Cryptocurrencies are becoming a staple in Kenya today. You cannot speak of matters of money or the economy without mentioning cryptocurrency. But for beginners, it can feel confusing.
Two names always come up: Bitcoin and Ethereum, or better still, Bitcoin vs Ethereum. Are they the same thing? Do they do the same job? And which one is better, if any?
In this guide, I’ll break down the key differences between Bitcoin and Ethereum in simple terms. By the end, you’ll understand how each one works and what makes them unique.
Bitcoin vs Ethereum: Overview
Bitcoin and Ethereum are the two biggest cryptocurrencies in the world.
While both are built on blockchain technology and allow peer-to-peer (P2P) transactions without banks, they serve different purposes.
- Bitcoin is primarily used as a digital currency — a means of storing and transferring value.
- Ethereum, on the other hand, is a platform that allows developers to build apps on top of it, with Ether (ETH) as its currency.
But that is not all there is to learn about the two. Let’s explore each one in more detail.
A Brief History of Bitcoin
Bitcoin was created in 2009 by a person (or group) using the name Satoshi Nakamoto. It was the first-ever cryptocurrency and was designed to be a digital version of cash.
After the 2008 financial crisis, many people lost trust in banks. Bitcoin offered a way to send money to anyone, anywhere, without using a bank or middleman.
How Bitcoin Works
Bitcoin uses something called a blockchain, which is like a digital record book.
Every time someone sends or receives Bitcoin, that transaction is recorded on the blockchain. Once a transaction is added, it can’t be changed or erased.
The system is kept secure by a network of computers called miners. These miners solve math problems to confirm transactions, and they are rewarded with new Bitcoin.
Bitcoin’s Main Use
Think of Bitcoin as digital gold. It’s valuable because:
- There’s a limited supply (only 21 million coins will ever exist),
- It’s decentralized (no government or company controls it),
- And people use it to store value or send money.
While you can buy things with Bitcoin, most people today use it as an investment or a way to protect their money from inflation.
PS. As of July 3, 2025, 1 BTC = 14,128,299.99 KES.
Pros of Using Bitcoin
Here are some of the main benefits of using Bitcoin in your day-to-day transactions:
1. Decentralization
One of Bitcoin’s biggest advantages is that it is not controlled by any government, company, or central bank. This means no single authority can freeze your funds or manipulate the system for its benefit.
🔹 Great for people who want financial freedom or live in countries with unstable currencies.
2. Limited Supply (Scarcity)
There will only ever be 21 million Bitcoins. This makes it scarce — kind of like digital gold.
🔹 This limited supply can protect against inflation and can make Bitcoin more valuable over time.
3. Secure and Transparent
Bitcoin uses strong encryption and a public ledger (blockchain) where all transactions are recorded. Once a transaction is confirmed, it can’t be altered or deleted.
🔹 This boosts trust and reduces fraud, especially for large or international payments.
4. Global and Borderless
You can send Bitcoin to anyone, anywhere in the world, without needing to go through a bank or pay high international transfer fees.
🔹 Perfect for cross-border payments and remittances.
5. Potential for High Returns
Over the years, Bitcoin has seen massive price growth. People who bought early and held on saw life-changing profits.
🔹 While prices can drop too, it has shown long-term growth and adoption.
Cons of Using Bitcoin
Although Bitcoin has several advantages, it has a few flaws too. Here are a few:
1. Price Volatility
Bitcoin’s price can go up and down very quickly. It’s not unusual to see a 10–20% swing in a single day.
⚠️ This makes it risky for people who want stability or plan to use it for everyday purchases.
2. Slow Transactions
Bitcoin is not very fast. It processes around 7 transactions per second, and it can take 10 minutes or more for a transaction to confirm.
⚠️ During busy periods, transactions may get delayed or require higher fees to speed up.
3. Energy Consumption
Bitcoin still uses a system called Proof of Work (PoW), which requires a lot of computer power. This leads to high electricity use, which has raised environmental concerns.
⚠️ Critics say it’s bad for the planet, though some miners are now using renewable energy.
4. Limited Use in Daily Life
While acceptance is growing, not many shops or services accept Bitcoin directly — especially for small, everyday purchases.
⚠️ You’ll likely need to convert it back to your local currency, which may involve extra steps or fees.
5. Irreversible Transactions
If you send Bitcoin to the wrong address or fall for a scam, you can’t get it back. There’s no “customer support” to call.
⚠️ It puts the responsibility on the user to double-check every transaction.
What is Ethereum?
While that is an important question, there are other such as who created Ethereum and why?
Ethereum was created in 2015 by a group of developers, with Vitalik Buterin as the most well-known co-founder. They wanted to build something bigger than just digital money.
Ethereum introduced the idea of a programmable blockchain, which means it’s not just for sending money, but also for building apps.
Smart Contracts and dApps
The real magic of Ethereum is in its smart contracts. These are little programs that run automatically when certain conditions are met.
For example:
- If you pay for a digital art piece, the smart contract can automatically send you the file.
- If both sides agree to a trade, a smart contract can carry it out without needing a third party.
Apps built on Ethereum are called dApps (decentralized apps). These include games, finance platforms, and even social networks — all without needing big tech companies.
Ether (ETH) — The Currency of Ethereum
Just like Bitcoin has BTC, Ethereum has ETH (also called Ether). ETH is used to:
- Pay for transactions,
- Run smart contracts,
- And as a store of value.
It’s like the “fuel” that powers the Ethereum network.
PS. As of July 3, 2025, 1 ETH = 335,463.13 KES.
Pros of Using Ethereum
Why use Ethereum when doing your daily transactions? Here are the top reasons:
1. Smart Contracts and Programmability
Ethereum introduced smart contracts — self-executing programs that run exactly as written, with no downtime or interference.
🔹 This allows for the creation of decentralized apps (dApps) for finance, gaming, NFTs, and more — all without a central authority.
2. Active Developer Community
Ethereum has the largest blockchain developer community in the world. This means faster updates, stronger security, and constant innovation.
🔹 As a result, Ethereum has become the go-to platform for launching new blockchain projects and tokens.
3. Ethereum 2.0 and Energy Efficiency
Ethereum has moved from Proof of Work (PoW) to Proof of Stake (PoS), which has cut energy usage by over 99%.
🔹 This upgrade makes Ethereum more eco-friendly than Bitcoin and better suited for mass adoption.
4. Wide Adoption and Use Cases
Ethereum powers a huge part of the blockchain world — including DeFi (Decentralized Finance) platforms, NFT marketplaces, and DAOs (Decentralized Autonomous Organizations).
🔹 Its versatility means it’s useful for much more than just transferring money.
5. Fast Transaction Confirmation
Compared to Bitcoin, Ethereum’s block time is much shorter — around 12 seconds, meaning faster confirmation times.
🔹 This improves user experience, especially when using apps that rely on quick feedback.
Cons of Using Ethereum
Just like Bitcoin, Ethereum too has a few disadvantages.
1. High Gas Fees
When the network is busy, Ethereum users must pay “gas fees” to process transactions or run smart contracts — and these fees can be very expensive.
⚠️ Sometimes, simple tasks like sending ETH or minting an NFT can cost more than the action itself.
2. Scalability Challenges
Ethereum still faces scaling issues, meaning it can become slow or congested during high demand.
⚠️ Although upgrades like Ethereum 2.0 and Layer 2 solutions aim to solve this, the platform isn’t yet as fast or smooth as traditional systems.
3. Complexity for Beginners
Using Ethereum-based apps or wallets often involves technical knowledge, browser extensions, or understanding gas settings.
⚠️ This learning curve can be intimidating for new users, especially compared to simpler apps like PayPal or Venmo.
4. Not Fully Decentralized (Yet)
Although Ethereum is more decentralized than most platforms, some critics argue that large stakers or developers hold too much influence.
⚠️ It’s still evolving toward complete decentralization, but it’s not there yet.
5. Unpredictable Network Upgrades
Ethereum is still a work in progress, and big changes (like The Merge or future updates) can cause uncertainty or require users and developers to adapt quickly.
⚠️ While innovation is good, frequent changes may feel unstable for some.
The Key Differences Between Bitcoin and Ethereum
Although they may seem similar at first, Bitcoin and Ethereum are quite different in purpose, design, and usage.
Purpose
Bitcoin’s goal is simple: to be a digital currency. It’s designed to send, receive, and hold value without relying on banks.
Ethereum’s goal is broader: it’s a platform for building applications using smart contracts. Its currency, ETH, powers this network.
So:
- Bitcoin = Digital money
- Ethereum = Digital apps + money
Technology
Both use blockchain, but in different ways.
Bitcoin’s blockchain only records transactions.
Ethereum’s blockchain can also store and run smart contracts — making it more flexible and powerful.
This flexibility means Ethereum can do more things, but it also makes it more complex and slower in some cases.
Speed and Transactions
- Bitcoin processes about 7 transactions per second.
- Ethereum can process around 15–30 transactions per second (with improvements like Ethereum 2.0 aiming for much more).
Ethereum also has shorter block times, meaning transactions are confirmed faster (usually within seconds, compared to Bitcoin’s 10 minutes).
Supply
- Bitcoin has a fixed supply: 21 million coins. This makes it scarce — like gold.
- Ethereum does not have a fixed supply, but recent upgrades (like the EIP-1559 fee burn) are helping reduce its inflation.
Bitcoin is more focused on scarcity, while Ethereum is focused on usability.
Mining vs. Staking
Bitcoin uses Proof of Work (PoW) — miners solve puzzles to confirm transactions. It’s secure but uses lots of energy.
Ethereum used to use PoW but now uses Proof of Stake (PoS). Instead of mining, people “stake” ETH to help secure the network, which uses much less energy.
Summary: Bitcoin vs. Ethereum – Which One is Right for You?
Both Bitcoin and Ethereum have changed the world of finance, but they do different things.
- If you want to hold digital money that’s decentralized and limited in supply, Bitcoin is a great option.
- If you’re interested in digital applications, smart contracts, and the future of the internet, Ethereum is your go-to.
Key Points:
- Bitcoin is digital gold. Ethereum is the world’s decentralized computer.
- Bitcoin is simpler and more focused on payments.
- Ethereum is more flexible and supports apps and contracts.
- Bitcoin has a fixed supply; Ethereum doesn’t — but is moving toward deflation.
- Ethereum is faster and more energy-efficient thanks to staking.
Final Thoughts
You don’t need to choose just one — many investors hold both Bitcoin and Ethereum. As a beginner, the best step is to learn, start small, and follow updates in the crypto space.
If this guide helped you, share it with someone else who’s also wondering about crypto. Have any beginner questions? Drop them in the comments below — and let’s grow together!