Bitcoin vs Ethereum: What are the differences?

What is Bitcoin and how does it work?

Bitcoin is a decentralized blockchain network that records and verifies peer-to-peer value transfers on a public ledger maintained by distributed computers. In plain – it’s a shared record book that anyone can check and no single company controls. 

It was launched in 2009 by an unknown founder operating under the pseudonym Satoshi Nakamoto, introducing a way to transfer value online without relying on a central institution to approve every transaction. The network’s native cryptocurrency is BTC, which people can send, receive and hold. 

Learn how to buy BTC in the US

What Bitcoin (BTC) was built to do

Bitcoin (BTC) was designed as peer-to-peer digital money. Over time, it’s also become associated with the idea of a digital store of value. One reason is its supply design. Bitcoin has a maximum supply of 21 million BTC, which is enforced by the protocol rules.

How Bitcoin (BTC) transactions work

When someone sends BTC, the transaction is broadcast to the Bitcoin network. Miners collect transactions into blocks. Once a block is added to the blockchain, the transaction becomes part of the shared record and later blocks build on top of it.

Proof of Work (PoW) explained 

Bitcoin uses a consensus mechanism called Proof of Work (PoW), where miners compete to solve computational puzzles to add new blocks to the blockchain and help verify transactions. The winner earns the right to add the next block.

This is part of how Bitcoin protects the ledger from being easily rewritten. It’s also why energy use is often discussed when comparing PoW systems.

Common Bitcoin use cases

People can use Bitcoin in different ways, depending on what they’re trying to do and what’s available in their region. Common examples include:

• Holding BTC as a digital asset.
• Transferring value across borders.
• Using BTC for payments where it’s accepted.

Some platforms, including the Crypto.com App, may offer ways to access BTC features like price tracking and alerts (availability can vary).

What is Ethereum and how does it work?

Ethereum is a decentralized blockchain network that records transactions and can run programmable applications on a public ledger maintained by many computers. In a nutshell, it’s a shared system where code can run as it’s written, without one company controlling it.

It launched in 2015 and is associated with co-founder Vitalik Buterin. The network’s native cryptocurrency is Ether (ETH), which is commonly used to pay for activity on the network and can also be sent, received and held. 

Learn how to buy ETH in the US

What Ethereum (ETH) was built to do

ETH is used to pay for activity on Ethereum, like sending it to someone or interacting with smart contracts that power tokens and apps. Validators commit ETH to participate in Ethereum’s Proof of Stake (PoS) consensus to validate blocks and help secure the network.

Proof of Stake (PoS) explained

Ethereum uses a consensus mechanism called Proof of Stake (PoS), where validators help verify transactions and add new blocks by putting up ETH as a security deposit. If they follow the rules, they can earn rewards. If they don’t, they can be penalized. Rewards and penalties can vary based on network rules and conditions

‘The Merge’ was Ethereum’s switch from Proof of Work (mining) to Proof of Stake (validation). In practical terms, it replaced miners competing with computing power with validators proposing and attesting to blocks. 

This changed how the network is secured and reduced the need for energy-intensive mining, while keeping Ethereum’s transaction history recorded on the blockchain.

Smart contracts and decentralized apps

Smart contracts are programs stored on the blockchain that execute when certain conditions are met. This capability supports a wide ecosystem – including DeFi tools, NFTs, DAOs and other dApps. What it costs to use these apps can vary based on network demand.

Bitcoin/BTC vs Ethereum/ETH: What are the differences?

Purpose and design

Bitcoin is designed to do a smaller set of things well – mainly recording BTC transfers on a public ledger with rules that change slowly. Ethereum is designed to do more. It supports smart contracts, so developers can build tokens, financial tools and apps that run on the blockchain.

Both ecosystems have also evolved scaling approaches. Bitcoin is commonly linked with the Lightning Network, while Ethereum has Layer-2 networks that aim to improve throughput and reduce costs.

Consensus mechanism

This is where Proof of Work vs Proof of Stake shows up. Bitcoin’s PoW relies on miners and computing power. Ethereum’s PoS relies on validators who lock up ETH to participate in block validation and confirmation. These models differ in hardware needs, incentive design and energy profile. 

Supply and tokenomics

Bitcoin’s supply is capped, and the pace of new BTC entering circulation slows over time through scheduled ‘halving’ events. Ethereum doesn’t have a fixed maximum supply. Its issuance depends on protocol rules and network activity, including mechanisms like fee burning introduced by EIP-1559.

People often frame this as scarcity vs utility. It can be a helpful lens, but it doesn’t remove market risk.

Transaction speed and costs

Bitcoin and Ethereum confirm blocks on different schedules, which can affect how quickly transactions are recorded on-chain. The typical comparison is ~10 minutes for Bitcoin vs ~12 seconds for Ethereum, though real-world experience can vary.

Fees also differ. Ethereum fees are commonly described as ‘gas’, while Bitcoin uses transaction fees. Both can change based on network demand.

Layer-2 solutions can also affect cost and speed, depending on which tools someone uses.

Blockchain technology

Under the hood, the networks track value differently. Bitcoin uses an unspent transaction output  (UTXO) model that tracks spendable outputs. Ethereum uses an account-based model that tracks balances and smart contract state.

That account-based structure is one reason Ethereum is commonly used for smart contracts and dApps, while Bitcoin remains more focused on value transfer.

Market position and outlook

Bitcoin is often viewed as the benchmark crypto asset because it was first and remains widely held. Ethereum is often viewed as a platform layer because of its programmability and developer ecosystem. Many people see them as serving different roles rather than being direct substitutes.

How to buy Bitcoin (BTC) and Ethereum (ETH) in 5 steps

1. Choose a crypto platform
2. Create and verify your account
3. Add funds to your account
4. Search and buy BTC/ ETH
5. Keep track of your investment

1. Choose a crypto platform

The first step is selecting a platform where you can buy BTC and ETH. Choose a platform that clearly explains fees, supports the assets you want and provides account security features. Review the platform’s disclosures, limits and regional availability

The Crypto.com App is trusted by more than 150 million users worldwide and offers an intuitive interface, zero-fee* deposits and multiple payment methods. These features make it accessible for newcomers while still offering the tools experienced investors need.

2. Create and verify your account

Next, you’ll need to create an account. This typically involves entering your name, email address and other basic details. 

To comply with regulations and protect your account, most platforms require identity verification. This process usually includes uploading a photo of a government-issued ID and sometimes a selfie for facial verification. Completing this step ensures you can deposit funds and trade without restrictions.

3. Add funds to your account

Platforms like Crypto.com support several deposit options, including bank transfers, debit cards and credit cards. Some platforms may also offer payment through services like PayPal or wire transfers. Choose the method that best suits your needs, keeping in mind the processing time and any fees that may apply.

4. Search and buy BTC/ETH

After funding your account, you can search for BTC and ETH on the platform. Once you’ve found it, enter the amount you want to purchase. Many platforms allow you to buy fractions of cryptocurrency, so you can start with as little or as much as you’re comfortable investing. 

Always review the transaction details carefully, including the amount of BTC/ETH you’ll get and any fees, before confirming your purchase.

5. Keep track of your portfolio

Once you own cryptocurrency, it's important to monitor your holdings. You can track the BTC price and ETH price directly in our App or through market tracking websites. Staying informed about blockchain network upgrades, market news and price movements can help you monitor your holdings over time.

FAQs about Bitcoin vs Ethereum 

What’s the difference between Bitcoin and Ethereum?

Bitcoin is a blockchain built mainly for recording and verifying BTC transfers, with limited programmability. Ethereum is a blockchain built to run smart contracts and decentralized applications. 

On the token side, BTC has a capped supply, while ETH is used to pay for network activity and has no fixed maximum supply.

Is Ethereum better than Bitcoin?

It depends on what you’re trying to do. Bitcoin focuses on value transfer and scarcity. Ethereum focuses on programmability and on-chain applications.

Can you use Bitcoin and Ethereum for payments?

Their native tokens, BTC and ETH, can be used to transfer value. In practice, payment usefulness depends on merchant acceptance, network fees, confirmation times and the tools you use.

Which is faster – Bitcoin or Ethereum?

Ethereum typically has shorter block times than Bitcoin at the base layer. Actual transaction speed can vary based on network demand and fee settings.

Can you buy both BTC and ETH on Crypto.com?

Yes, Crypto.com offers access to BTC and ETH, as well as over 400 other cryptocurrencies. 

What gives Bitcoin and Ethereum their value?

Bitcoin is often valued for scarcity and network effects. Ethereum is often valued for demand to use the network for smart contracts and applications. Remember, these are just frameworks, not guarantees.

* Other transaction fees and spread may apply.

Important information: This is informational content sponsored by Crypto.com and should not be considered as investment advice. Trading cryptocurrencies carries risks such as price volatility and market risks. Past performance may not indicate future results. There’s no assurance of future profitability. Before deciding to trade cryptocurrencies, consider your risk appetite.