Bitcoin vs Ethereum
Overview
The two largest cryptocurrencies serve fundamentally different purposes. Bitcoin is digital gold; Ethereum is a programmable world computer. Understanding the difference is essential for portfolio allocation. We compare supply mechanics, consensus models, Layer-2 ecosystems, and real-world use cases so you can make informed crypto market decisions. Learn where to buy both in our crypto exchange reviews, and explore Ethereum's DeFi ecosystem in our crypto lending guide.
Similarities
- Both are decentralised, open-source blockchain networks.
- Both have massive network effects and deep liquidity.
- Both are available on virtually every exchange and in spot ETFs.
- Both have proven resilience through multiple bear markets.
Differences
- Purpose: Bitcoin is a store of value and monetary network; Ethereum is a smart contract platform.
- Supply: Bitcoin has a hard cap of 21 million; Ethereum has no fixed cap but is deflationary post-merge (EIP-1559 burn).
- Consensus: Both use Proof of Stake (Bitcoin is PoW); Ethereum transitioned in September 2022.
- Speed: Bitcoin processes 7 TPS; Ethereum processes 15-30 TPS (much more with Layer 2s).
- Ecosystem: Bitcoin has Lightning Network for payments; Ethereum has DeFi, NFTs, DAOs, and L2 scaling.
Verdict
Most portfolios should hold both. Bitcoin for sound-money exposure and macro hedge; Ethereum for smart-contract ecosystem growth. A 60/40 or 70/30 BTC/ETH split is common.
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