Ethereum Vs Bitcoin | 13 Key Differences & Similarities

CoinSwitch | 10 August, 2018 | 2 min

Today, we are going to discuss the world’s two biggest cryptocurrencies- Bitcoin and Ethereum. Bitcoin and Ethereum are similar in some ways while different in many many ways. Although Ethereum is only three years old created by Vitalik Buterin. Ethereum has managed to lay aside the biggest crypto contender- Bitcoin, which was created almost a decade back by a Pseudonym Satoshi Nakamoto.

Let’s talk about the few similarities between Bitcoin and Ethereum first, then we can shoot out the differences.

Similarities between Bitcoin and Ethereum

  1. Bitcoin is now considered as digital gold but the first similarity between Bitcoin and Ethereum is both can be used for payment as digital currency.
  1. Bitcoin and Ethereum both use Distributed Ledger Technology (DLT) called blockchain.
  1. Both the coins use the same mining method, i.e, Proof of Work (POW). These days not all the coins use the same method. Mining is the process of how transactions are validated on the blockchain.

Differences between Bitcoin and Ethereum

  1. Bitcoin has a scarce supply of 21 million Bitcoins, out of which 17 million has already been mined, hence BTC is limited in nature, hence it's pricing. On the other hand, Ethereum is unlimited in nature but the creation of new coins is very tightly controlled to keep inflation from ruining the coin’s value. (Ethereum vs Bitcoin Mining)
  1. Bitcoin is currently valued at $6357.08 with a market capitalization of $109,335,891,192, while Ethereum is currently valued at $361.04, with a market capitalization of $36,542,706,260.(Ethereum vs Bitcoin Price)
  1. Bitcoin mining creates 12.5 new Bitcoins every 10 minutes (or roughly 75/hr) while Ethereum creates 3 new Ethers every 15 seconds (or 720/hr).
  1. Bitcoin creates a new block every 10 minutes (on average) while Ethereum takes only 14 to 15 seconds for a block to mine.
  1. To solve the scaling problem, Bitcoin introduced a system called SegWit ( Segregated Witness), which is a new way to make the transactions easier and faster. It even introduced the Lightning Network which involves setting up multiple payment channels (off blockchain) to go around the blockchain. On the other hand, Ethereum introduced updates such as Plasma- which will only broadcast smart contracts to the main Ethereum blockchain after the contract’s completion and Casper- which involves switching from the old proof-of-work mining system to a more efficient proof-of-stake algorithm.
  1. While Bitcoin is mostly a means of payment, Ethereum is a programming platform on which you can write applications (dApps). With Ethereum, transactions have a different cost (called Gas) based on bandwidth use, computational complexity, and storage space. In Bitcoin, transaction costs are measured based on their block size only.
  1. Bitcoin’s hashing algorithm is SHA-256, which can be performed efficiently with special purpose hardware, known as ASICs (Application-Specific Integrated Circuit). The Ethereum hashing algorithm is Ethash which is memory intensive so it’s far more difficult to build an economical special-purpose chip for. This allows for Ethereum to have greater mining decentralization.
  1. Bitcoin hard forks include Bitcoin cash, Litecoin, Bitcoin Gold, Bitcoin Classic and many more. Ethereum hard forks created Ethereum Classic. A hard fork relates to blockchain technology which is a radical change to the protocol that makes previously invalid transactions valid (or vice-versa). This requires all nodes or users to upgrade to the latest version of the protocol software.
  1. Bitcoin applications in real time include sectors such as banking, retail, entertainment and so on. Blockchain technology is growing exponentially to grab the top spot in the most innovative discovery of the decade. Even it is being used for voting and betting and many other industries. On the other hand, Ethereum applications are more prominent in domains such as self-driving cars- which Google announced some months back, then casinos or gambling, politics and so on.
  1. Bitcoin is still the top investment choice with Bitcoin’s first-in advantage, name recognition, developed payment systems. With Ethereum’s much faster transaction speeds, higher data handling feature, larger currency float, and widespread corporate adoption, ETH has its own appeal. Bitcoin Price May Go To $35,000 Post Bitcoin ETF Approval while ETH Price May Touch 1221 USD by the end of this year as predicted by the crypto traders. (Ethereum Vs Bitcoin Investment).

Both Bitcoin and Ethereum are the market leaders in their own specific way. So, we shouldn’t comment on which one is better. Both are unique in its own way. Just stay updated on the market trends to get the most out of it.

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