What is the first thing that pops into one’s head when they think about cryptocurrency? That would be Bitcoin, unsurprisingly. It is seen by many to be the quintessential digital currency and shaped what the general public recognizes as crypto. Bitcoin is not alone, though, as Ethereum is another popular cryptocurrency that has successfully risen […]
What is the first thing that pops into one’s head when they think about cryptocurrency? That would be Bitcoin, unsurprisingly. It is seen by many to be the quintessential digital currency and shaped what the general public recognizes as crypto. Bitcoin is not alone, though, as Ethereum is another popular cryptocurrency that has successfully risen in the ranks to be a constant subject of comparison to Bitcoin.
The best way to describe the relationship between these two is that Bitcoin is the Coca-Cola of the market, and Ethereum is the Pepsi. Some people will favor one over the other.
The question that is frequently raised is which of these cryptos is the better investment. It would be easy to answer this by simply looking up the current Bitcoin and Ethereum price, but cryptocurrency is notorious for being volatile. Knowing the prices is not enough; there are more factors to take into consideration.
Key differences
Bitcoin and Ether (Ethereum’s cryptocurrency) share quite a few similarities, with the obvious being that they are both digital currencies. They are tradeable through online exchanges and can be put into storage in an array of crypto wallets. Both tokens are decentralized, which means that a central bank or other authority does not issue or regulate them, and they frequently utilize blockchain technology.
However, for all their similarities, there are plenty of distinctions between the two that make them separate entities. Bitcoin is a peer-to-peer electronic cash system that operates securely without the involvement of a central figure of authority. It was not the first time that the concept of a decentralized form of money was contemplated, but it was the first time that the idea garnered some steam. The value of all other cryptos – like Ether – generally moves in tandem with Bitcoin, and Bitcoin is still traded much more than any other coin.
The key intent of Bitcoin was to establish itself as a worthwhile alternative to fiat currencies that are backed by countries. In other words, traditional currency. First and foremost, it is a medium of exchange and a store of value.
As insinuated earlier, Ethereum is not technically a cryptocurrency. In actuality, Ether is the cryptocurrency, and Ethereum is simply the platform that Ether is based on; it is a common misconception. The purpose of Ethereum’s launch in 2015 was to serve as an upgrade to the weaknesses of Bitcoin. Its use cases offer developers more opportunities to build new applications, and in doing so, it went on to become its own thing and a formidable rival to boot.
To sum up the differences, Bitcoin is a cryptocurrency, and Ethereum is a platform, with Ether being the actual cryptocurrency. Bitcoin transactions are mostly monetary, whereas Ethereum transactions are typically executable code. Transactions on the Ethereum network are considerably faster than on Bitcoin’s. For the most part, Bitcoin functions as a store of value and medium of exchange; Ethereum does not. Its creation was out of a desire to make a compliment to Bitcoin, but it ironically went on to become a competitor.
The better choice
If an investor wants a cryptocurrency that they can buy and forget about, Bitcoin would be the better option, as it has proven itself to be a reliable store of value. However, if the intent is to acquire crypto that investors are likely to use, then Ethereum is the best choice.
Ethereum has the potential to give bigger gains. While Ethereum will close out a year with considerably less than Bitcoin, investors would quadruple their investment if it went back up to its all-time high. In the case of Bitcoin, if it reached its all-time high, investors would not even double their money.
In the end, there is a consensus among the more knowledgeable crypto investors, entrepreneurs, and experts on the subject matter. They are of the belief that Bitcoin is a better buy than Ethereum. That being said, there are plenty of Ethereum supporters who argue that, while not as coveted as Bitcoin, Ethereum can work out just as well in the long run.
The decision is ultimately up to the investor. The pros and cons are there; it is up to them to decide which is better suited for them.