Bitcoin and Ethereum are both blockchain protocols. Bitcoin was initially thought to solve the money use case, where the blockchain is used as a trustless entity that enables two parties to transact without an intermediary. Ethreum was thought of as a modular and programmable blockchain, enabling the development of decentralized apps on top of that. So, where Bitcoin looks more like digital gold. Etehreum looks more like the Internet protocol.
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Understanding the key differences between Bitcoin and Ethereum
Bitcoin


To understand the key difference in how Bitcoin and Ethereum work, let’s look at two consensus mechanisms:
Proof of Work

Proof of Stake

Where Ethereum has born as a proof of work blockchain, it has transitioned more toward proof of stake with what has been called The Merge.
This has been a process of transition from proof of work to proof of stake, which took years to implement from the core of Ethereum’s development team.
Indeed, Ethereum, by transitioning toward Ethereum 2 integrates mechanisms like proof of stake and sharding that enable it to become more scalable than Bitcoin’s protocol.
Sharding


This is an extract from Blockchain Business Models

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Proof of Work vs. Proof of Stake



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