While both bitcoin and ether are cryptocurrencies, the ethereum blockchain is very different from the bitcoin blockchain. Bitcoin was designed purely as a digital currency. The ethereum blockchain is a more general implementation of blockchain technology.
Both offer anonymous transactions, and neither of the two is controlled or regulated by a centralised body. However, they still differ remarkably in nature as well as functions.
First of all, while bitcoin’s average block time is around 10 minutes, ethereum’s completes in just 12 seconds. Another distinguishing feature is differences in their monetary supply.
More than 65 percent of bitcoin has already been mined, while since its inception, not more than 50 per cent of ethereum are mined so far.
Also, they cost their transactions in different ways.
Rachit Chawla, CEO, Finway Capital said, “In ethereum, it is called gas, and the costing of a transaction varies on the basis of storage needs, bandwidth usage, and complexity. On the other hand, cost of the transaction in bitcoin depends on block size, and they compete equally with each other.”
“Although there are more advanced calculating features are embedded in ethereum, this complexity makes the platform more vulnerable to cyber attacks than bitcoin,” said Chawla.
In fact, bitcoin and ethereum differ in purpose: Bitcoin is pitched as an alternate currency, or digital currency, ethereum facilitates peer-to-peer contracts and applications via its own currency vehicle. That’s why bitcoin has emerged as more stable digital currency, while ethereum is more about smart contract applications.
What makes the ethereum blockchain more generalised is the concept of the EVM, or Ethereum Virtual Machine. Karan, Bharadwaj, CTO of XinFin said, “Using the EVM we can write code, called smart contracts, to automate and execute real world agreements in an immutable ledger. The underlying currency of ethereum is called Ether and is used to buy computation power (ability) to run these programs. Smart contracts allow for the blockchain to be applicable in a range of different industries like, trade and finance, supply chain, securities and derivatives, and banking.”
The bitcoin blockchain has a block limit of 1 MB. What that means is the the number of transactions that fit into a single block cannot exceed a 1 MB. The time it takes to mine, or create, a new block on the bitcoin blockchain is about 10 minutes. This effectively means that the bitcoin network can handle 3-4 transactions per second.
The ethereum blockchain does not have a block limit. The number of transactions that are put into a block are decided by the miners. Each block is mined in 12-14 seconds and the number of transactions per second are around 15.