Bitcoin & Ethereum: Understanding the Two Largest Blockchains

When it comes to blockchain technology, Bitcoin and Ethereum are the two most recognized names in the space. Both are decentralized networks powered by distributed ledgers, and both have transformed how we think about money, ownership, digital identities, and digital interactions. However, while they share some similarities, their purposes, designs, and use cases are very different.

Similarities Between Bitcoin and Ethereum

At their core, Bitcoin and Ethereum are very similar. Blockchain technology uses a network of nodes to validate and record actions and transactions are grouped into blocks. You can probably see how “blockchains” got their name. To keep data consistent across the blockchain, a consensus mechanism is needed. Until recently, both Bitcoin and Ethereum used a Proof-of-Work mechanism where complex cryptographic puzzles are solved in order to verify the block. The Proof-of-Work (PoW) consensus mechanism was first used by Bitcoin and was considered the standard for blockchain technology. In 2022, Ethereum hard forked to the Proof-of-Stake (PoS) consensus mechanism, which requires less computational power and is more scalable than its predecessor. 

Differences Between Bitcoin and Ethereum

When Bitcoin launched in 2009, one BTC was worth as little as two pizzas. Despite its humble beginnings, Bitcoin paved the way for blockchain technology. But Bitcoin has unique utility, and its intentions are very different from newer blockchains like Ethereum. The fundamental difference can be summed up in two lines:

Bitcoin is digital gold optimized for security and scarcity.

Ethereum is a decentralized computer optimized for programmability and innovation.

Unlike Ethereum, Bitcoin has a fixed supply. This is similar to how treasuries handle fiat currencies today. You can’t simply make more Bitcoin. Ethereum, on the other hand, doesn’t see the need for a hard cap. Its value isn’t in ownership and storage. Instead, Ethereum’s goal was to be a flexible, programmable, and sustainable blockchain that prioritizes development over value. 

Ethereum’s development potential is what makes it the world’s blockchain computer. Smart contracts are an inherent feature that Bitcoin doesn’t have, making room for Ethereum to become the blockchain for decentralized applications (dApps). Bitcoin does have smart contract capabilities, but this is dependent on Layer 2 (L2) solutions. L2s layer smart contract functionality on top of the Bitcoin blockchain, working in tandem to power decentralized finance (DeFi) and dApps. 

Two Blockchains: One Web3 Digital Identity Solution

Both Bitcoin and Ethereum have native domain extensions: .btc and .eth. These extensions are limited to their respective platforms, meaning you can’t use a .eth on Bitcoin and vice versa. This might be useful if you’re operating on a single chain, but many users like to crossover into other ecosystems to experience their unique features. This creates a scattered experience where your digital identity can vary wildly depending on which blockchain you’re using. This is where .locker comes in.

.locker is an all-in-one solution for Web3 digital identities. Unlike other blockchain domains, .locker is ICANN-accredited and can be registered through trusted registrars with DNS capabilities. This means that you not only get a Web3 digital identity solution for Bitcoin and Ethereum, but you have a fully functional domain name for a website or email address. Eliminate identity boundaries by using .locker, one of the few blockchain-enabled domains that can do it all. 

Final Takeaway

Bitcoin and Ethereum are not direct rivals in the traditional sense. Bitcoin excels as the most secure and scarce digital asset, while Ethereum is the foundation of the decentralized application economy. Many investors and developers hold and use both—Bitcoin as a store of value and Ethereum as a platform for building the future of the internet.