Why two blockchains? A quick overview
Bitcoin launched in 2009 to enable peer-to-peer electronic cash without a central authority, using proof-of-work mining and a hard-capped supply of 21 million BTC enforced by full nodes.
Ethereum, introduced in 2015, generalizes blockchain into a programmable platform: a shared computer (the EVM) where developers deploy applications and tokens via smart contracts.
Consensus and energy use
Bitcoin secures its chain with proof-of-work (PoW): miners compete to add blocks roughly every 10 minutes, and difficulty adjusts so the average stays close to that target.
Ethereum completed “The Merge” on September 15, 2022, replacing PoW with proof-of-stake (PoS). The change cut estimated energy consumption by about 99.95%.
In Ethereum PoS, time is divided into 12-second slots and 32-slot epochs. Validators stake ETH, propose blocks, and attest; finality is reached when enough validators vote on checkpoint pairs.
Ledger design: UTXO vs accounts
Bitcoin uses a UTXO model, where transactions spend discrete “unspent outputs”; this design naturally supports change outputs and simplifies validation that outputs aren’t double-spent.
Ethereum uses an account-based model: externally owned accounts and contract accounts maintain balances and code/storage, and transactions mutate global state directly.
Programmability and smart contracts
Bitcoin’s Script is intentionally limited and not Turing-complete, prioritizing safety and verification simplicity. It supports features like multisig and, since 2021’s Taproot, more private and flexible spending paths.
Ethereum runs general-purpose smart contracts on the EVM; contracts are programs with code and state that execute when transactions call them. Token standards such as ERC-20 (fungible) and ERC-721 (NFTs) enabled a broad application ecosystem.
Fees, issuance, and monetary policy
Bitcoin’s supply is fixed by consensus rules: only 21 million BTC will ever be created, with new issuance dropping every 210,000 blocks at “halving” events (the latest occurred at block 840,000 in April 2024).
Ethereum’s supply is dynamic. Since EIP-1559 (2021), each block includes a protocol-set base fee that is burned, while validators receive priority tips and issuance; after the Merge, issuance decreased significantly relative to PoW.
Scaling approaches
Bitcoin’s primary scaling strategy is the Lightning Network: off-chain payment channels that enable instant, low-fee transactions backed by on-chain contracts.
Ethereum’s strategy emphasizes layer-2 rollups. The March 2024 Dencun upgrade (EIP-4844) introduced “blob” data to cut L2 costs now and pave the way for full danksharding.
Finality and confirmation times
Bitcoin blocks arrive every ~10 minutes on average, and many businesses wait for multiple confirmations to reduce reorg risk.
Ethereum’s fixed slot time is ~12 seconds; blocks become finalized after supermajority validator votes across epochs, with ongoing research toward single-slot finality to reduce time to finality further.
Typical use cases today
Bitcoin is widely used as hard-capped digital money and settlement layer, with Lightning for payments and Taproot enabling more private or complex spends.
Ethereum serves as a generalized platform for DeFi, NFTs, DAOs, and tokenized assets through smart contracts and standard interfaces like ERC-20 and ERC-721.
Which should you choose?
Pick Bitcoin if you primarily want a scarce, censorship-resistant asset with a simple rule set and a mature payment channel network.
Pick Ethereum if your goal is to build or use decentralized applications, issue tokens, or leverage rollups and composable smart contracts on a shared execution environment.
FAQs
What exactly changed in Ethereum’s Merge?
Ethereum swapped PoW mining for PoS validation, merging its execution layer with the Beacon Chain and reducing estimated energy use by ~99.95%.
Why are Ethereum fees sometimes burned?
EIP-1559 introduced a base fee that users must pay and the protocol destroys; only the priority tip goes to the block producer. This stabilizes fee dynamics and ties ETH’s value to blockspace demand.
How often does Bitcoin’s halving occur?
Roughly every 210,000 blocks (about four years). The 2024 halving happened at block 840,000.
How is Ethereum scaling different from Bitcoin’s?
Bitcoin scales payments with Lightning’s off-chain channels; Ethereum scales general computation with L2 rollups and, since Dencun, cheaper data blobs via EIP-4844.
