Bitcoin vs Ethereum – The Blue Chip Coins
Cryptocurrencies have taken the world by storm. Investors worldwide have heightened interest in these instruments as they are some of the best-performing assets in the market this year. With the crypto community rallying behind this currency, there is substantial hype that they are bound to be the next big thing in the world of finance.
Two of the most important and highly ranked cryptocurrencies in the market today are Bitcoin vs Ethereum. Bitcoin was first traded in 2009 and back then, these digital tokens were available for less than 1 cent. Over time, prices have risen both significantly and steadily, displaying massive fluctuations at times, eventually reaching more than $57,000 as of November 30, 2021.
Ethereum on the other hand made its debut in 2015. Trading prices started at a little less than $3 and rose past $1,400 by 2018. At the time of writing this article, the price stood above $4,600.
For comparison, the shares for General Electric Co. traded at just under $3 in 1995. Today, the stocks are priced at $104 which despite a significant rise is not enough to rival that of respective cryptocurrencies.
Being two of the most valuable cryptocurrencies in terms of market capitalization is the only similarity that Bitcoin vs Ethereum share. Underneath, they are poles apart having been developed for different reasons and having contrasting internal dynamics.
The more pressing question that investors have today is which of the two is better in terms of placing money for better returns? If you are looking for the answer to this question too, here are the most significant considerations that can help you make an informed decision in this regard:
Bitcoin is the undisputed leader of the cryptocurrency market with no coin even coming close to it. It trades under the label BTC with its market cap now exceeding almost $1 trillion. Every cryptocurrency collectively on the market today has a market cap of close to $2.5 trillion giving Bitcoin nearly 40% of the market share. Ethereum’s market value stands around $450 billion in 2021.
Here are some of the most influential things that can influence an investment decision with respect to Bitcoin vs Ethereum;
- It has the attention of some of the biggest investors in the world
Although not publicly acknowledged yet, many big names in the investment spheres have highlighted their interest in cryptocurrency. The Winklevoss twins, who famously stated that Mark Zuckerberg stole their idea for Facebook, reportedly tried to start a Bitcoin exchange-traded fund but were rejected by the US Securities and Exchange Commission. Today, however, the SEC has approved the first Bitcoin futures ETFs for the market showing that these assets are finally becoming recognized in regulated trading circles.
- Bitcoin enjoys relatively high stability and acceptance
Bitcoin has served as a thorough validator and pilot test for the concept of having a decentralized currency that remains beyond the grasp of any central bank with a predefined maximum supply. Investors are rallying behind the cause as people can resonate with the idea behind this currency.
“Bitcoin is a scarce digital currency and store of value. While still volatile, it tends to be one of the most stable cryptocurrencies, with the longest history, and has been the most consistent and best-performing investment asset year after year for the last 10 years,” says Rick Scott Jason Cooper of Flotsam Ice.
- It is rare
It has been predetermined that there will only ever be 21 million bitcoins. Limited supply makes any asset more valuable. Due to its limited availability, investors are considering Bitcoin synonymous with digital gold. However, unlike gold, for which more natural reserves can be discovered, there will be no more Bitcoin and 90% or 18.6 million of the 21 million tokens have already been mined.
The rate of BTC creation is also designed to slow down over time through a process known as bitcoin halving. Through this framework, bitcoin creation is cut to half after every 210,000 block transactions. The last bitcoin halving came into effect in May 2020 and with the current pace, the next one is expected somewhere around 2024.
Before asking the question of whether to buy Bitcoin or Ethereum, it is important to understand the motivations behind both the cryptocurrencies being discussed here.
- The objective behind Ethereum is different than Bitcoin
The two most popular cryptocurrencies serve quite different purposes and have very different ambitions, with Ethereum serving as a decentralized network on which applications can be developed. The Ethereum network is where a lot of cryptocurrency tokens are created. The capacity to use the Ethereum platform to revolutionize mortgage transfers, securities trading, and a variety of other sectors has aided in the development of its next feature.
- More developments are on the way
Since Ethereum’s usefulness is only limited by the creativity of developers, there is naturally greater activity around the ecosystem. The cryptocurrency used to support Ethereum transactions is termed “ether” in technical terms, but it’s more often referred to as “Ethereum.” In any case, there are 263 Ethereum-related repositories on the developer platform Github, compared to four for Bitcoin.
- The basic way in which blocks are created has changed
With Ethereum, miners with the most computing power don’t hold an advantage. Instead, it lies with people who have the largest owner of these coins. At the same time, the rise of decentralized finance is driving the growth of Ethereum. After the GameStop fiasco where certain brokerages restricted investors from buying stocks, people have begun rallying behind the idea of eliminating intermediaries in finance altogether. This is driving the growth of Ethereum too.
Final Word: Should I Buy Bitcoin vs Ethereum?
Despite having all the considerations in the world, the final decision in whether to invest in an asset class or not depends on the investor’s risk profile. Between Bitcoin vs Ethereum, the former is more stable but both have the potential for bullish rise as the world becomes increasingly digitized. However, Ethereum is not far behind.
As it is a general rule with investments, there is a possibility that the higher risks associated with Ethereum bring higher rewards. In any case, both currencies have spiraled to new heights with the potential for a further rise in the future. If anything, it is time for all investors to take both these cryptocurrencies seriously.