Bitcoin vs. Ethereum: A Comprehensive Comparison

What you need to understand is that while Bitcoin and Ethereum are the two most common projects and most commonly talked about subjects in the cryptocurrency space, their purposes and functionality are very different.

Both Bitcoin and Ethereum are blockchain-based decentralized entities, fueled by their native tokens, BTC and ETH, respectively. These tokens are able to be used outside their Bitcoin and Ethereum ecosystems as a medium of exchange and value.

The Bitcoin Timeline

For two decades, attempts at creating and successfully implementing Bitcoin failed. Until 2008, when an anonymous individual/organization by the name of Satoski Nakamoto published a whitepaper entitled: "Bitcoin: A Peer-to-Peer Electronic Cash System".

For a complete insight into Bitcoin’s timeline, please click here.

The Ethereum Timeline

In November 2013, Vitalik Buterin published the Ethereum whitepaper and created The Ethereum Foundation. In January 2014, the development of the Ethereum platform was publicly announced, ending its $18.4 million ICO in August 2014.

For a complete insight into Ethereum’s history, please click here.

Functionality and Purpose

Each platform was created for two very different reasons.

Beginning with Bitcoin, it’s important to look at the time period in which Bitcoin first (successfully) came into being immediately following the 2008 financial crisis. Remember, the crisis led to a complete distrust and lack of faith in traditional financial institutions such as banks and lending corporations.

Since its inception, the Bitcoin Foundation has never departed from its mission in building and operating as a global decentralized financial system (DeFi), while ensuring that its users maintain complete control and ownership over their finances.

From a supply and demand standpoint, Bitcoin has a hard limit or cap at 21 million coins, utilizing market supply and demand to help regulate its price.

Ethereum

However, Ethereum differs in that it’s not a “payment-only” system like Bitcoin, and doesn’t have a market cap limit. According to Buterin, blockchain technology has more utility than simply as a payment-service provider. Specifically, individuals can build onto it, similar to a traditional operating system (OS) like Windows, Mac, and/or Linux.

How to achieve this, according to the Ethereum founder is by creating smart contracts and executing them on top of the Blockchain.

Native Token: Ether

Unlike Bitcoin, where miners “mine” for bitcoin, in the Ethereum, miners work to earn the network’s native currency, Ether. Ether, like bitcoin, can also be purchased, traded, and used to pay for transaction fees and other services on the ethereum network. It is available on Cryptoexchange.com.

Ethereum’s average transaction fees are much lower than that of Bitcoin’s, where some miners charge some transaction fees for each and every transaction. Think PayPal’s annoying fees.

Gas Tokens

Unlike Bitcoin, which uses transaction fees, Ethereum uses a “gas system”, powered by gas tokens.

Ethereum’s additional token to Ether is a gas token which is used to pay miners fees for including transactions in their block. Every Ethereum smart contract execution requires a certain amount of gas to be sent along with the contract so that miners are encouraged to put that transaction into the Blockchain.