Bitcoin vs Ethereum: Top Differences

And while the market value of Bitcoin is significantly higher than that of any form of digital currency on the market right now, it is closely followed by Ethereum, which hopes to take over one day. The number of Bitcoin transactions that take place in a day currently hovers around 260,000; for Ethereum, it’s about 1.2 million. As for the number of blocks that have been mined, for Bitcoin, it’s over 718,000, and for Ethereum it’s about 13 million. This has a lot to do with the fact that it takes a lot less time for a block to be added to Ethereum than to Bitcoin. We all know that when we conduct a transaction through a bank, some amount of money or service charge is levied. However, with Bitcoin, this charge is very low, making it a more attractive alternative to conventional electronic transactions.

how is ethereum different from bitcoin

Decentralized experiences like lending/borrowing, NFTs collections and video games can all be based on Ethereum and powered by Ether payments. Bitcoin and Ethereum use different scripting languages, with Bitcoin leveraging a more simple language limiting its functionality to basic transactions. Smart contracts are essential in the operation of decentralized apps where transactions can occur Ethereum vs Bitcoin in a trustless, secure and transparent manner without the help of any third party. Data Ownership – Ethereum’s most prominent supporters believe blockchain technology will be the foundation for a completely new internet, dubbed Web 3.0, by experts. In principle, the new web would be decentralized, allowing people to reclaim ownership of their data and build an organic online identity.

Secured by cryptography

As a protective mechanism for customers, Aave specializes in so-called overcollateralized loans, meaning customers are required to make crypto deposits worth more than they borrow. Users can then borrow up to a certain percentage of the pledged collateral value, helping avoid issues like loan defaults. Like Bitcoin, Ethereum aims to be a viable alternative to existing fiat money. However, Ethereum is not just a cryptocurrency used as a medium of exchange. Instead, it allows users to construct dApps on top of it for various use cases.

  • “The crypto market continues its recovery process after the dreadful start to the summer.
  • With that in mind, it’s crucial to understand these two currencies.
  • Thousands of cryptocurrency token projects have emerged in recent years that run on the Ethereum blockchain, adhering to the ERC-20 compatibility standard.
  • In this case, each coin is backed by an equivalent number of US dollars, which keeps it from experiencing the same kind of pricing volatility that other cryptocurrencies face.

This marked the culmination of a historic price rally which took place throughout the entire 2017 and especially towards its end. At the beginning of 2017, BTC was trading at around $900, hence increasing its value more than 20 times by year-end. It’s interesting to note that Ethereum has fairly faster block time – the amount of time necessary to validate a block. Bitcoin’s average block time currently is a little bit more than eight minutes, while Ethereum’s block time is around 25 seconds, according to BitInfoCharts. Once a transaction is broadcasted and included in a mined block, it is added to the blockchain.

What to consider before buying cryptocurrency

Ethereum has a more diverse set of use cases, with thousands of ETH-powered decentralized apps showcasing the network’s scalability and resilience. Ecosystem – Ethereum is far more helpful in the actual world than Bitcoin. Because it is an open technology platform, developers can create products with real-world utility.

how is ethereum different from bitcoin

As a result, Ethereum is able to do many things well instead of serving solely as a store of value. Bitcoin is the largest cryptocurrency by market capitalization, Ethereum is the second largest. Ether works very similarly to Bitcoin and can be used for peer-to-peer payments. Smart contracts work in such a way that when a specific set of predefined rules is satisfied, a given output takes place. Of the more than 1,600 available cryptocurrencies on the market, both Bitcoin and Ethereum are in the top three. In fact, Ethereum may overtake Bitcoin, according to Yahoo Finance, which cites the platform’s custom contracts as a more versatile alternative to Bitcoin.


Both are popular and established cryptocurrencies, but there are key differences between them that make Bitcoin a better investment. The reason for this belief can be boiled down to three simple reasons. Like coins, tokens are also digital assets that can be bought and sold. However, tokens are a non-native asset, meaning that they use another blockchain’s infrastructure. These include Tether, which is hosted on the Ethereum blockchain, and others, including Chainlink, Uniswap, and Polygon. The following statements do not constitute investment advice or any other advice on financial services, financial instruments, financial products, or digital assets.

Bitcoin has a hard cap of 21 million coins, which means that there will never be more than 21 million bitcoins in circulation. Currently, there are around 19.3 million circulating, with the remaining 1.7 million yet to be mined. Even better, though, these remaining 1.7 million bitcoins will be released at a diminishing rate for the next 117 years until the last bitcoin is mined. Naturally, there are many other coins that one can use, but Bitcoin has long established itself as the predominant market leader, accounting for nearly half of the entire coin market cap.

Bitcoin Developers vs. Ethereum Developers

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. Ethereum is designed explicitly for payments on the Ethereum network. Andy Rosen covers cryptocurrency investing and alternative assets for NerdWallet. He has more than 15 years of experience as a reporter and editor covering business, government, law enforcement and the intersection between money and ideas.

Scalability is one of the biggest issues with the Ethereum network today. It currently operates using a proof-of-work protocol, similar to bitcoin. This means that cryptocurrency miners with purpose-built computers have to compete to solve complex mathematical puzzles in order to validate transactions. Put simply, bitcoin is a payments network that can be used to transfer value between two people anywhere in the world. Ethereum, on the other hand, is aiming to create the infrastructure for an internet that isn’t maintained by any single authority.

Bitcoin’s origins as the first cryptocurrency

Ethereum’s vision is a censorship resistance and self-sustaining network of computers. Bitcoin and Ethereum are two decentralized and peer-to-peer networking concepts based on cryptocurrency. To eliminate the central authority or a central server system peer-to-peer networking system was invented. In peer-to-peer computing, each participating party acts as a node and sends/receives data. There are two main consensus mechanisms employed by cryptocurrencies. Bitcoin uses the proof of work mechanism, while Ethereum is moving toward a proof of stake consensus mechanism.

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Ethereum suffers from centralization and uncertain monetary policy, which will prevent it from becoming money. The Bitcoin blockchain is intended as a settlement layer while scaling solutions are built atop the blockchain. Essentially what this means is that Bitcoin is currently a more established asset than Ethereum and makes up a disproportionate amount of value in the entire crypto asset class. As of today, Bitcoin accounts for more than 45% of all the value in crypto. As you can see, there are plenty of things to know about both Bitcoin and Ethereum. While they are commonly regarded as the two largest digital currencies, the truth is rather different.

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