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Bitcoin vs Ethereum: digital money or a shared computer?

Bitcoin and Ethereum are the two biggest names in crypto. They're often lumped together. But one was built to be money, and the other was built to run programs.

Comparison · 7-minute read · Updated 2026-10-21

The short answer

Bitcoin (BTC) launched in 2009, created by someone using the name Satoshi Nakamoto. It's built to be digital money: send value without a bank. Its supply is capped at 21 million coins.

Ethereum launched in 2015, co-founded by Vitalik Buterin and others. It's a shared computer that runs programs called smart contracts. Its coin, ether (ETH), pays for using that computer. It has no fixed supply cap.

In plain words: Bitcoin is mostly a store of value and a payment network. Ethereum is a platform that apps are built on.

Side by side

How Bitcoin works, in plain words

Computers called miners compete to add the next block of transactions. They use a lot of electricity to do it. That's Proof of work. The winner earns new bitcoin.

About every four years, the reward is cut in half. That's the Bitcoin halving. The most recent one was in April 2024. It means new coins arrive more slowly over time, until the 21 million cap.

How Ethereum works, in plain words

Ethereum runs programs that anyone can use: trading apps, lending apps, digital collectibles, and Stablecoins (coins pegged to a currency like the dollar).

In September 2022, Ethereum switched from mining to Proof of stake in an upgrade called the Merge. Now people lock up ("stake") ether to help secure the network. Since 2021, part of every fee is burned, which removes some ether from supply. Whether supply grows or shrinks depends on how busy the network is.

Bitcoin: strengths and limits

The good parts:

• Simple story. Fixed supply, one main job.
• The largest crypto. Usually the most traded and most watched.
• Longest track record in crypto.

The limits:

• Huge swings. Drops of more than half have happened several times in its history.
• Few uses beyond money. It doesn't run apps the way Ethereum does.
• Energy use. Mining draws criticism for power use.

Ethereum: strengths and limits

The good parts:

• Many uses. A large share of crypto apps run on it or on networks linked to it.
• Less energy. Proof of stake uses far less power than mining.

The limits:

• More moving parts. Upgrades, fees, staking and app risk all affect it.
• Often swings more than Bitcoin. That cuts both ways.
• Competition. Other networks try to do the same job.

How they tend to move together

They often move in the same direction, because big crypto news tends to lift or drop the whole market. Ether has tended to move further than bitcoin on the same day. That's history, not a promise.

Which fits you?

1. Want to learn crypto with the simpler story? Bitcoin is often where people start.
2. Curious about apps and smart contracts? Ethereum is where most of that happens.
3. Trading the chart? The same method applies to both: mark the last places price turned around on the bigger chart, wait for a candle body to close past a level, and size from the stop. See crypto trading for beginners.

Whatever you choose, practice on past charts first. See practice trading without money.

Common mistakes

• Thinking they're the same thing. They do different jobs and have different supply rules.
• Oversizing because "crypto always comes back". Big drops can last a long time. Size so one loss stays small with the position size calculator.
• High leverage on 24/7 markets. A weekend spike can wipe out a leveraged trade.
• Keeping coins somewhere you don't understand. Learn how wallets and keys work before you hold anything.

Questions