Bitcoin vs Ethereum: what is the difference?

Bitcoin is digital money with a supply capped at 21 million coins. Ethereum is a blockchain that can run programs, with a coin called ether that pays for them. They were built to do different jobs.

Side by side

What each one records

Bitcoin's ledger answers one question: who owns which coins. That narrow job is the point of it.

Ethereum's ledger also stores and runs code. These programs are called smart contracts, and they make tokens, stablecoins, lending services and NFTs possible. Lesson 7 explains them.

Supply

New bitcoin is created only as the reward for mining a block, and that reward is cut in half about every four years. The total approaches a limit just under 21 million.

Ether has no cap. New ETH is issued to the validators who secure the network, and part of every transaction fee is destroyed. The total can rise or fall with how busy the network is.

How each is secured

Bitcoin uses mining. Miners spend electricity to compete for the right to add a block.

Ethereum switched from mining to staking in September 2022. Validators lock up ETH as collateral and lose part of it if they cheat. The switch cut Ethereum's energy use by about 99.95%.

Different risks

• Bitcoin: its main criticism is the electricity that mining uses.
• Ethereum: it carries the risks of the applications built on it. A bug in a smart contract can lose money, and signing the wrong approval can hand over your tokens. Lesson 37 covers this.
• Both: prices swing sharply, payments cannot be reversed and a lost key cannot be recovered.