By
Andrew Munro&
Kylie PurcellUpdated
Coinstash
Bitcoin, the first ever cryptocurrency, was designed as a method for transferring wealth. In comparison, Ethereum is a blockchain-based platform designed for the construction of decentralised computer applications (dapps).
Ethereum's native cryptocurrency Ether (ETH) is the second most popular digital currency after Bitcoin. While many traders invest in both cryptocurrencies, there are a number of key differences that set them apart.
| Coin symbol | BTC | ETH |
|---|---|---|
| Market cap | US$2,428,830,105,531 | US$365,164,797,652 |
| Total supply | 19,892,090 | 120,714,972 |
| Circulating supply | 19,892,090 | 120,714,972 |
| Current price | US$122117 | US$3025.14 |
| All-time high | US$122,369.00 | US$4,878.26 |
| All-time high date | July 14, 2025 | November 10, 2021 |
Bitcoin is the world's first cryptocurrency and blockchain, which exists primarily to serve as a decentralised, unrestricted, borderless digital currency. Created in 2009, it led to the evolution of what we now know as the cryptocurrency industry.
As far as modern blockchain technology goes, Bitcoin is rather old and clunky, but that's all it needs to get the job done. When people talk about Bitcoin (BTC), they are either talking about the coin itself or the network on which Bitcoin transactions are made and recorded. As cryptocurrency adoption has increased, Bitcoin has moved to a "store of value" for many investors.
On the other hand, Ethereum is a network built for the development of decentralised applications (dapps). The network, or blockchain, is powered by its native cryptocurrency Ether (ETH). Launched in 2015, the blockchain allows the deployment of smart contracts that operate the decentralised applications.
Thousands of dapps have been created over the years, offering services including exchanges, insurance, games and investments, all hosted over the Ethereum blockchain. Most decentralised applications have a native cryptocurrency token, so Ethereum has facilitated a significant proportion of the cryptocurrency market that we see today.
There are a lot of similarities between Bitcoin and Ether. Both are cryptocurrencies that can be traded over decentralised online exchanges and both run on blockchain technology.
Fans of Bitcoin or Ethereum will tell you that there are more differences than similarities between the two.
Broadly speaking, Bitcoin and Ethereum have developed very differently over the years and each have partnered with different protocols to improve accessibility.
Proof of work and proof of stake are processes used by Bitcoin and Ethereum to keep their blockchains secure and up to date.
A blockchain is another name for a distributed ledger that tracks and updates data.
With the proof of work process, the distributed ledger, or blockchain, is updated by "miners". Miners are people or entities that utilise computers all over the world to complete mathematical problems in order to create blocks of data for the Bitcoin blockchain. The math problems are designed to be time-consuming and resource-heavy. Miners compete to reach the solution first.
When the math problem is solved, this proves that a certain amount of computational effort has been used. A miner can then process the new data and add it to the blockchain for other members of the distributed ledger to see.
The proof of stake process was designed to be a more efficient and far less energy intensive solution. Rather than miners solving problems to verify data blocks, there are "validators" who lock up Ether (ETH) in their wallets as collateral. Validators are then chosen at random to add new blocks and earn rewards.
In this way, the PoS process encourages long-term holding and is more scaleable in terms of system upgrades.
Proof-of-work is required to make sure a blockchain runs smoothly and to prevent the misrepresentation of data, such as using the same cryptocurrency for two different payments.
As Bitcoin and Ethereum are two of the oldest and most trusted cryptocurrencies, they have both become extremely popular. However, too many people using them has led to a few scaling problems for the proof-of-work protocol.
Having more users requires more computational power to maintain the blockchain, which can result in slower transactions and higher transaction costs. To solve this, Bitcoin and Ethereum are implementing different solutions.
Over the years, Bitcoin has had offshoots that were specifically designed to solve its scaling problem. Litecoin and Bitcoin Cash are two well-known examples.
Bitcoin as we know it today resisted those hard forks and remained unchanged. Instead, it introduced two solutions called "SegWit" and the "Lightning Network".
Ethereum's smart contracts are extremely useful, but also slowed down the network. To accommodate this, Ethereum underwent a major upgrade to its protocol called ETH 2.0. This upgrade includes:
Those that complete the proof-of-work protocols on the Bitcoin blockchains are often referred to as "miners". When it comes to Ethereum, mining is replaced by staking and performed by "validators." In both mining and staking scenarios, you aim to be rewarded with the associated cryptocurrency.
Mining is the act of adding a new block to the blockchain, which is usually rewarded with the associated cryptocurrency token. Miners must complete mathematical puzzles using computers in order to add new blocks. Staking simply involves holding ETH in order to earn yield.
For this reason, staking is far easier to achieve for everyday users, as it doesn't require any special hardware or advanced knowledge. In its simplest form, you can start off by simply signing up to an exchange, purchasing ETH and selecting the 'Stake' option.
Mining hardware
Mining Bitcoin requires expensive specialised hardware known as ASICs (Application Specific Integrated Circuit).
The expense of AISCs alone reduces the amount of participants on the network and means the centralisation of Bitcoin mining is a constant risk. As ASIC circuits have advanced, Bitcoin mining difficulty has increased to ensure that the time taken to add a new block to the chain remains consistent.
Bitcoin and Ether are two of the most trusted cryptocurrencies currently in existence. They would represent a reasonable starting point for any cryptocurrency investor.
Bitcoin
Bitcoin has dominated the cryptocurrency markets since its inception in 2009 and was for a while the only option for cryptocurrency investors. Thanks to its market leading origins, the token has remained number one. At the time of writing, Bitcoin's market cap has grown to over $1 trillion and has outpaced the growth of all other coins.
Over the decade, the cryptocurrency has moved from a transactional token to a store of value for many investors due to its "tried and tested" track record. Bitcoin's strongest advantage over Ether as an investment lies with scarcity. There will only ever be 21 million Bitcoin in existence. This gives the coin strong fundamentals from a supply and demand point of view, and led to some likening it to "digital gold".
With further technical upgrades, applications may be built to run on the Bitcoin blockchain giving it some of the functionality that smart contracts bring to Ethereum.
Ether
Ether is the fuel of the Ethereum blockchain. Investing in Ether is seen by most as an investment and a belief in the development of the Ethereum network. Traditionally, as Ethereum has grown, so has Ether.
The Ethereum network is utilised by both dapps and centralised organisations such as Microsoft. A flexibility for development and appetite for innovation has been the backbone of its success. Many investors view Ether as a proxy investment for all of the protocols and businesses that utilise the Ethereum blockchain. The more protocols that are added, the better. Future upgrades to the network, such as ETH 2.0, will make the network even more accessible.
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"Bitcoin and Ethereum are crypto royalty, but they're fundamentally quite different. While Bitcoin is the original cryptocurrency, Ethereum actually laid the groundwork for a lot of the most important development in the crypto space, including smart contracts, decentralised finance and even NFTs. Since the approval and launch of spot Bitcoin ETFs, BTC has become more of a store-of-value asset, whilst Ethereum might suit investors looking for a slightly higher risk/reward profile when dipping their toes into the crypto markets."
Bitcoin vs Ethereum is a comparison that has always been hard to make due to the two cryptocurrencies' wildly different purposes. However, comparisons of these two cryptocurrency giants may become easier in the future.
There are many "cross-chain" developments in the pipeline for Bitcoin and Ethereum, which are designed to allow users to connect different blockchains together and transfer coins more freely. Users can already "import" Bitcoin onto the Ethereum blockchain to be used in dapps.
Although launching with similar intentions, Bitcoin and Ethereum have progressed down very different development paths. After many years apart, cross-chain developments could now hold the key to connecting these two titans of the cryptocurrency industry and reinforcing their top market cap positions.
Both Bitcoin and Ethereum have their pros and cons. While Bitcoin is the most popular and successful cryptocurrency, its technology is somewhat old and rigid. That makes it hard to improve or adapt. ETH's market cap may not be as big as Bitcoin's, but the core technology of the Ethereum platform is able to be regularly updated and is used for a range of decentralised services, including gaming, NFTs and payment applications. In some ways, this means Ethereum has greater potential.
Some analysts argue that Ethereum (ETH) will overtake Bitcoin as the dominant coin because it has more use cases than Bitcoin. Ethereum's platform supports applications including gaming, De-Fi and NFTs. Check out Finder's Ethereum price prediction report for more on this.
Technically speaking, Ethereum's price could reach $100k if it becomes the dominant cryptocurrency ahead of Bitcoin. Since its listing, the price of ETH has increased over 1,000% — if it increased another 3,000% we're getting close to that $100k figure. That being said, Finder's panel of experts predict it will reach just over $17,000 by 2025.
According to Finder's panel of 25 cryptocurrency specialists, Ethereum is predicted to be worth around $9,495 by 2030. This is simply a forecast based on technical analysis, current and future trends and is not a recommendation.
Andrew Munro was the global cryptocurrency editor at Finder. During his time he covered all aspects of cryptocurrency and the blockchain. Before he became cryptocurrency editor, he was a content writer for Finder covering various topics over his nearly 5 years in the role. Prior to joining Finder he was a web copywriter. Andrew has a Bachelor of Arts from the University of New South Wales. See full bio
Kylie Purcell is an experienced investments analyst and finance journalist with over a decade of expertise in a wide range of financial products, including online trading platforms, robo-advisors, stocks, ETFs and cryptocurrencies. She is a sought-after commentator and regularly shares her insights on the AFR, Yahoo Finance, The Motley Fool, SBS and News.com.au. Kylie hosts the Investment Finder video series and actively contributes to the investment community as a judge and panellist. She holds a Master of Arts in International Journalism, a Graduate Diploma in Economics, and ASIC-recognised certifications in securities and managed investments. See full bio
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