Ethereum vs Bitcoin: Key Differences Explained

Bitcoin and Ethereum are the two largest cryptocurrencies, but they serve very different purposes. This guide breaks down the key differences.

The Basics

Feature

Bitcoin

Ethereum

Launch	2009	2015
Creator	Satoshi Nakamoto	Vitalik Buterin
Primary Purpose	Digital Gold / Store of Value	Programmable Blockchain
Consensus	Proof of Work	Proof of Stake
Block Time	~10 minutes	~12 seconds
Supply Cap	21 million	No hard cap

Purpose and Vision

Bitcoin: Digital Gold

Bitcoin was designed as a peer-to-peer electronic cash system that evolved into "digital gold" - a store of value resistant to inflation and censorship.

Ethereum: World Computer

Ethereum is a programmable blockchain that enables smart contracts and decentralized applications (dApps). It's the foundation for DeFi, NFTs, and Web3.

Smart Contracts

This is the biggest difference:

• Bitcoin: Limited scripting capabilities, focused on simple transactions
• Ethereum: Full-featured smart contract platform (Turing-complete)

Ethereum's smart contracts power:

• Decentralized exchanges (Uniswap, Curve)
• Lending protocols (Aave, Compound)
• NFT marketplaces (OpenSea, Blur)
• DAOs (Decentralized Autonomous Organizations)

Consensus Mechanisms

Bitcoin's Proof of Work

Miners compete using computational power to validate transactions. Energy-intensive but battle-tested for 15+ years.

Ethereum's Proof of Stake

Since "The Merge" in 2022, Ethereum uses staking. Validators lock up ETH as collateral, making it 99.95% more energy-efficient.

Transaction Speed and Fees

Metric

Bitcoin

Ethereum

TPS (Base Layer)	7	15-30
Avg. Fee (2026)	$1-5	$0.50-3
Finality	60 min (6 blocks)	15 min

Both have Layer 2 solutions:

• Bitcoin: Lightning Network
• Ethereum: Arbitrum, Optimism, Base, zkSync

Investment Perspective

Bitcoin

• Clearer "digital gold" narrative
• More institutional adoption
• Simpler tokenomics
• Less technical risk

Ethereum

• Higher growth potential
• Revenue from network fees
• Deflationary since EIP-1559
• More utility-driven value

Which Should You Choose?

Choose Bitcoin if:

• You want a simple store of value
• You prefer battle-tested security
• You're focused on long-term preservation

Choose Ethereum if:

• You want exposure to DeFi/Web3 growth
• You plan to use decentralized apps
• You're interested in staking yields

Conclusion

Bitcoin and Ethereum aren't competitors - they serve different purposes. Many investors hold both as complementary assets in a diversified crypto portfolio.

Track both BTC and ETH prices on Free Crypto News.