Get Newton
The Canadian crypto trading platform you can trust.
Sign up now.
Bitcoin (BTC) and Ether (ETH) are the market cap heavyweights and most well-known cryptocurrency tokens but that could be where the similarities end. While both operate on decentralized networks, their reasons to exist are fundamentally different. This week, we’re breaking down five differences between the leading blockchain projects in Web3.
Bitcoin is the first to market, the original layer-one blockchain. It was launched in 2009 by an individual or possibly a group under the pseudonym Satoshi Nakamoto. After being active, chatting on early forums, Satoshi disappeared, and the wallets believed to be his (with an estimated 1 million BTC and scattered between addresses) have never been touched. This has been a critical design feature that has driven its adoption.
Ethereum has a very different origin story that started when a Russian born Canadian by the name of Vitalik Buterin met co-founders Gavin Wood, Charles Hoskinson, Anthony Di Iorio, and Joseph Lubin, together launching the chain. These names have become key opinion leaders (KOLs) in the sector. Unlike Satoshi, Vitalik remains actively involved in Ethereum. He commands substantial influence and mindshare. When he posts to social platforms or speaks at conferences, it sparks debate. This visibility gives him a kind of soft power that contrasts with Satoshi’s anonymity. ETH is the native cryptocurrency of the Ethereum platform.
BTC was likely launched in response to the global financial crisis and American bank bailouts, and designed for its divisibility and scarcity, it presents a remedy to fiat money printing by central banks. We know this to be true because Satoshi left a message hardcoded into the first block suggesting its purpose as a capped decentralized digital currency.
Like traditional fiat money, BTC can be broken down into smaller units called satoshis. This allows for micro-transactions and flexible use across global digital markets. It was created to enable peer-to-peer transactions without the need for a central bank or government but has been constrained due to its slow block time and variable network fees.
ETH was built to move beyond currency, offering a decentralized computing layer where smart contracts power a wide range of Web3 applications. The Ethereum network was created to expand what blockchains could do beyond digital currency, although like BTC, its native token ETH is divisible into smaller units called Wei.
Bitcoin focuses on scarcity because it was launched to address country currency and fiat printing. This is why there will only ever be 21 million coins, a defining feature of the protocol. Its fixed supply and halvening was designed to make it deflationary and valuable over time. This potential for verifiable scarcity is part of what gives Bitcoin its appeal. Its achievement has additionally contributed to the development of thousands of other cryptocurrencies, many of which attempt to replicate its tokenomic model.
ETH does not have a limited supply. New ETH can continue to be issued, and the total supply grows over time. Although the network introduced changes like EIP-1559, which burns a portion of transaction fees, it remains fundamentally different from Bitcoin in this regard. Ethereum’s supply model supports its broader use as a programmable platform, rather than as a hard-capped digital asset. Inflationary systems can use funds to work on continued scaling efforts or other real time operational costs.
Bitcoin has often been described as digital gold in part because of its complex mining operations and digital scarcity. It is widely categorized as a commodity rather than a currency and was one of the only tokens to receive such global regulatory clarity. BTC was initially introduced as a peer-to-peer electronic cash system, but over time, it has come to be used by some as a digital asset with long-term holding appeal. There is growing discussion around Bitcoin's prospective function in national reserves. The network faces few competitors in its original role as decentralized digital cash.
Ethereum, by comparison, was built as a decentralized compute platform. Its primary use case is running smart contracts and supporting decentralized applications. Although ETH has benefited from the network effect it competes with other blockchains offering platforms for executing smart contracts with similar features and user-friendly fees.
Bitcoin often receives its criticism for being energy inefficient but many of these claims are based on analyzing just one figure, dividing total energy use by the number of transactions. This gives us just a partial picture since it does not consider how energy is optimized with dynamic response systems. Waste and inefficient operation is reduced by Bitcoin mining absorbing unused or excess energy. This includes power from stranded sources or surplus capacity from solar and wind farms, turning what would be wasted into productive use. In some regions, Bitcoin mining is even helping to fund the expansion of renewable infrastructure.
One of the reasons BTC is considered valuable is for the very fact of the increased energy required to secure its network. Its proof-of-work model has been compared to the effort involved in mining gold or drilling for oil. Value comes from many decentralized global participants contributing resources to maintain the distributed ledger’s integrity.
Ethereum took a different approach. In 2022 the community found consensus and upgraded the protocol via the Merge. This was a major change that shifted the network from proof-of-work to proof-of-stake lowering energy consumption by over 99 percent. This change positions ETH alongside other competing energy-efficient blockchains that are shaping a new category focused on sustainability.
Whether measured by energy, supply, or core purpose, the contrast between these two blockchains show just how diverse the space is. These networks have helped define what blockchains can do, and their differences reflect the multiple directions the technology continues to take. For bi-weekly updates that explore crypto fundamentals and the evolving Web3 ecosystem, visit our blog.
