What Sets Bitcoin Apart from Ethereum?

Posted on Sep 11, 2024

Table of contents:

Key Differences Between Bitcoin and Ethereum

While Bitcoin and Ethereum are both blockchain-based cryptocurrencies, they have several key differences:

Purpose

Bitcoin was designed primarily as a digital currency and store of value.
Ethereum was designed as a platform for running decentralized applications and smart contracts, with Ether as the native cryptocurrency.

Smart Contracts

Bitcoin has limited smart contract functionality.
Ethereum was built with smart contracts as a core feature, allowing developers to build and run distributed applications.

Supply

Bitcoin has a hard cap of 21 million coins.
Ethereum has no fixed supply limit, although a portion of Ether is burned with each transaction.

Consensus Mechanism

Bitcoin uses a Proof of Work (PoW) consensus mechanism.
Ethereum transitioned from PoW to a Proof of Stake (PoS) consensus mechanism with the Merge upgrade in 2022.

Block Time

Bitcoin blocks are mined approximately every 10 minutes.
Ethereum blocks are produced much faster, around every 12 seconds under PoS.

Transaction Speed

Bitcoin can handle around 7 transactions per second.
Ethereum can handle around 30 transactions per second.

Transaction Fees

Ethereum transaction fees have tended to be higher than Bitcoin’s.

In summary, while both Bitcoin and Ethereum are cryptocurrencies built on blockchain technology, Ethereum is designed as a more flexible platform for decentralized applications and smart contracts, while Bitcoin remains focused on being a digital currency and store of value.

Citations: