Bitcoin or Ethereum?
Let's imagine that tomorrow is the luckiest day of your life. You are woken up by loud knocks on your front door. It's your best friend and they are asking if you have heard the news. You were the winner of local contest in your town and now you must choose between the two prize options. The choice is between receiving 1 full Bitcoin, or 20 Ethereum. You couldn't go wrong by choosing either one of those options. But, nearly everyone in the cryptocurrency market comes in with their own preferences and biases. In fact, most of you reading this have probably already decided which prize you would choose.
While it is true that both options would be amazing to receive, and could both one day be valued high-enough to allow you to retire. But which one is better? Is there even a correct answer? The question is much more complicated that you might imagine.
And so let's dig into this deep question.
First things first. I need to let my biases be known. If you have been following me for any length of time, you will know that I'm a big supporter of Bitcoin and usually think it is the best crypto asset to accumulate. With that said, I also am a fan of Ethereum and own a significant amount of it as well. I will try to stay balanced and unbiased during the article. But please make your own decision.
What was once a simple answer, may not be so simple anymore. Bitcoin, the king of cryptocurrencies, and the coin that started them all. The cryptocurrency market might not even exist today if it wasn't for Bitcoin. Just a few years ago, if anyone would have asked you if you would rather have had 1 Bitcoin or 20 Ethereum. Almost always the best answer would be to choose Bitcoin. But that question is a bit deceiving, because in the past the question was always if you would rather have 1 full Bitcoin or 32 Ethereum. You can quickly see that Ethereum has been gaining on Bitcoin over the last few years, and there is no reason to believe that this will be coming to an end anytime soon.
Bitcoin and Ethereum are the two most valued cryptocurrencies in the market, and are often considered to be the only blue-chip crypto assets we have. There is a deep rivalry between the two, and it is passionately debated about which one is better. But it is a difficult comparison to make. They are actually attempting to do very different things, and are very different crypto assets.
Bitcoin is digital gold that has the potential to be so much more. It has solved the byzantine general problem, which establishes Bitcoin as the strongest money out there, and will become the most trusted. Having a hard cap limit of only 21 million Bitcoin, that will have the creation rate of new bitcoin minted cut in half every 4 years during the bitcoin halving. The game theory behind this coin will only continue to rise. While skeptics of crypto will say that these assets are make-believe money, that were created out of thin air. Big supporters of Bitcoin will argue that it is the only crypto that does have value. This is due to the large requirements of energy to be using during the mining of bitcoin. Energy and time is money, and that is what makes Bitcoin valuable. And then there is the fact that the Bitcoin network is by far the most decentralized network out there, which will make it the most trusted in the future.
Depending on who you listen to, most of the people in the industry believe that Bitcoin will someday be worth of $1 million dollars, and that is being very conservative. The truth of the matter is that there are two options for Bitcoin. The price of it will either go to zero, or it will be worth several millions of dollars. Today there are nearly 50 million, millionaires in the world. Because of the limited and capped supply of Bitcoin, all of the millionaires in the world couldn't buy a full bitcoin even if they wanted to.
The future progress of the Bitcoin network looks incredibly great, but it also moves at a snails pace. That is what happens when a network is completely decentralized, where consensus must be agreed upon before making any upgrades. The Bitcoin code is to a certain degree considered sacred, and must be dealt with incredibly carefully, especially considering that it is now worth several hundreds of billions of dollars. The Lightning network has made huge strides during the last year and it won't be letting down anytime soon. With the Taro update, if approved, will bring the ability to have stable coins on Lightning, and also for tokens to be able to be created on the Bitcoin 2nd and 3rd layers. All supported by the security of Bitcoin. This means smart contracts, instant free transactions, stable coins, NFTs, games and more would all be possible on the Bitcoin layer. Basically everything you seen happening on Bitcoin, could one day come to the bitcoin ecosystem. This isn't something that will happen next year, or the year after that. That would be a decade long timetable. Remember that bitcoin is playing the long game.
When comparing Bitcoin to Ethereum, it must be noted that Bitcoin is a much less risky investment than Ethereum. As we stand currently, Bitcoin layer 1 is a nearly finished project. If all development stopped today, Bitcoin would be fine and still thrive as digital gold and the strongest money out there. It is the best store of value crypto asset out there, and has no real rivals in that category. While Ethereum is far from finished. ETH is finally approaching on its long-awited merge, but even after that happens, It still has many more updates to go until it becomes a finished project. Ethereum is building in a very competitive smart-contract field with many rivals. If the development time continues to take a significant amount of time, if there was to be a failure or bug in its development, there is a chance that a rival chain could overtake Ethereum. In this regard, Bitcoin is the safer choice.
But let's go back to that previous point. While that might be a negative point of Etheruem when comparing it against Bitcoin, it could also be a positive. Ethereum is a much newer project when compared to Bitcoin and still has a lot more development to go before its finished. The ETH that we see today, will look much different in the future. Which means that Ethereum potentially has much more room to grow than Bitcoin.
Another notch in Ethereum's favor is that you are able to earn a passive income by staking your ETH. This has been something that I have been thinking about a lot recently during the whole CeFi market turmoil of services like Celsius, Voyager, BlockFi, Vauld and more. If you wanted to earn a passive income with your Bitcoin, it was necessary to lend it out to services like these. But, trust in those services has potentially been lost forever, and for the time being at least. It is not a good idea to lend out your Bitcoin. Since ETH staking is built into the protocol, and you maintain the keys, it means that it is a much safer and guaranteed way to make a passive income. For this reason, I have been increasing my investments into Ethereum recently.
While Bitcoin is what I would considered the strongest crypto money asset out there. Ethereum has been gaining ground in this category as well. With the implementation of EIP-1559, there is ETH burned during every transaction, which will help to significantly lower the supply of ETH over time. After the merge, the issuance of ETH will drop even further, making its inflation rate actually lower than bitcoin's.
So which one should you choose? As I mentioned before. Choosing either one of these coins as your reward could make you rich if you have a long-enough timeframe. That all depends on them both existing and being successful. This directly leads me to my own personal decision. I'm quite risk adverse, and I already view investing into bitcoin and crypto as very risky. I view Bitcoin as the safest bet, and it is also the project that I believe in the most. For my own peace of mind, that is why I would choose Bitcoin. I realize that Ethereum has the ability to increase in value more than bitcoin, especially if it delivers on all of its promises. Even though I like both, and own own both. At the end of the day, I'm more than happy keeping a safer investment that will be worth millions of dollars in the future over an investment that could be worth a few more million dollars, but has more risk.
How about you? Would you choose the 1 full Bitcoin, or the 20 Ethereum? Why?
As always, thank you reading!
