Key Differences Between Ethereum (ETH) and Bitcoin (BTC)

**Key Differences Between Ethereum (ETH) and Bitcoin (BTC)**

1. **Purpose and Functionality**:
   - **Bitcoin (BTC)**: Designed as a decentralized digital currency, primarily a store of value and medium of exchange, often compared to "digital gold." It focuses on secure, peer-to-peer transactions without intermediaries.
   - **Ethereum (ETH)**: A decentralized platform for smart contracts and decentralized applications (dApps). ETH is the native currency used to pay for transaction fees (gas) and power computations on the Ethereum network.

2. **Blockchain Technology**:
   - **Bitcoin**: Uses a simple blockchain for recording transactions, optimized for security and immutability. Its scripting language is limited, focusing on basic transaction logic.
   - **Ethereum**: Supports a Turing-complete programming environment, enabling complex smart contracts, token creation (e.g., ERC-20), and dApps like DeFi and NFTs.

3. **Consensus Mechanism**:
   - **Bitcoin**: Uses Proof of Work (PoW), requiring miners to solve computational puzzles, which is energy-intensive but highly secure.
   - **Ethereum**: Transitioned to Proof of Stake (PoS) with "The Merge" in 2022, reducing energy consumption by ~99.95%. Validators stake ETH to secure the network, making it more environmentally sustainable.

4. **Supply and Inflation**:
   - **Bitcoin**: Fixed supply cap of 21 million coins, with predictable issuance via halving events (every ~4 years), making it deflationary over time.
   - **Ethereum**: No fixed supply cap, but since PoS, ETH issuance is low, and EIP-1559 (2021) introduced fee burning, which can make ETH deflationary during high network usage.

5. **Transaction Speed and Scalability**:
   - **Bitcoin**: Slower, with ~7 transactions per second (TPS) and 10-minute block times. Scalability relies on solutions like the Lightning Network.
   - **Ethereum**: Faster, with ~15-30 TPS and ~12-second block times. Layer-2 solutions (e.g., Optimism, Arbitrum) and sharding plans enhance scalability.

6. **Use Cases**:
   - **Bitcoin**: Primarily used for payments, remittances, and as a hedge against inflation or fiat currency devaluation.
   - **Ethereum**: Powers a vast ecosystem of dApps, including DeFi, NFTs, DAOs, and gaming, with ETH as the fuel for transactions and smart contract execution.

7. **Market Positioning**:
   - **Bitcoin**: Largest crypto by market cap (~$1.2T as of 9/17/2025), seen as a stable, long-term investment.
   - **Ethereum**: Second-largest (~$400B market cap), valued for its versatility and role in Web3 innovation, though more volatile due to its broader utility.

**Summary**: Bitcoin is a focused, secure digital currency for value storage and transfer, while Ethereum is a versatile platform for decentralized applications, with ETH enabling a dynamic ecosystem. Bitcoin’s strength lies in its simplicity and scarcity, while Ethereum’s lies in its programmability and adaptability, though it faces higher complexity and gas fee volatility.