Bitcoin vs Ethereum

Key differences

Bitcoin and Ethereum were built for different purposes. Bitcoin, launched in January 2009 by the pseudonymous Satoshi Nakamoto, is designed as peer-to-peer electronic cash and a scarce store of value, often described as "digital gold." Ethereum, which went live in July 2015, is a programmable platform: developers use it to deploy smart contracts and decentralized applications, from DeFi protocols to NFT marketplaces, rather than to serve primarily as a currency.

The two networks also secure themselves differently. Bitcoin relies on Proof of Work mining with the SHA-256 algorithm, where miners expend computing power to add blocks. Ethereum originally used Proof of Work as well, but transitioned to Proof of Stake in September 2022 ("the Merge"), replacing miners with validators who lock up ETH to secure the network.

Supply mechanics diverge sharply. Bitcoin has a hard cap of 21 million coins, with roughly 20 million already in circulation, and block rewards halve about every four years. Ethereum has no maximum supply; issuance depends on staking rewards, while a portion of transaction fees is burned, so net supply changes with network activity. Circulating ETH stands at around 120.7 million.

In ecosystem terms, Bitcoin functions mainly as a settlement and store-of-value network, while Ethereum is the base layer for the largest smart-contract ecosystem, hosting stablecoins, tokenized assets, and thousands of applications, with ETH used to pay transaction fees across that activity.