Currently, the most popular public blockchains are Bitcoin and Ethereum, informally referred as Blockchain 1.0, and Blockchain 2.0. These two blockchains are designed for different purposes, and have evolved overtime. While it is unclear what the next generation blockchains will be, it is worth to study how those two blockchains are going to shape our future.

I interviewed and gathered opinions from developers and miners of Bitcoin and Ethereum on both blockchains. Our discussions cover topics on scalability, consensus algorithm, community culture, and etc. The details of the discussions are summarized in the table below. In general, most of the differences in the two blockchains derive from two of their features: the importance of decentralized governance and their business models.

The Importance of decentralized governance

The governance of the Bitcoin and Ethereum communities is different in terms of the degree of decentralization, and hence has drawn different crowds of developers and supporters. Satoshi Nakamoto, the creator of Bitcoin, remains a mysterious figure and has not been involved in Bitcoin's development since 2011, yet Vitalik Buterin, the founder of Ethereum, has a clear plan for Ethereum and is actively leading Ethereum’s development. This difference in governance and emphasis on decentralization influence how two communities tackle conflicts and how they use blockchain technology to solve business and social problems.

Bitcoin supporters appreciate the absence of Satoshi and have a more strict definition of decentralization. They deem Bitcoin’s governance to be decentralized, since there is no single decision maker who has control over the whole network. By their definition, Ethereum with Vitalik who can represent and make decisions for the whole network is not decentralization. In addition, the community tends to stay detached from governments, and some developers aim at building the system robust enough to avoid interference of any regulations. Moreover, many Bitcoin-based applications emphasize decentralization and disintermediation.

Ethereum supporters believe that the community is democratic with a few influential figures, such as Vitalik and Gavin Wood. Vitalik provides a clear direction to guide the community. In the meantime, the community accepts most of his vision not because he is the creator but his ideas have been proved to be right most of the time. As such, it is more responsive to conflicts and experienced several hard forks, as people with different views could choose to work on their version. Unlike Bitcoin, Ethereum is less stable and less mature, but its community has become more united and continues to make progress. Furthermore, since Ethereum supporters are more relaxed about the degree of decentralization, they are more friendly to governments and incumbents, and their projects extend to permissioned and private blockchains based on business needs.

Look back to Bitcoin, without a leading figure, Bitcoin community is fragmented. Though its developers have built many smart solutions to scalability, only a few have been implemented since 2015 for the lack of consensus. Regardless of how diverse or divided BTC’s stakeholders are, they have not chosen hard fork for the belief in one blockchain and foreseeable chaos and damage to the network. In addition, the highly contentious environment has discouraged developers from working on it, and little progress has been made.

Platform vs Monetary System

The cryptocurrency space is a market with network effects, as Ethereum and Bitcoin become more valuable with increasing users. They can grow exponentially if they attain a critical mass and achieve network effect. Ethereum is designed to be a platform, while Bitcoin is a monetary system. Due to the difference in positioning, Ethereum and Bitcoin have employed different strategies to grow their network.

As a monetary system, Bitcoin’s growth strategy is to differentiate itself from existing systems and hence emphasize its decentralization, efficiency, and anonymity. The demand of Bitcoin is high when the local monetary system is weak, such as Venezuela. Since the ability to move money easily and securely is its main competence, the majority of Bitcoin developers focus on core development of blockchain and tackle issues, such as scalability and anonymity. In addition, many Bitcoin supporters consider Bitcoin the stable bottom layer for more sophisticated applications, such as smart contracts and asset tokenization. Just as piling up boxes, developers can add more applications and features on top of the Bitcoin blockchain.

Ethereum is portrayed as a distributed-applications(dApps) platform that connects developers and users, similar to the iOS platform but decentralized. To grow the platform, Ethereum needs to engage both developers and users. Ethereum markets two of its features heavily to developers: unstoppable applications and coding-friendly smart contract. For these two features, it has successfully attract many developers to work on not only core development but also widespread projects and dApps, such as Augur, Trustlines, or Raiden Network, covering all the exciting applications and technology in the blockchain space.

Since the users is what make a platform valuable and is the source of revenue, Ethereum developers are more user-oriented and willing to makes changes to meet users’ needs and enhance their experience. As a result, the Ethereum blockchain may be still subject to change even after its four-stage release. To stay relevant, dApps need to keep up with changes and hence remain young and immature.

To extend users to businesses, the Ethereum Enterprise Alliance is formed. It gathers a group of developers to focus on enterprise solutions, and encourages enterprises to build permissioned and private blockchains on the Ethereum Virtual Machine. Linked to the public chain, these permissioned and private blockchains can interact through Ethereum, which solves the interoperability issue. As more companies join the network, Ethereum may build its own ecosystem, attain network effects, and potentially grow to the largest public blockchain that everyone uses.

However, to become the largest public blockchain and the underlying infrastructure of all blockchain applications, Ethereum still needs to tackle many challenges. First, it cannot grow exponentially without a strong and stable foundation. Scalability and security issues remain to be solved. In addition, though many Ethereum-based projects and dApps are very innovative, their business models are still unclear. At the same time, many of them are funded through ICO without legal protection. The hype will be gone if there are new regulations, not many deliverables, or people start to lose money. Finally, tokenization, a big selling point of the network, will allow people to trade and exchange assets on the network freely and borderlessly. Not mentioning the difficulty to implement, it is interesting to see how regulators will react, and how the relationship between Ethereum and governments will evolve.

Both Bitcoin and Ethereum are fascinating social experiments. Studying them helps us answer questions, such as whether the bottom layer blockchain should include smart contracts, and whether blockchain should be built as the internet, layer by layer. It is exciting to see Ethereum moving from Proof of Work to Proof of Stake, and we wait for Bitcoin to move forward.

Special thanks to Tadge Dryja, a co-author of the Lightning Network paper, and Jan Xie, an Ethereum R&D team member and the founder of Cryptape, for helping me collect comments and prepare this table.

Disclaimer: The comments cannot represent the whole community, and they are opinions not facts.