Bitcoin vs Ethereum: different goals, different tradeoffs

TL;DR. Bitcoin is sound digital money with a hard 21-million supply cap and minimal smart-contract support; Ethereum is a Turing-complete smart-contract platform that powers DeFi, NFTs, and most of Web3. Different products solving different problems, not competing alternatives.

Bitcoin and Ethereum are the two largest public blockchains and the two most-traded cryptocurrencies. They’re often discussed as alternatives. They’re really different products with different goals — comparing them as “which one should I buy” misses what each is actually for.

The headline differences

What each was designed for

Bitcoin: sound digital money

Satoshi Nakamoto’s 2008 whitepaper proposed a system for “a purely peer-to-peer version of electronic cash” that doesn’t require trusted intermediaries. The design choices follow:

• Hard supply cap of 21 million BTC, mimicking gold’s scarcity.
• Proof-of-work, expensive to attack precisely because expensive to mine.
• Conservative protocol changes — Bitcoin Core releases major upgrades roughly once per year.
• Limited scripting — by design — to avoid the bug surface of full programmability.

Bitcoin’s use case has converged on “digital gold”: a censorship-resistant store of value. It’s not optimised for being a medium of exchange — block times are too slow, fees too variable.

Ethereum: programmable money

Vitalik Buterin’s 2014 whitepaper proposed a blockchain with a Turing-complete virtual machine — the EVM — so any deterministic program could be run on-chain. The design choices follow:

• Smart contracts, the building blocks of DeFi, NFTs, DAOs, ENS, and most of what people mean by “Web3.”
• Faster blocks (12 seconds), so applications feel interactive.
• Fees in gas (denominated in Gwei), proportional to the computation performed.
• Aggressive protocol roadmap — proof-of-stake transition (the Merge, 2022), sharding work, account abstraction, EIP-1559 fee market reform.

Ethereum’s use case is broad and evolving: decentralised finance, identity, gaming, on-chain coordination. The base token ETH is required to pay gas for any of this activity.

The energy debate, post-Merge

Pre-2022, both networks used proof-of-work and both consumed substantial energy. After Ethereum’s Merge to proof-of-stake in September 2022, ETH transactions require ~99.95% less energy than before. Bitcoin still uses proof-of-work and is the dominant energy consumer among cryptocurrencies — roughly 130 TWh annually as of 2024, comparable to Argentina’s electricity use.

The political argument cuts both ways. Bitcoin defenders argue the energy is the security; Ethereum supporters argue the same security can be achieved with stake at the line instead of joules.

The unit conventions

Bitcoin: 1 BTC = 100,000,000 satoshi. The satoshi count fits comfortably in a 64-bit integer, so Bitcoin libraries rarely need BigInt. See our Satoshi glossary entry.

Ethereum: 1 ETH = 10⁹ Gwei = 10¹⁸ Wei. The 19-digit precision exceeds JavaScript’s Number type, so production Ethereum libraries use BigInt throughout. Our Wei / Gwei / ETH converter uses BigInt to round-trip without precision loss.

Should you hold both?

That’s an investment question we don’t answer — Convertitive doesn’t give financial advice. But from a purely structural view, BTC and ETH solve different problems and historical correlation has run high (typically 0.7-0.9) without being identity. A portfolio holding both is different from a portfolio holding twice as much of one.

For the math — converting between sub-units, computing gas fees, sanity-checking transaction hex — use our crypto cluster.

Numeric facts

• Total supply: Bitcoin caps at 20,999,999.9769 BTC (effective 21 M); Ethereum has no cap, current supply ~120.4 M ETH and slightly deflationary post-EIP-1559.
• Issuance schedule: Bitcoin block reward halves every 210,000 blocks (~4 years); current (post-2024 halving) reward = 3.125 BTC/block. Ethereum issues ~600 ETH/day to validators, burns ~2,000 ETH/day in base fees on busy days.
• Block size: Bitcoin = 1 MB base + ~3 MB SegWit witness (4 MB weight); Ethereum has no byte cap, instead a gas limit of 30 M gas per block (~150 KB typical).
• Throughput: Bitcoin ~7 TPS base-layer, ~1 M TPS via Lightning. Ethereum ~15 TPS L1, ~10,000+ TPS aggregated across L2s (Optimism, Arbitrum, Base).
• Finality: Bitcoin probabilistic — 6 confirmations (~60 min) is the bank-grade rule. Ethereum economic finality at 2 epochs = ~12.8 min.
• Energy: Bitcoin network ~130 TWh/year (Cambridge CBECI); Ethereum ~6 GWh/year post-Merge — a ~22,000× ratio.
• Validator economics: minimum 32 ETH to run an Ethereum validator (~$95K at $3K ETH); Bitcoin mining requires ASIC hardware ($2-10K per S21 unit).

Decision matrix

Sources

• Nakamoto, S. — Bitcoin: A Peer-to-Peer Electronic Cash System, 2008 — bitcoin.org/bitcoin.pdf.
• Cambridge Centre for Alternative Finance — Bitcoin Electricity Consumption Index (CBECI) — ccaf.io/cbnsi/cbeci.
• Ethereum.org — The Merge energy analysis, ~99.95% reduction figure — ethereum.org/en/roadmap/merge.