Definition: Bitcoin vs. Ethereum

Although Bitcoin and Ethereum both use a decentralized blockchain architecture which has no middleman, Bitcoin is strictly a cryptocurrency, and its native token is the bitcoin (BTC symbol). All transactions pertain to buying and selling BTC or sending BTC from one party to another.

Ether (ETH) is Ethereum's native cryptocurrency, and it can be bought and sold just like Bitcoin. However, the Ethereum blockchain is a general-purpose platform that hosts programs known as "smart contracts," which are used to create other cryptocurrencies, NFTs and more. See smart contract and NFT.

Both blockchains are having a major impact on the world, but for different reasons. Bitcoin (BTC) is entirely cash. Ether (ETH) is also cash that can be bought and sold for speculation, but because of Ethereum's smart contract platform, a fee is paid in ether for every transaction that executes a function in the contract. As more smart contracts are deployed on Ethereum for different purposes, more ether is paid to activate and execute them. This smart contract programmability is why Ethereum is called the "world computer," as dramatic as that sounds. See blockchain oracle.

Processing Methodology
Transactions coming from all parts of the globe are selected by Bitcoin miners or Ethereum validators and combined into a block. Each miner or validator competes to add that block to the blockchain but uses different methods. Bitcoin miners try to solve a puzzle, whereas Ethereum validators hope to be randomly selected. However, from Ethereum's launch in 2015 until 2022, Ethereum also operated with miners much like Bitcoin does (see Ethash and Ethereum 2.0). See cryptographic hash function.

Market Cap vs. Transaction Volume
As of 2023, the market cap of Bitcoin is more than double the market cap of Ethereum. However, because of the thousands of Ethereum smart contracts, there are four times as many transactions processed on Ethereum every day than on Bitcoin, which only handles the transfer of bitcoins. Pundits predict that the market cap of Ethereum will some day exceed Bitcoin, and that day is called the "Flippening."

Cap and Speed
The number of bitcoins eventually tops out at 21 million in the year 2140. Ethereum has only an annual cap of 18 million ether. A new block of bitcoins takes roughly 10 minutes to become part of the blockchain. Ethereum blocks take only seconds. See Bitcoin, Ethereum, blockchain and crypto glossary.

Cryptocurrencies and Tokens

Although the bitcoin is the only cryptocurrency on the Bitcoin network, there is no end to the number of crypto tokens on Ethereum. See Ethereum token.