1. Currency issuance: Bitcoin creates 12.5 new bitcoins every 10min (or 75/hr) while Ethereum creates 3 new ether every 15 seconds (or 720/hr).
2. Currency cap: Bitcoin is limited to 21 million bitcoins, of which 16.7m have been created so far. Ethereum has no hard cap currently, but there are plans to reduce or stop issuance in a year or two. There are currently 96.4m ethers.
3. Bitcoin creates a new block every 10 minutes (on average). Ethereum creates a new block every 15 seconds.
4. While bitcoin has a scripting language built in, it’s very limited in functionality with only a few dozen operations. Ethereum has a full general-purpose language integrated (known in computer-speak as a Turing-complete). Programs written in this built in language are known as “smart contracts”.
5. Ethereum assigns a cost, known as gas, to every operation or use of storage on the blockchain. Bitcoin transaction costs are based simply on their size.
6. Each block in bitcoin is limited to 1MB in size (or 8BM in the case of Bitcoin Cash). In Ethereum, blocks are capped by the gas-limit, the total overhead of all the operations in the block. In practice bitcoin can process 5 transactions per second, Ethereum roughly 15.
7. Ethereum smart contract code lives at its own address on the blockchain as opposed to being within a transaction as in the case of Bitcoin. Therefore Ethereum has two account types, one to hold user funds, the second to hold computer code.
8. Ethereum includes blocks that are valid but were outpaced by another newly accepted block. These almost-accepted blocks are known as “uncles” and their incorporation provides added security to the chain and allows Ethereum to have shorter block times.
9. Bitcoin’s hashing algorithm (SHA-256) can be performed efficiently with special purpose hardware, known as ASICs (application-specific integrated circuit). The Ethereum hashing algorithm (KECCAK-256) is memory intensive so it’s far more difficult to build an economical special-purpose chip for. This allows for Ethereum to have greater mining decentralization.
10. Ethereum has plans to move away from mining altogether by changing the consensus algorithm from Proof-of-Work (PoW) to Proof-of-Stake (PoS). PoS creates blocks based on the token holdings of the nodes rather than computational power. In addition, Ethereum plans to tackle scalability by implementing “sharding”. Sharding breaks up the blockchain into many many interconnected sub-blockchains. Bitcoin currently has no such plans.
About the author
Dr. Lederer has over 15 years of technical experience in computer system design and programming. He has been teaching about blockchain and Ethereum for 3 years and recently co-authored Blockchain: A Practical Guide to Developing Business, Law, and Technology Solutions. Prior to working on blockchain technology, he worked at The Wall Street Journal, Morgan Stanley and BAE Systems, where he held a DoD TS (top secret) clearance to develop a novel mobile ad-hoc network for the US Air Force.