances that are tied to a public ledger that is cryptographically secure.

Although Bitcoin was not the first attempt to build an online money of this type, it was the most successful in its early attempts and became known as the pioneer, in some respects, of almost all cryptocurrencies produced over the previous decade.

The notion of a virtual, decentralized currency has garnered recognition from regulatory and government bodies throughout the years. While Bitcoin is neither an officially recognized form of payment nor a store of value, it has carved out a place for itself and continues to survive in the financial system while being frequently examined and scrutinized.


Ethereum Fundamentals

Blockchain technology is being utilized to develop applications that go beyond merely including digital currency. Ethereum, which debuted in July 2015, is the most popular and well-established open source decentralized software platform.


Ethereum enables the development and deployment of smart contracts and decentralized applications (dapps) with no downtime, fraud, supervision, or intervention from outside parties. Ethereum has its own programming language that runs on the blockchain, allowing developers to create and execute distributed applications.

Ethereum has a wide range of possible uses and is built on its own cryptographic token, ether (usually abbreviated as ETH). Ether is largely used for two purposes:

  • to trade as a digital currency like other cryptocurrencies
  • to power programs on the Ethereum network.


Key Differences between Ethereum Vs Bitcoin

Coin limitation

  • Unlike Bitcoin, which has a fixed quantity of 21 million coins, ETH has no maximum supply. This is due to the fact that BTC functions as a currency. If its supply were infinite, it would depreciate, just as fiat currencies would if additional money was produced.
  • ETH, on the other hand, like programmable money, does not strive for stability. Instead, it seeks to add value and usefulness by generating possibilities and recruiting users and businesses to build on its technology. Of course, this does not rule out the possibility of an increase in the value of BTC.



  • BTC is accepted in many more locations than ETH. According to a 2020 HSB poll, 36% of small and medium-sized businesses in the United States accept Bitcoin, as do large corporations such as Microsoft and Wikipedia.
  • There are just a handful of sites where you can spend ETH. However, this distinction does not make BTC more valuable or helpful than ETH, as they serve very different purposes.



  • Both ETH and BTC use distinct forms of blockchain technology. To minimize centralization, ETH employs its own Proof-of-Work (PoW) hashing method called Ethash, which was developed to guard against ASICs.
  • BTC employs a PoW method based on Secure Hash 256 (SHA-256), a one-way feature created by the US National Security Agency (NSA) to safeguard digital data.
  • Both approaches are safe and decentralized, although they provide various benefits based on the cryptocurrency's purposes. These technology disparities have also resulted in scalability and block production time discrepancies.
  • On BTC, the transaction might take minutes, whereas on ETH, it merely takes seconds.


Overall functionality

  • In addition to being accepted in many locations, BTC began to function as national legal money, which was first observed in El Salvador. However, ETH has a distinct use, which is exchange automation. Its smart contracts let two parties complete a transaction, such as buying a property or renting a cab.
  • ETH not only reduces the number of middlemen, reducing bureaucracy, waiting times, and costs, but it also increases security by assuring that all transactions are automated, irreversible, and transparent.
  • Both cryptocurrencies have a wide range of worldwide applications in their respective sectors, as well as the ability to decentralize influence and power, putting people's assets back in their own hands.


The environmental impact

  • Positive, environmental, social, and governance factors are coming to dominate the investing platform as consumer awareness grows. Large corporate players have begun to select investment options based on ESG considerations.
  • This implies that as soon as miners (miners) band together to build a green and sustainable mining system, more firms will enter the market, demand will increase, and prices will rise as a result.
  • Currently, BTC and ETH rely on PoW mining, which results in large CO2 emissions. BTC is a major environmental issue. ETH, on the other hand, has a substantially lower carbon impact.
  • Furthermore, his intention to transition from a PoW to a PoS system constitutes a significant step toward responding to the implications of ESG.
  • A PoS system eliminates the need for mining by requiring validators to collect their currencies in return for incentives for positive validation behavior, cutting energy costs by almost 100%.



Ether (ETH) is arguably the second most popular digital token after Bitcoin (BTC). In terms of market capitalization, Ether and BTC are the second and third largest cryptocurrencies. Bitcoin and Ether have substantial distinctions, although they are similar in many aspects. Ethereum allows for the creation and implementation of smart contracts and decentralized applications.

Developers utilize Ether to build and run apps on the platform's network. While Bitcoin is accepted in many places, it has not yet served as national legal tender in El Salvador. Smart contracts on ETH allow two parties to perform a transaction, like as buying a house or renting a cab.


Further Reading

Blockchain explained
Proof of Work


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