How is the Ethereum blockchain different from the Bitcoin blockchain?

The natural consequence of Ethereum’s rising popularity has been its constant comparison to the first virtual currency, Bitcoin. For the investors, it is important to understand the similarities and differences between Bitcoin and Ethereum.  

Launched in January of 2009, Bitcoin introduced a novel idea set out in a white paper by the mysterious Satoshi Nakamoto, i.e. the promise of lower transaction fees than traditional online payment mechanisms and is operated by a decentralized authority, unlike government-issued currencies. The attempts to understand this virtual currency largely led to the discovery of blockchain, the technology that powers it. A blockchain is a public ledger of all transactions in a given system that has ever been executed and it is ever-growing as completed blocks are added to it in linear, chronological order through cryptography, ensuring they remain beyond the power of manipulators.

Ethereum was launched in July of 2015 and is the largest and most well-established, open-ended decentralized software platform. It enables SmartContracts and Distributed Applications (ĐApps) to be built and run without any fraud, control, downtime, or interference from a third party. Apart from being a platform, Ethereum is also a programming language (Turing complete) running on a blockchain, helping developers to build and publish distributed applications. The potential applications of Ethereum are wide-ranging and run on its platform-specific cryptographic token called Ether, which is broadly used as a digital currency exchange and inside Ethereum to run applications and even to monetize work

While both the platforms are powered by the principle of distributed ledgers and cryptography, the two differ in many technical ways. For example, the programming language used by Bitcoin is in a stack-based language whereas Ethereum uses Turning complete. Block time (Ethereum transaction is confirmed in seconds compared to minutes for Bitcoin) and their basic builds (Ethereum uses ethash while Bitcoin uses a secure hash algorithm, SHA-256) are some of the other differences between them.

Bitcoin and Ethereum, however, differ in purpose from a general point of view. While Bitcoin is created as an alternative to regular money and is therefore a means of payment transaction and value store, Ethereum is being developed as a platform that facilitates peer-to-peer contracts and applications through its own currency vehicle. While Bitcoin and Ether are both digital currencies, Ether’s primary purpose is not to establish itself as an alternative payment (as opposed to Bitcoin) but to facilitate and monetize Ethereum’s work to enable developers to build and run distributed apps (DjApps).