The correct answer is option 'C', which states that Ethereum uses account balance.

Explanation:

Ethereum is a decentralized platform that enables the creation of smart contracts and decentralized applications (dApps) through the use of blockchain technology. Ethereum is different from Bitcoin in many ways, one of which is the way it handles transactions. While Bitcoin uses an Unspent Transaction Output (UTXO) model to keep track of transactions, Ethereum uses an account-based model.

Account-based model:

Under the account-based model, each account on the Ethereum network has a balance associated with it. This balance is denominated in Ether, the native cryptocurrency of the Ethereum network. When a transaction is initiated on the Ethereum network, it involves the transfer of Ether from one account to another.

The account-based model is simpler than the UTXO model used by Bitcoin. In the account-based model, there is no need to keep track of unspent transaction outputs since each account has a balance that reflects the total amount of Ether it holds.

Advantages of the account-based model:

1. Easier to use: The account-based model is easier to use than the UTXO model since it does not require the tracking of unspent transaction outputs.

2. More flexible: The account-based model is more flexible than the UTXO model since it allows for more complex transactions to be carried out.

3. Faster transaction processing: The account-based model allows for faster transaction processing since there is no need to spend time verifying unspent transaction outputs.

Conclusion:

In conclusion, Ethereum uses an account-based model to handle transactions, which allows for simpler and more flexible transaction processing. This is different from Bitcoin, which uses a UTXO model to keep track of transactions.