Guide to Ethereum vs Bitcoin

Do you choose Bitcoin or Ethereum? Yes, there are thousands of coins and tokens, but these remain the big names.

Disclaimer – This article is not investment advice and should not be taken as recommending a strategy. It is for information only. Before investing your money, ensure you conduct your own extensive research.

Cryptocurrencies are the assets increasing numbers of people are looking to as they seek to diversify their portfolios.

Volatility, and therefore a higher chance of earning huge profits, is one reason.

It has been a bumpy ride for crypto. After taking centre stage in 2016-17, its prominence faded due to acceptance levels and regulation concerns.

More recently, interest has soared with record-breaking values and a market cap in excess of $2 trillion.

The potential profits have driven interest, but other benefits of cryptocurrencies have helped. These include:

• Decentralised Nature
• Fast Transactions
• Secure Transactions
• Transparent System

The upwards trend has led to many investors considering digital assets and beginning to learn about them. Some then face a dilemma; where do they invest?

Due to their market prominence, the main choices are Bitcoin or Ethereum. But which one?

Bitcoin

Bitcoin (BTC) is often regarded as the first cryptocurrency, coded by anonymous Satoshi Nakamoto. As the first and best know, bitcoin has become synonymous with cryptocurrency. Its name recognition has contributed to stellar values.

At the time of writing, BTC is trading for $20,194 and is responsible for around 40% of the cryptocurrency market. At its peak, it traded at $68,789.63.

Bitcoin’s efficiency is, comparatively, lower than many other well-known cryptocurrencies. The transaction speeds are relatively low, and power consumption is high.

This is because Bitcoin works on the Proof of Work (POW) principle rather than Proof of Stake (POS).

However, BTC fulfils its purpose of being a decentralised currency that can be traded globally with ease and convenience.

Ethereum

Second on the list of cryptocurrencies by market cap is Ethereum. At the time of writing, its price is $1496.70.

Ethereum has a market cap of $365 billion, considerably less than Bitcoin’s $817 billion. This represents around 18% of the cryptocurrency market. Its value has increased from $1,300 to the current price in just a year.

Ethereum is a popular blockchain used for drafting smart contracts to assist in almost any form of transaction. The transactional token that facilitates operations on the Ethereum network is ether.

Like Bitcoin, it works on the less efficient Proof of Work (POW) principle, yet is more efficient and has higher utility when compared to that of the Bitcoin blockchain.

To improve its efficiency, Ethereum plans to launch an update named Ethereum 2.0, which will work on the Proof of Stake (POS) principle. The aim is to make the overall blockchain more efficient.

Due to the Ethereum blockchain’s ability to code smart contracts, its utility value, compared with Bitcoin, is a lot more. Due to this property, it’s easy to develop a Decentralised Application (dApp) on the Ethereum blockchain. In addition, smart contracts are easier to code, which is helpful in developing decentralised finance contracts and assists in NFTs transactions.

The Ethereum blockchain is so versatile that it even helps form new cryptocurrency tokens, altcoins coded on the Ethereum blockchain. They can stand out individually, separate from ether, and have individual use cases like any other cryptocurrency.

The Future

If we compare ETH and BTC prices for the last year, ETH seems to be the more logical investment as it had a better high to low ratio than BTC.

As the move towards decentralisation continues, the applications of the Ethereum blockchain will increase, making it tough competition for Bitcoin, even when their values are so far apart.

Disclaimer

This article is not investment advice and should not be taken as a recommended strategy. It is for information only. Before investing your money, ensure you conduct your own extensive research.

You can read more guest articles at brendanbeeken.com.