Bitcoin or Ethereum: Which to choose?
Among the most influential and valued cryptocurrencies in the world are Bitcoin and Ethereum. These two digital assets are worth more than €1 trillion by 2021. These two currencies rank 1st and 2nd in terms of popularity and value. This position makes these two curr
encies a sound and safe investment compared to other cryptocurrencies. While Ethereum and Bitcoin have many similarities, they were designed for completely different purposes. And understanding how (and why) they differ is something you need to know before you can make a wise investment choice.
The Bitcoin On April 13, 2021, bitcoin hit a new all-time high by trading at over $60,000. This high comes just weeks after breaking the $50,000 mark, a significant milestone, as this mark was a crucial psychological barrier. Breaking this barrier could see bitcoin reach $100,000 before the end of the year, a realistic prospect.
This exponential growth is appreciated by many investors and continues to attract new ones every day. But this growth also comes with its own concerns, with many individuals and analysts fearing that such a rise will cause the price of bitcoin to fall. They claim that bitcoin lacks intrinsic value and will soon be worthless. By the way, back in 2014 we were already talking about the future of bitcoin on our blog.
Ethereum started the year at $730, six weeks later it was trading for $2030. An impressive run that has seen a gain in value of nearly 300%. No other digital asset has this huge growth potential this year. Currently, 68% of ethereum is held in wallets of at least 10,000 ethers (the name of the currency derived from Ethereum), meaning that a large amount of ethereum is being acquired by large wallets (called whales) that intend to hold it for the long term. Many tools exist to manage Ethereum wallets like MyEtherWallet, and allow to send, receive and protect ethers.
What are the differences?
So here’s a look at the main differences between Bitcoin and Ethereum and what they mean for you as an investor. Usage Bitcoin is a digital currency that can be traded at any time. It is also a digital asset with a store of value. This means that it can be held, retrieved and exchanged at a later date. This is why many investors consider bitcoin to be digital gold.
Ethereum is different. Its currency, Ether, is tied to smart contracts and can only be traded after meeting a set of predetermined conditions. Broadly speaking, Bitcoin is a currency, while Ether is a fuel that powers the Ethereum network. In fact, it is often referred to as gas.
The blockchains technology(information storage and transmission technology) of Bitcoin and Ethereum are constantly being updated. But experts agree that Ethereum technology is more advanced and robust. It is faster and has lower transaction fees than Bitcoin. In addition, programmers are currently working on a major update, called Ethereum 2.0.
Ethereum can verify transactions (or blocks) in 20 seconds. It takes Bitcoin about 10 minutes to process each block. Availability Ethereum is unlimited. The supply is continuous, although it slows down as more ethers are produced. Bitcoins are limited to 21 million. Over time, this limited supply will increase demand, which will drive up the value of each coin. Reputation Bitcoin is over 10 years old. It is the only cryptocurrency that most people have heard of.
Bitcoin has an established reputation and is now accepted by major retailers, such as showroomprive.com and Expedia. This makes bitcoin more likely to become the currency of choice. Which is the better investment? Ultimately, the debate between bitcoin and ethereum as investments comes down to the investor’s risk profile. Both are poised to perform well over time as the world becomes more digital and cryptocurrencies become more accepted.
Some investors will prefer to take on more risk by using the leverage of cryptocurrencies to trade larger positions. Leverage consists of borrowing Bitcoins (or Ether) to invest more and thus earn a higher profit. However, this method also comes with a much higher risk.
Bitcoin is the more common and stable of the two currencies, although the bullish sentiment among experts for Ethereum seems to have only increased over the past year.
As with most investments, it’s possible that Ethereum’s higher risk comes with a higher profit potential. Be that as it may, this is no longer 2009: both currencies are past the proof-of-concept stage; for investors who have not considered this asset class in the past, now is the time to start taking BTC and ETH seriously.