Bitcoin vs Ethereum: what is the difference?

At a glance

What do they have in common?

Despite their different goals, the two networks have a lot in common:

• Both are public blockchains that anyone can use and inspect.
• Neither network is controlled by a single company or government. The software is open source, and thousands of computers around the world run it.
• Confirmed transactions can't be reversed on either network.
• Both coins divide into small units. One bitcoin is 100 million satoshis and one ether is a billion gwei.
• The prices of both are set by the market and swing a lot.

Different goals

Bitcoin was introduced in 2008 as electronic cash: a way to send money directly between people without a bank. The system is deliberately simple. It does little more than keep track of who owns which bitcoin, but it does that very reliably. Its rules change rarely and slowly.

Ethereum was designed to do more. The network can run any program, known as a smart contractSmart contractA program that runs on a blockchain and automatically carries out what it was written to do once certain conditions are met., and anyone can create new tokensTokenA digital asset created with a smart contract on another cryptocurrency's blockchain, rather than on a blockchain of its own. on it. Ethereum evolves faster and has gone through many major upgrades since 2015.

You can compare Bitcoin to a pocket calculator and Ethereum to a smartphone. The calculator does a few things and always gets them right. The smartphone can run any app you like, but more can go wrong.

Supply and issuance

There will never be more than 21 million bitcoin. That is Bitcoin's maximum supplyMaximum supplyThe largest number of units of a cryptocurrency that can ever exist under its rules, such as 21 million for bitcoin., and about every four years the number of new bitcoins created is cut in half. This is called the HalvingHalvingThe event roughly every four years when the number of new bitcoin that miners receive for each block is cut in half..

Ether has no fixed cap. New ether is issued as a reward to those who secure the network, while part of every transaction fee is destroyed. When the network is busy, the supply can shrink, and when it is quiet, it grows. A little over 120 million ETH are in circulation.

How the networks are secured

Bitcoin uses proof of workProof of workA consensus method where the right to add the next block to a blockchain goes to whoever first solves a hard computing puzzle.. Miners compete to solve a mathematical puzzle with specialised computers. That takes a lot of electricity, but it also makes attacking the network extremely expensive. Read more about mining.

Ethereum also started with proof of work but switched to proof of stakeProof of stakeA consensus method where crypto is locked up as a stake for the right to create blocks, and anyone who cheats can lose part of that stake. on 15 September 2022. ValidatorsValidatorA participant on a proof-of-stake network who locks up their own crypto as a stake to create and check blocks in return for rewards. stake ether and can lose it if they cheat. The switch cut Ethereum's energy use by an estimated 99.95%.

Speed and fees

On the Bitcoin network a new BlockBlockA batch of transactions added to a blockchain in one go, together with a reference to the block before it. is added about every ten minutes on average. On Ethereum it happens every 12 seconds. On both networks fees rise when things are busy, and on Ethereum they are measured in GasGasThe unit that measures the computing work a transaction or smart contract needs on Ethereum, which sets how high the network fee is..

Both networks use additional networks built on top of them to make payments faster and cheaper, known as layer 2Layer 2A system built on top of a blockchain such as Ethereum or Bitcoin to make transactions faster and cheaper than on the base network itself.. For Bitcoin, the best known is the Lightning NetworkLightning NetworkA payment network on top of Bitcoin that makes bitcoin payments almost instant and cheap, without recording each payment on the blockchain.. Ethereum has many such networks, which bundle transactions together and record them on the main network in one go.

What is each used for?

Bitcoin is mainly used as a store of valueStore of valueAn asset that keeps its purchasing power over a long time, so it can be saved now and used later, as gold has done for centuries.. Many people buy bitcoin to hold for the long term. It is also used for payments, both across borders and through the Lightning Network. Read more about Bitcoin.

Ether pays for everything that happens on Ethereum. The network hosts stablecoins, DeFiDeFi (decentralised finance)Financial services, such as lending, saving and trading, that run on smart contracts on a blockchain instead of through a bank or other middleman. (lending and trading without a bank) and NFTs, among other things. Many people also buy ether to hold, or stake it in return for rewards. Read more about Ethereum.

The risks are different

The prices of both swing a lot. From their peaks in November 2021, the price of ether fell by more than 80% by June 2022, and the price of bitcoin by more than 75% by November 2022. Both later recovered: bitcoin passed its previous peak in March 2024, and ether in August 2025.

Otherwise the risks differ:

• Bitcoin is simpler. The main risks are the price and how you store your keys.
• Ethereum offers more possibilities but has more weak points. Bugs in smart contracts, fake tokens and staking with a third party can all cause losses.

Closing thoughts

Bitcoin and Ethereum are the best-known blockchains, but they play different roles. Bitcoin is a simple, settled currency with a limited supply. Ethereum is a flexible platform for applications, where ether pays for their use.

Learn the basics of crypto and the risks of each network before you buy.