For the purpose of tethering a notebook to the internet via a mobile phone in the field, the most important difference is power consumption and range.
The Wifi tether can consume your smartphone's battery in an hour, while with the Bluetooth tether you can go for hours, and the phone will not shut itself down before the notebook does.
So what can each kind do and not do, besides the power requirement difference?
Wifi:
- Higher speed (which you will probably NOT be able to exploit at all, since the mobile link is much slower, typically less than 3Mbps effective even on 3G).
- More clients connected simultaneously. The only limit is the number of clients the phone can handle; typically 8.
- Wider coverage. Depends on the phone aerials, typically 50m in the open are no problem.
Bluetooth:
- About 3Mbps link between the client and the phone.
- ONLY ONE client at a time (even if you have BT 2.0+ which supports multiple connections).
- Range of up to 10 meters.
So when to use which one? From the above it should be obvious:
- Bluetooth: when you're the only one who needs to use the internet, or when the battery life is a concern.
- Wifi: when you can use wall power for both the client and the phone, when you need to connect multiple clients, or when you need to use your phone as an AP to (for example) Chromecast a movie to a TV/projector. If you use for example, a VideoStream application for Chrome, you only need the internet for connecting to the Chromecast, and from there on the stream only flows from your computer to the Chromecast, so the slow outward connection will not be a problem.
Faster, in what respect? – AStopher – 2014-06-19T08:29:43.843
Related: Is Bluetooth tethering slower than Wifi? and What's the difference between Wifi and Bluetooth?
– galacticninja – 2014-06-20T08:19:19.797