Bitcoin vs Ethereum: The Better Cryptocurrency For A Smart Investment
Here’s a detailed cryptocurrency analysis.
The concept of cryptocurrency has become monumental. When market analysts will look back on the pandemic once it’s over, cryptocurrency will have its special mentions in their studies. No conversation about cryptocurrency is complete with the mention of Bitcoin. Synonymous to the term crypto, Bitcoin is the largest cryptocurrency and needs no introduction. Second to Bitcoin is Ethereum. These two are the most prominent digital assets in terms of their market cap. If you are just starting to learn more about cryptocurrencies, Bitcoin and Ether will be the first names to pop up. You must have seen their prices, Bitcoin stands at US$36,000 and Ethereum stands at US$2,600. But that’s not the only difference you should know to make a smart investment.
Fulfilling Different Roles
The first difference that will contradict everything you know is that Bitcoin isn’t actually a cryptocurrency. Launched in 2009 by Satoshi Nakamoto, Bitcoin’s purpose was to make transactions anonymous without the need of a third party to carry on payments across a network. Ethereum, on the other hand, is a network in itself. Ether is the currency that is used to purchase products and services on the Ethereum network. That’s why Ethereum’s network allows developers to create applications on its network and enable smart contracts.
Humble and Not-So Humble Beginnings
The gold and silver equivalents of the cryptocurrencies, Bitcoin, and Ethereum have seen huge spikes over the last year. Bitcoin is up by 335% and Ethereum is up by 1460%. But things changed during the last month.
You would think that celebrity endorsements work well for companies, but with Bitcoin, that was not the case. Elon Musk, Jack Dorsey, Gweneth Paltrow, and Snoop Dogg are some of the many fans that Bitcoin had. In 2017, the US Securities Exchange Commission stated that those who are promoting cryptocurrencies may be doing so illegally, with no proof that they are endorsing it as a paid promotion.
Unlike Bitcoin, Ethereum lacks celebrity fanfare. The Ethereum network was created by Vitalik Buterin, a recipient of the Thiel Fellowship award. With no push from outsiders, Ethereum’s success was transparent and that made him the world’s youngest crypto billionaire.
Bitcoin vs Ethereum
The whole essence of cryptocurrency is to eliminate the need for a financial middleman for transactions, which includes removing brokerage fees and commissions. Another genuine reason cryptocurrency can become the future of finance is that features like smart contracts will cut out layers of complexity and uncertainty. That’s Ethereum’s vision, mostly.
But a major flaw in adopting digital assets like Bitcoin and Ether is its price volatility. It’s only now that Ether is performing exceptionally, the case wasn’t always like this in the crypto market. Another flaw is the fact that the technology behind cryptocurrency is quite complicated. The transactions are stored on the blockchain with a crypto address assigned to it and not the person’s name to keep it anonymous. However, if the name of the person is exposed, that person’s entire history will be out. To avoid this catastrophe, Bitcoin suggested a brilliant idea of using a different address for every transaction. This way, even if the name behind one transaction is leaked, other payments made by that person won’t be revealed. In the end, Bitcoin’s network might be secure but there’s no certainty that crypto exchanges, wallets, and other trading websites can be trusted with this. There have already been some fraudulent activities pertaining to Bitcoin and Ether, over the years.
With these limitations in mind, there cannot be a definitive answer as to which one will rule the crypto world in the future. So, as investors, it is advisable to diversify in both these crypto assets. Both these cryptocurrencies are poised to grow steadily and perform well as the world is accepting cryptocurrencies at a rapid pace. Bitcoin is more mainstream and stable than Ether. However, the limelight is slowly shifting towards Ethereum.
Bitcoin gets the highest attention from large investors, and rightfully, because a lot of companies have started to accept Bitcoins as a mode of payments. As seen by its trends, Bitcoin is also relatively stable in the volatile crypto market. And the fact that such a large cryptocurrency is scarce also helps its case.
Ethereum is more utility-based. It is one of the first networks to enable smart contracts so there will be more development around that network. Hence, it only makes sense to diversify your investments and keep an eye out for more trends. In the crypto world, values can drastically change within months and even days.