What Is the Difference Between Bitcoin and Ethereum ?

This guide will cover the basics of each cryptocurrency, their differences, uses, and whether one is better than the other is.

If you’re new to cryptocurrencies, you may have many questions about your currency options. Ethereum and Bitcoin are the two most popular cryptocurrencies available. But what’s the difference between Bitcoin and Ethereum?

When comparing Ethereum vs Bitcoin, it’s important to understand what makes each one unique so that you can determine whether one is the better option for you. This guide will cover the basics of each cryptocurrency, their differences, uses, and whether one is better than the other is.

Ethereum vs Bitcoin: The Basics

Ethereum and Bitcoin are the two most prominent cryptocurrencies available today, and the two digital currencies are similar in many ways. How is Ethereum differs from Bitcoin? To answer this question, it’s important to understand the basics of Ethereum vs Bitcoin.

Before discussing the basics of each cryptocurrency, let’s explore the similarities they share. Both are:

  • Traded via online exchange
  • Stored in cryptocurrency wallets
  • Decentralized

Of course, both cryptocurrencies also make use of blockchain, the distributed ledger technology that made cryptocurrencies known.


Ethereum was launched in 2015 and since then, has grown to become the largest open, decentralized software platform worldwide. Like Bitcoin, Ethereum was built on blockchain technology, but it uses it in a different way.

Ethereum is more than just a cryptocurrency – it’s also a software platform. The platform allows users to create and deploy smart contracts as well as decentralized applications (dapps). The advantage of using Ethereum is that apps can be built and run without interference from third parties, control issues, fraud or downtime.

The applications for Ethereum are wide-ranging, and activities are powered by Ether, the platform’s digital currency.

Ether has two purposes:

  • It can be traded as a cryptocurrency
  • It can be used on the Ethereum network to power applications

Ether is traded just like any other digital currency.


Launched in 2009, Bitcoin started out as an idea in a white paper written by Satoshi Nakamoto. The aim of Bitcoin was to provide the public with a digital currency that was secure and didn’t have a central authority like traditional currencies.

Bitcoin’s entire aim is to serve as a currency; a digital alternative to physical fiat currency. Although it wasn’t the first of its kind, Bitcoin was the most successful attempt to bring the cryptocurrency concept to life and paved the way for future digital currencies.

Key Differences Between Bitcoin and Ethereum

If you’re new to cryptocurrency, you may be wondering: what’s the difference between Bitcoin and Ethereum?

Although similar, there are many differences between Ethereum vs Bitcoin. Both are powered by blockchain, but there are technical differences that set these two digital currencies apart.

Different Purposes

The most glaring difference between Ethereum and Bitcoin is the purpose of the two cryptocurrencies.

  • Bitcoin only serves as a form of currency and a store of value
  • Ethereum is an open-source platform aimed at facilitating smart contracts and applications

Essentially, Ethereum leverages blockchain technology for a wider range of applications.

Here’s an easy way to remember the main difference between these two cryptocurrencies:

  • Ethereum = Smart Contracts
  • Bitcoin = Digital Money

Transaction Execution and Speed

Another major difference between Bitcoin and Ethereum is the way in which transactions are executed.

  • Bitcoin transactions are manual
  • Ethereum transactions are programmable

Transaction speed is also different. Bitcoin transactions take a few minutes to complete, whereas Ethereum takes seconds.

Market Cap and Age

Although Ethereum is only second to Bitcoin, there is a world of difference between the two as far as market cap, ecosystem and age are concerned.

Bitcoin has been around for more than a decade, whereas Ethereum has been around for half that amount of time. Bitcoin has had more time to grow, and arguably, it’s received more publicity than Ethereum.

As of January 2020:

  • Bitcoin’s market cap was $147 billion
  • Ether’s market cap was just $16 billion

Supply Limitations

Bitcoin has a limited number of coins available (21 million to be exact). Having a limited number of coins creates supply and demand, which helps build value for the digital currency.

Unlike Bitcoin, Ethereum is not limited. Ether can be produced continuously, but production speed will slow over time. The founder of Ethereum, Vitalik Buterin, says the number of Ether coins will not surpass 100,000,000 in the foreseeable future.

Is Ethereum Better Than Bitcoin?

Should you choose Ethereum over Bitcoin? Is it the better option? The answer really depends on your goals, but many people feel that Ethereum is the better choice.

Why is Ethereum better than Bitcoin? Because it has more use cases.

When you compare Ethereum vs Bitcoin, you’ll find that there are more applications for Ethereum than for Bitcoin. You will also find that Ethereum, overall, has better technology than Bitcoin. That’s partly because Ethereum’s blockchain is newer and more developed compared to Bitcoin. It fixes some of the issues that Bitcoin’s blockchain presented.

With Ethereum, you can create smart contracts and deploy applications, both of which are powered by the platform’s Ether cryptocurrency. These are two activities that you cannot do with Bitcoin.

But if you’re looking to invest in cryptocurrency for the sole purpose of acquiring alternative currency, Bitcoin is the better option. It holds more value, and it has a longer history compared to Ethereum.

Ethereum vs Bitcoin: The Conclusion

When comparing Ethereum vs Bitcoin, you’ll find that there are many similarities between the two, but the differences between these digital currencies is significant.

  • Ethereum is a decentralized, open software platform powered by the Ether cryptocurrency.
  • Bitcoin is a digital currency that builds and holds value.

Ethereum broadens the use of blockchain technology while building its own cryptocurrency. Bitcoin maintains its position as the leading digital currency.

Ethereum does not seek to overtake Bitcoin. In fact, it isn’t even marketed as a Bitcoin alternative. The platform pursues a different path that makes it a unique cryptocurrency in its own right. Because it offers so many use cases, Ethereum may very well see significant growth in the coming years as the concept of smart contracts continues to gain wide acceptance.

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