Ethereum (ETH) is a blockchain platform that runs smart contracts, which automatically execute the terms of an agreement, and it is also the name of the cryptocurrency used within that platform. The key difference from Bitcoin is that Bitcoin was designed mainly for transferring value, while Ethereum was designed as a platform for running programs.
How Ethereum Works
A blockchain is a ledger system in which a large number of participants share a record of transactions. On Ethereum, you can run smart contract programs on top of this ledger that process automatically once their conditions are met. Rather than a specific country or company acting as an administrator who can halt transactions, the defining feature is that many nodes participating in the network verify the records.
What Is a Smart Contract
A smart contract is a program that encodes the rule "if these conditions are met, then perform this action," and it is deployed on a blockchain. Because processing proceeds without intermediaries, smart contracts are being explored for a wide range of uses, including financial services and rights management.
However, if a published program contains a bug or vulnerability, it can lead to incidents in which assets are lost. The fact that these programs run automatically is two sides of the same coin as the risk that they are difficult to stop, even when errors exist.
How Gas Fees Work
Running transactions on Ethereum requires a fee paid for the network's computing resources. This is commonly called a "gas fee." The more complex the transaction, the more computation it requires, so gas fees tend to rise accordingly.
Gas fees fluctuate with network congestion. Actual fee levels can vary significantly over time, so it is important to check the latest figures before using the network, either in your wallet or in official sources that display current gas prices.
Design Differences from Bitcoin
Bitcoin is designed primarily as "digital gold," intended for storing value and transferring money, with a fixed upper limit on its supply. Ethereum, by contrast, has no supply cap, and ETH serves as the fuel that powers the execution of smart contracts.
| Aspect | Bitcoin | Ethereum |
|---|---|---|
| Main purpose | Value transfer and storage | Foundation for executing smart contracts |
| Supply cap | Yes | No cap |
| Flexibility of operations | Limited | Programs can be deployed to enable a wide range of processing |
In this way, the two are often discussed as similar cryptocurrencies, but their purposes and design philosophies differ.
History and the PoS Transition
Ethereum originally ran on a method called PoW (Proof of Work). It later moved to PoS (Proof of Stake) through an upgrade known as "The Merge." Publicly available information you can find through search presents this transition as a major turning point.
There is also discussion of an upcoming improvement plan called "Fusaka." Plans and timing may change, so please check the latest information in official announcements.
Risks to Understand Before Investing
Crypto assets are highly volatile, and their value can fall sharply in a short period. You should assume that you could lose part or all of your principal. There are also risks of asset losses caused by smart contract bugs or hacks of exchanges and wallets.
Whether trading is permitted and how it is taxed vary by country and region. For how crypto is handled in Japan and its tax treatment, be sure to check information from official government agencies or consult a qualified professional.
Summary
Ethereum is a blockchain designed as a foundation for running smart contracts, and gas fees are the transaction fees required to process that work. Because its purpose and design differ from Bitcoin's, it is not appropriate to compare the two using the same criteria. It is important to understand how the system works and to make decisions with the risks in mind. If you want to compare providers where you can trade in Japan, you may also find the Cryptocurrency Exchange Comparison helpful.
Risks and Disclosures
Risk: Crypto assets are highly volatile, and you may lose some or all of your principal. This article is a general explanation based on information as of 2026-10-12. It is not an investment solicitation or advice, nor a recommendation of any specific asset. Whether trading is permitted and how it is taxed varies by country and region, so be sure to check the regulations in your country of residence and the latest terms of each exchange before using any service.
Affiliate Disclosure: This article may contain affiliate (advertising) links, and this site may earn a commission at no additional cost to you. Commissions do not influence our evaluations.
Frequently Asked Questions
What is the biggest difference between Ethereum and Bitcoin?
Bitcoin is primarily designed for transferring and storing value. Ethereum is designed as a foundation that can execute smart contracts, and it has no fixed supply cap, which is another key difference.
Why are gas fees necessary?
Processing transactions on Ethereum uses the network's computing resources, so a fee is required as compensation. The more complex the process, the more computation it requires, and gas fees tend to fluctuate accordingly.
Are smart contracts safe to use?
They offer the benefit of automated execution, but if the underlying code contains a bug, assets can be lost. Before using them, review how they work and their risks, and it is important to start with small amounts and proceed with caution.
Where can I check the current gas fee amounts?
Gas fees change with network congestion, so check the latest figures in the wallet you use or on official informational pages.
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