Bitcoin vs. Ethereum: What’s the Difference?


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To those not familiar with cryptocurrency, “Bitcoin” may be an all encompassing term for all manner of cryptocurrency out there. However, there are several cryptocurrencies currently floating around and being used by different businesses, investors, and key players. There are two big names in the cryptocurrency market: Bitcoin and Ether. What’s the difference between them? Read on and find out.

What is Bitcoin (BTC)?

Bitcoin is a pioneer currency in the crypto market. It is the first digital currency that successfully created a way for two people on different sides of the world to complete a transaction. Bitcoin’s creator (or creators), Satoshi Nakamoto, succeeded in this endeavor by creating blockchains, which they use as a digital ledger in which to keep the records of each transaction. The uses for blockchain are myriad, for example, as an expense management solution, but for Satoshi, its purpose was to provide a transparent platform where all transactions are viewable, anonymous, and not subject to third party intervention. This helped stop the possibility of people making fake Bitcoins and double-spending. And because all transactions are recorded in these digital ledgers or blockchains, it means that these transactions are independent from banks or traditional financial institutions and intermediaries.

Bitcoin essentially paved the way for all other cryptocurrencies and made starting and completing transactions completely outside the control of the government or corporations possible. Bitcoin was launched in January 2009. There are no physical bitcoins. Its value and balances are stored cryptographically in blockchains. These chains are publicly accessible. And every movement of the transaction is recorded in these ledgers.

What is Ethereum?

Ethereum was created by a Russian-Canadian teenager named Vitalik Buterin. He was a fan of Bitcoin at first, but soon grew disillusioned with its limitations. So he created his own system at a very young age, borrowing Bitcoin’s blockchain technology.

Currently, Ethereum is the largest, open-ended decentralized software platform. It runs on its native token called Ether (ETH). Buterin compared Bitcoin to a pocket calculator that does one thing well; whereas, he compared Ethereum to a smartphone with multiple applications inside it, capable of doing many other things.

The similarities

Both Bitcoin and Ethereum are similar in the essence that both are cryptocurrencies and store value. Both are decentralized and operate outside of government or corporation control. They both use proof-of-work consensus that uses a network-wide consensus of nodes to verify and confirm transactions. They are both built on open source software, making it easy for developers to code in improvements.

Both are publicly viewable. They operate on blockchain technology, though Ethereum’s Buterin has discovered several more uses for blockchain technology. You can buy things using either Bitcoin or Ether. Both are volatile since the cryptocurrency market is a highly volatile space prone to sudden highs and crushing lows.

The differences

Though both are cryptocurrencies, Ethereum is so much more than that. Its token, Ether, is used not only for transactions (buying things), but also as something akin to fuel that makes running the different programs on the Ethereum platform possible.

Bitcoin, in essence, is digital money — what most people think of when you say cryptocurrency. Bitcoin can be mined (lending computing power) and harvested (being paid in Bitcoins for allowing the use of your machine). And there can only ever be 21 million bitcoins produced.

Ether can also be mined like Bitcoin, but Ethereum miners can charge fees for confirming transactions. And there is no limit to the amount of Ether that can be released, very much unlike the limited number of Bitcoins that can be in circulation.

How fast they process transactions is also different, with Ethereum being just a bit faster at processing that Bitcoin.

Buterin’s comparison of Ethereum to a smartphone is warranted. The system is not just a platform for trading digital currency for products and services. Ethereum hosts smart contracts. Smart contracts are programs that are stored in a blockchain that will run automatically when certain predetermined conditions are met. This saves time and effort.

Buterin’s vision for Ethereum and the various uses of blockchain that he saw led to his platform being more than just an ordinary cryptocurrency platform. People can build applications on Ethereum. They just need Ether to do it. It has its own programming language. Smart contracts power decentralized applications or dapps. This could lead to having traditional financial products like loans be hosted in the blockchain, away from the jurisdiction of the government and other financial institutions — decentralized finance.

Many non-fungible tokens (NFTs) are also run on Ethereum. NFTs are digital tokens that represent ownership of a unique or particular asset. The rise in NFTs also saw the rise in activity within the Ethereum platform.


To put it simply, Ethereum is a platform where you can build and decentralize apps. It runs on its native token called Ether. This token can also be used as a cryptocurrency. While Bitcoin is a cryptocurrency. You can invest in it, use it to buy things, but you can’t build apps on Bitcoin.