Solana vs. Bitcoin vs. Ethereum

Since the inception of Bitcoin in 2009, crypto has been in a constant state of evolution. What began as an outsider technology has grown into one of the most exciting sectors in tech and a new sector of the global economy. While Bitcoin laid the foundation for decentralized digital currencies, newer web3 platforms like Solana and Ethereum have emerged to address its limitations and offer enhanced functionalities.

Today, we’ll compare three of the biggest blockchain networks — Bitcoin, Ethereum, and Solana — while taking a look at how they work, their advantages and disadvantages. All three are incredible technologies in their own right, but it’s useful to understand the infrastructure and advantages of each. 

Still new to crypto and web3? Read our guide to Crypto for Beginners.

Bitcoin, created by the pseudonymous Satoshi Nakamoto in 2009, was the first cryptocurrency and remains the largest by market capitalization. It was designed as a peer-to-peer electronic cash system, aiming to provide a decentralized alternative to traditional financial systems. Bitcoin emerged as a response to the 2008 market crash and proceeding recession as an alternative to traditional banks, and has since led a revolution in digital assets. 

Key Technology:

To compare Solana, Bitcoin, and Ethereum, you have to start with one core element of their respective infrastructures: the consensus mechanism. That’s how the decentralized network of computers that make up each blockchain come to agreement on the data that’s being transacted upon them.

Bitcoin uses Proof of Work for its consensus mechanism — a process where computers crunch huge amounts of data (also known as “mining”) to validate transactions and create new blocks. Miners participate to earn mining rewards in Bitcoin, which are released when a mining machine successfully validates a network block. This is the only way new Bitcoin is created, and written into its code is a cap of 21 million bitcoin. Proof of Work was a revolution in decentralized computing when Bitcoin appeared in 2009, but it consumes significant energy and can be cost prohibitive for people to participate.

Ecosystem and Use Cases:

Bitcoin is primarily used as a store of value and an investment. That’s why BTC is often referenced as "digital gold.” Bitcoin can also be used as a payment system. While much slower and costly to use than newer networks, Bitcoin can be used for cross-border transactions and as a medium of exchange. That’s why it has been adopted by many financial institutions and central banks around the world. 

Advantages and Disadvantages

While Bitcoin is the leading digital asset in the world, it is simply a cryptocurrency and not a web3 platform like Solana and Ethereum. The bitcoin network itself can’t be used to build decentralized apps. Another major limitation of Bitcoin is scalability. Bitcoin's network can only process about 7 transactions per second, and it can take up to ten minutes for transactions to confirm. For that reason, it’s not ideal as a medium of rapid exchange or everyday payments. 

The Bitcoin network also consumes a large amount of energy because its PoW consensus mechanism requires significant computational power. which results in high energy consumption. In fact, the Bitcoin network alone consumes more power than many countries. That’s one of the main reasons why networks like Ethereum and Solana instead run on the far more environmentally friendly Proof of Stake consensus algorithm. 

You can buy BTC, SOL, AND ETH in a number of ways. Learn how in How to Buy and Trade Crypto.

 

Launched in 2015, Ethereum introduced a number of web3 innovations like smart contracts and programmable money. Ethereum has historically been the second largest cryptocurrency by market cap. 

Key Technological Features:

A major upgrade from Proof of Work, Ethereum runs on a Proof of Stake consensus mechanism. Instead of relying on costly miners, PoS networks rely on ‘validator’ computers to confirm transactions. Validators are chosen based on the amount of cryptocurrency they "stake" or lock up as collateral. Proof of Stake requires far less energy and is much easier to scale. Ethereum was initially a Proof of Work blockchain, but it upgraded to Proof of Stake in 2022. 

While Bitcoin is primarily designed for simple value transfer, Ethereum was the first web3 technology to introduce smart contracts, which are self-executing agreements with terms written directly into code. This enabled a wide range of applications beyond just currency, such as decentralized finance platforms, non-fungible tokens (NFTs), and a wide array of dApps. 

Ecosystem and Use Cases:

Ethereum has a diverse ecosystem of web3 applications including wallets, exchanges, DeFi protocols, DAO tooling and NFTs.

Advantages and Limitations:

Despite being a revolutionary technology, Ethereum has limitations when it comes to its speed, scalability, and cost. During periods of high network activity, transaction fees can become prohibitively expensive, costing hundreds of dollars to send a large transaction. Additionally, Ethereum currently processes only 15-45 transactions per second, which leads to network congestion.

Launched in 2020, Solana quickly gained traction as a web3 platform for decentralized applications — like DeFi, NFTs, memecoins, DePIN, and gaming. Because it’s so fast and affordable to use, it’s become the home to a thriving ecosystem of innovative web3 sectors. The key to Solana’s rise is that its network can handle thousands of transactions per second without compromising on decentralization or security.  

Key Technology: 

Like Ethereum, Solana uses a Proof of Stake mechanism — but with a number of additional improvements. First among these is Proof of History, a way of timestamping transactions that drastically improves efficiency. This allows for faster processing and validation of transactions. While Ethereum was a pioneer in web3 technology, Solana’s ecosystem of dApps is able to offer faster transaction speeds and lower cost to users compared to Ethereum. 

Ecosystem and Use Cases:

Solana has attracted a variety of projects and use cases like Decentralized finance (DeFi), stablecoins, NFT marketplaces, DePIN (decentralized physical infrastructure networks), memecoins, and web3 gaming.  You can explore all the emerging sectors you’ll find on Solana today in our Guide to the Solana Ecosystem. 

Advantages and Disadvantages

There are many advantages that Solana has over Bitcoin and Ethereum. Perhaps because it’s the youngest of the three technologies, it’s built to accommodate issues like scalability and cost, while building upon the revolutionary technology of decentralized networks, programmable money, and smart contracts.

The first and foremost of Solana’s advantages  is speed. Solana processes around 4000 transactions per second (TPS), far surpassing Bitcoin's 7 TPS and Ethereum's 15-45 TPS. Additionally, Solana is more affordable to transact on than Bitcoin or Ethereum. Transaction fees on Solana are a fraction of a cent, compared to dollars on Ethereum. Lastly, Solana is the most energy efficient. Solana's unique consensus mechanism consumes significantly less energy than Bitcoin's Proof-of-Work system. In fact, a transaction on Solana consumes less energy than 2 google searches.

Learn more about what you can do on the Solana network with The Easiest Ways to Get Started on Solana.

 

Each blockchain has its strengths and unique offering in the crypto ecosystem. Bitcoin continues to dominate as a store of value, Ethereum pioneered programmable money, smart contracts, and Solana offers unparalleled performance for high-speed applications.

Transaction Speed and Costs:
Solana clearly leads in this category, offering lightning-fast transactions at minimal costs. Bitcoin and Ethereum lag behind, with Bitcoin being the slowest and Ethereum often having high gas fees during peak times.

Scalability and Energy Efficiency:
Solana shows significant advantages, handling thousands of transactions per second with relatively low energy consumption. Bitcoin's PoW system is the least energy-efficient, while Ethereum is working to improve its efficiency with the move to PoS.

Developer Ecosystem and Adoption:
Ethereum currently has the largest developer community and the most diverse range of applications. However, Solana is rapidly gaining ground, attracting developers with its high performance and low costs. Bitcoin, while having the largest market cap, has a more focused use case and a smaller developer ecosystem.

Take a deeper look at Solana’s infrastructure with our explainer How to Stake SOL.