How Ethereum Is Different From Bitcoin: Basics Explained

Ethereum Vs Bitcoin

The onset of digital currencies has dramatically modified the financial transaction process. These currencies, also called cryptocurrencies or crypto coins, follow the success of Bitcoins.

BTC or bitcoin was the first cryptocurrency to launch in the financial sector. Satoshi Nakamoto first presented it and influenced the economic creators to bring out more such variants. In this article, we will talk about Bitcoin and Ethereum, two very prominent players.

Basics of Bitcoin

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Bitcoin was launched in January 2009 by Satoshi Nakamoto. It was different from government-issued currency as it offered secure transactions without any authority governing it.

Bitcoins are nowhere close to physical coins, and their balances are on a public ledger that is secured cryptographically.

But Bitcoin is not the solo effort made to create an online or digital currency. Eventually, it became a predecessor to all the virtual currencies introduced in the last decade.

Over this time, the decentralized virtual currency was accepted by government bodies and regulators. However, Bitcoin was not considered a formally accepted payment medium.

Cryptocurrency, however, carved a special place for itself. It still exists with the traditional financial system even though it was debated and scrutinized all the time.

In the starting years of the cryptocurrency boom in 2017, the market value of Bitcoin accounted for 87% of the cryptocurrency market.

Basics of Ethereum

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Ethereum was launched back in July 2015 and is the largest, well-established, and open-ended decentralized software platform.

Ethereum allows the use of smart contracts alongside the decentralized applications that were built without any fraud, downtime, control, or interference of a third party.

Ethereum also has its own programming language that runs on the Blockchain. This allows the developers to build and run the distributed applications.

The applications of Ethereum have a wide range. They are powered by the native crypto token known as Ether, also called ETH.

Ethereum launched the presale of Ether in 2014, which received a resounding response. Ether acts as the fuel to run the commands on the Ethereum platform.

The developers then use it to run all the applications on that platform.

Ether actually fulfills two purposes:

  • It is traded as a digital currency on different exchanges, just like many other crypto coins.
  • Ether is used on the Ethereum network to run the different applications.

Key Differences and Similarities Between Bitcoin and Ethereum

Ethereum Vs Bitcoin

We will talk about the similarities first and then move on to discussing the differences.


  1. Both Bitcoin and Ethereum work on the principle of cryptography and distributed ledgers.
  2. ETH and BTC are both digital currencies.
  3. ETH, as well as BTC, operate on utilizing proof of work consensus. These transactions thus require a network- comprehensive arrangement of nodes.


1. The transactions on Bitcoin have data that is mainly for keeping the notes. Ethereum network transactions, on the other hand, may contain executable data.

2. Ethereum is older than Bitcoin and also more advanced.

3. Block time for the Ethereum transactions is relatively more minor in comparison to the Bitcoin transactions.

Thus, the former will take few seconds to get confirmed, whereas the latter will get confirmed in a couple of minutes.

4. Ethereum can process 10-15 processes per second, whereas Bitcoin processes only 3-5 processes every second.

5. Bitcoin also leads over Ethereum when it comes to price stability.

6. Bitcoin is limited to only 21 million coins, whereas the same does not apply to Ethereum. But, BTC experts claim that the Ethereum coins number would never exceed 100,000,000 ETHS in the future also.

7. Ethereum can run on algorithms that use e-hash, whereas Bitcoin uses the SHA-256 algorithm.

8. Networks of both Ethereum and Bitcoin are pretty different basis their aims. BTC was created as an alternative to national currencies as a store of value and medium of exchange.

Ethereum, on the other hand, always was a DLT platform designed to facilitate programmatic, immutable contracts and applications through its own currency.

9. ETH does not claim to establish itself as an alternate option to the present monetary system. The ETH system monetizes and facilitates DApps operation and smart contracts.

10. GitHub has only four repositories of Bitcoin in contrast to the 247 Ethereum’s repository. A repository is a place where all the developers work together to access project information.

In theory, Ethereum should not compete with BTC as it is a use-case for a Blockchain trying to support the latter.

From a trader’s point of view, the popularity of Ethereum has risen so much that it reached the competition zone with other cryptocurrencies.

The Decentralized Finance tokens are based on Ethereum and have smart contracts which allow trading on different platforms easily.


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