How Bitcoin Is Different From Ethereum


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Ether, the Ethereum network’s cryptocurrency, is the second most popular digital coin after Bitcoin. As the second-largest crypto by market capitalisation, comparisons between Bitcoin and Ether are inevitable.

Bitcoin and Ether are similar in several ways: both are digital currencies traded through online exchanges and stored in various crypto wallets. They are also decentralised and use the distributed ledger technology called the blockchain.

Nevertheless, they also have several key differences. This post will take you through the differences between Ethereum and Bitcoin.

Introducing Bitcoin and Ethereum 

What Is Bitcoin? 

Bitcoin is a digital currency that operates without central control or government or bank oversight. Instead, it depends on cryptography and peer-to-peer software.

A public ledger records every bitcoin transaction, and copies are held on servers worldwide. Anybody with a computer can put up one of these servers called a node. Consensus on individuals who own specific coins is reached cryptographically across the nodes instead of depending on a central trust source such as a bank.

Each transaction is shared from node to node and publicly broadcast to the network. After every 10 minutes or more, miners collect these transactions into a group known as a block and add them permanently to the blockchain. This is the definitive bitcoin account book. You can buy Bitcoin online in minutes from reputable digital currency exchanges like Independent Reserve.

What Is Ethereum? 

Ethereum is a decentralised global software platform powered by blockchain technology. It’s mostly known for its native crypto Ether (ETH). Anyone can use Ethereum to create a secure digital technology. Ethereum has a token designed for application in the blockchain network. Additionally, users can use it to pay for work done on the blockchain.

It’s designed to be decentralised, secure, programmable, and scalable. Ethereum is the blockchain of choice for enterprises and developers, creating technology relying on it to change how industries function and people go about their daily lives.

Ethereum natively supports smart contracts — the essential tools behind decentralised applications. Several decentralised finances (DeFi) and additional applications use smart contracts along with blockchain technology.

Bitcoin vs. Ethereum: The Key Differences

While Ethereum and Bitcoin networks rely on encryption and distributed ledgers, they differ significantly in technical provisions. For example, while BTC is digitally equivalent to gold and is used for storing value, ETH is used for powering the Ethereum network.

You can issue new tokens on Ethereum and Bitcoin networks. BTC utilises the Omni layer, a platform for trading and generating currencies on the btc blockchain

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. The adoption of the Omni layer centres around stablecoins.

This standard defines the rules for the network’s tokens. The ERC-20 comprises many functions developers must implement before launching tokens. The functions comprise giving account balances on users’ addresses, enabling the transfer of funds between addresses, and giving information about the token’s total supply.

BTC transactions are monetary, though they can have messages and notes attached to them through encoding the messages and notes in data fields inside the transactions. On the contrary, Ethereum transactions have an executable code for making smart contracts or interacting with self-executing contracts and apps developed through them.

Another distinction between the two networks is the duration for adding new data blocks, which dictates the duration it takes to confirm transactions. Blocks on the BTC network are added every 10 minutes on average, whereas, on Ethereum, they take around 15 seconds.

The networks also have different public wallet addresses. Wallet addresses are unique identifiers that enable users to receive funds equivalent to an International Bank Account Number (IBAN), a unique identifier of financial corporations. BTC addresses begin with a 1, 3, or “bc1.”

While both networks have depended on proof-of-work consensus, Ethereum is relocating to a proof-of-stake consensus algorithm. This algorithm functions based on a transaction validator’s stake in the network. To be a validator on Ethereum — an entry that verifies transactions to ensure the network isn’t being interfered with — you must stake your Ether.

Proof-of-stake consensus algorithms restrict the energy required to reach consensus by ascribing mining power to the proportion of validators’ tokens rather than having miners with specialised computers. A proof-of-stake network is more energy-efficient, has minimal entry barriers for validators, and has stronger immunity to decentralisation since it’s easier to be a validator.

BTC is also represented on the Ethereum blockchain in ERC-20 tokens form. A tokenised BTC version was developed and launched on Ethereum to take advantage of dApps.

Tokenized BTC versions on Ethereum enable users to continue holding bitcoin while using dApps. Tokenized BTC versions enable users to continue holding bitcoin while using dApps. Token holders can lend their bitcoin to earn interest.


When comparing Bitcoin and Ethereum, the question isn’t which of these networks is better, but instead, what are the differences and strengths they offer investors?

While they are both digital currencies (both operate using distributed ledger technology and are decentralised), their underlying design and objectives are entirely different.

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