Bitcoin vs Ethereum: Key Differences Explained
Discover the main differences between Bitcoin and Ethereum, the two most popular cryptocurrencies, and learn which one might suit your needs in 2025.
Table of Contents
Overview
Bitcoin (BTC) is the first and most valuable cryptocurrency, often called "digital gold" for its role as a store of value. Ethereum (ETH) is a decentralized platform for smart contracts and decentralized applications (dApps), powering DeFi, NFTs, and more.
Technology & Consensus
Bitcoin
Uses Proof of Work (PoW) for consensus, ensuring high security and decentralization. Relies on miners and the SHA-256 algorithm. Layer 2 solutions like the Lightning Network improve transaction speed and reduce fees.
Ethereum
Transitioned to Proof of Stake (PoS) with Ethereum 2.0, offering greater scalability and lower energy consumption. Validators stake ETH to secure the network. Layer 2 rollups and innovations like Danksharding further enhance performance.
Supply & Economics
Bitcoin
Fixed supply of 21 million coins. Halving events reduce new issuance every four years, driving scarcity and long-term value.
Ethereum
No fixed supply cap, but EIP-1559 introduced a fee-burning mechanism that can reduce net issuance, especially during high network activity.
Use Cases & Ecosystem
Bitcoin
Primarily used as a store of value, inflation hedge, and means of transferring value globally. Limited programmability.
Ethereum
Powers a vast ecosystem of dApps, DeFi protocols, NFT marketplaces, and DAOs. Highly programmable with smart contracts, enabling innovation across finance, gaming, and more.
Security & Scalability
Bitcoin
Highly secure due to PoW and large mining network. Slower transaction speeds and higher fees during congestion, but Layer 2 solutions help.
Ethereum
PoS offers strong security with lower energy use. Layer 2 rollups and sharding improve scalability, supporting thousands of transactions per second.
Bitcoin vs Ethereum: Quick Comparison
| Feature | Bitcoin | Ethereum |
|---|---|---|
| Launch Year | 2009 | 2015 |
| Consensus | Proof of Work (PoW) | Proof of Stake (PoS) |
| Supply Cap | 21 million | No fixed cap |
| Main Use | Store of value | Smart contracts, dApps |
| Transaction Speed | ~7 TPS | ~30 TPS (base), thousands with L2 |
| Smart Contracts | No | Yes |
| DeFi / NFTs | No | Yes |
| Energy Use | High | Low |
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FAQ
Which is better for long-term investment: Bitcoin or Ethereum?
Bitcoin is often seen as a safer long-term store of value, while Ethereum offers more growth potential due to its programmability and ecosystem. Diversification is common among investors.
What are the main technical differences?
Bitcoin uses PoW, has a fixed supply, and focuses on security and simplicity. Ethereum uses PoS, is highly programmable, and supports smart contracts, DeFi, and NFTs.
Which is more secure?
Both are highly secure, but Bitcoin's PoW is considered the gold standard for decentralization. Ethereum's PoS is secure and more energy-efficient.
Can I use both Bitcoin and Ethereum?
Yes, many users hold and use both assets for different purposes: Bitcoin for value storage, Ethereum for DeFi, NFTs, and dApps.
How do transaction fees compare?
Bitcoin fees can spike during congestion. Ethereum fees vary but are reduced by Layer 2 solutions. Both networks are working to improve scalability and reduce costs.