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Bitcoin vs Ethereum is a fight for the top spot. People want to know which is better. which will win.
What separates the two?
There are three topics we will look at in this article:
- What are the differences between Bitcoin and Ethereum?
- What are the similarities?
- Which is the better investment?
Bitcoin vs Ethereum: The differences
Bitcoin and Ethereum are both popular cryptocurrencies, but interestingly, they are quite different.
Bitcoin is digital cash. Its purpose is to help people send money peer to peer without involving any third parties. Bitcoin removes the need for banks or any other payment processors.
With Bitcoin you control your money. You can send it anywhere, any time, and the fees are consistent. You won’t pay more if you send Bitcoin to your neighbor or to someone on the other side of the world.
Bitcoin’s entire purpose is to provide a means of transferring value and give you total control over your funds.
Bitcoin utilizes the Proof of Work (PoW) consensus mechanism. This means that people, or "miners", complete work to validate transactions to earn Bitcoin and maintain the network.
Bitcoin was created by a mysterious figure known only as Satoshi Nakamoto – one of crypto's biggest mysteries.
On the other hand, Ethereum is a platform. Developers can build their own projects on top of Ethereum.
Ethereum uses blockchain technology to create smart contracts - self executing contracts based on the blockchain. Ethereum has its own cryptocurrency, Ether, which is the tradable and investable part of Ethereum.
Ethereum is largely responsible for the ICO boom in 2017. Without Ethereum cryptocurrency would be substantially different. There would be less interest, fewer projects and definitely fewer overall users.
Unlike Bitcoin, Ethereum will move to the Proof of Stake (PoS) consensus mechanism. To take part in network upkeep users will have to stake some of their Ether.
Contrary to Bitcoin, the team behind Ethereum is well known. Public by community leaders are largely responsible for the development of Ethereum. Vitalik Buterin is the face of Ethereum and initially developed the idea.
You can also compare Bitcoin vs Ethereum with their corresponding value metrics.
Bitcoin is currently priced around 6,000 USD, while Ethereum is around 180 USD. However, the market cap of Bitcoin is 105 million USD, compared to Ethereum’s 19 million USD. The proportions are a little off because there is a larger supply of Ethereum compared to Bitcoin – 106 million and 17.7 million respectively.
Bitcoin vs Ethereum: The similarities
Despite the differences, Ethereum and Bitcoin naturally share a number of characteristics, much like any other cryptocurrency.
Bitcoin and Ethereum are built on a blockchain which means they share the intrinsic characteristics that make blockchain so unique, interesting and powerful.
Since they operate on a blockchain they are highly secure, immutable and decentralized.
Bitcoin and Ethereum are the preferred quote currencies for most trading pairs outside of fiat and stable coins because they are so popular. So if you have Bitcoin or Ethereum you won’t have a hard time trading into any other cryptocurrencies on crypto exchanges like Liquid.
Both networks are maintained by miners who work to earn crypto for processing transactions and upholding the network. However, the mechanics behind each one are different.
Weighing up an investment of Bitcoin vs Ethereum
Investment choices are tricky, especially when you’re new. We’ve got some things you’ll want to consider in your decision of Bitcoin vs Ethereum.
Bitcoin is the strong mover. The market largely follows the moves the Bitcoin makes. It’s said that the market is coupled to the price of Bitcoin.
Why does this matter?
If the market is largely tied to the price of Bitcoin, it would make sense to have a portion of your portfolio in Bitcoin since Bitcoin usually seems to lead the charge.
However, crypto enthusiasts often discuss the de-throning of Bitcoin and wondering which cryptocurrency could be the one to do so.
Hello Ethereum – the second largest cryptocurrency by market cap with a strong legacy. Ethereum majorly shaped cryptocurrency, making it so simple for new projects to throw their hat into the ring, build on top of a blockchain and develop their new, potentially groundbreaking idea.
If any cryptocurrency is going to take the throne from Bitcoin, it could well be Ethereum. Not only that, Ethereum doesn’t have to steal Bitcoin’s thunder – it just has to develop its own perception of value and begin to move unencumbered.
If Ethereum did become decoupled from Bitcoin, it could be very positive for the future price of Ether.
Now consider this:
Bitcoin is largely complete, having barely changed since it was released ten years ago. The core values remain unchanged.
On the other hand, Ethereum is under constant development and improvement as an open source project. This is leading to changes to improve many different aspects of Ethereum, one of which is scalability.
Could future development enhance the value of an asset? Quite possibly. However, the fact that Bitcoin doesn’t need vast updates is a huge selling point. Bitcoin remains true to its origins – it was working exactly as intended from the get go, more or less, although this is up for debate (see Bitcoin Cash). That shows a strength of development and represents why so many enthusiasts view Bitcoin as the one true cryptocurrency.
This content is not financial advice and should not form the basis of any financial investment decisions nor be seen as a recommendation to buy or sell any good or product. Trading cryptocurrency is complex and comes with a high risk of losing money, particularly if you trade on leverage. You should carefully consider whether trading cryptocurrencies is right for you and take the time to learn how trading works and decide how much money you are prepared to lose.
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