In the first four months of 2021, Bitcoin and Ethereum have almost doubled in value. Bitcoin gained over 90% in value, while Ether has shot up to more than 400% as of May 11, 2021. Ether has continued to gain on Bitcoin since its launch, and many investors prefer it to other cryptocurrencies.
Apart from Bitcoin, Ethereum, and a few other coins, the crypto market comprises at least 9000 digital assets.
Since Ethereum is gaining ground on Bitcoin, many investors don’t know which is better to invest in. Some investors could find it challenging to select between both crypto, and some traders opt to invest in both.
The best way to know which cryptocurrency is best for your needs is with a complete cache of info. That’s why this post points out every worthy detail to make your selection easy.
Don’t know where to put your money? Or do you plan to get both crypto assets in your wallet? You’ve got to read this through!
Bitcoin
With a market cap of over $600 billion and high market value, Bitcoin is the most popular cryptocurrency. Before experiencing a major crash in mid-May 2021, Bitcoin accounted for more than 50% of the crypto market’s entire value.
Since its pioneering launch by Satoshi Nakamoto in 2009, Bitcoin has ranked as the world’s most expensive digital currency. Several huge corporations like Tesla, MicroStrategy Inc., and big banks currently have investment interests in Bitcoin.
The Bitcoin blockchain serves as a distributed ledger that adds transparency to all its transactions. Most beginners to cryptocurrency trading
Ethereum
Created by Vitalik Buterin in 2015, Ethereum’s launch directly responded to some shortcomings of Bitcoin. The Ethereum network runs with its cryptocurrency, Ether. Ethereum’s programming language, Solidity, is used to create smart contracts deployed across its blockchain. Technology drives the Ethereum network, making it a top option for developers.
The use cases of Ethereum makes it easy for developers to craft cutting-edge applications, giving it an evolving pattern.
Ethereum’s foundation is one of the most active blockchain projects worldwide.
Bitcoin vs. Ethereum at a Glance
Bitcoin was created as an alternative means of exchange and a store of value that can work without government control. Think of BTC as an alternative to fiat currency before anything else. Ethereum, on the other hand, is a platform that could run executable code and still perform transactions like Bitcoin. The Ethereum platform runs on its native crypto asset, Ether.
Similarities Between Bitcoin and Ethereum
Means of exchange
Ethereum, Bitcoin, and many other cryptocurrencies can stand as a means of exchange. The intrinsic value of digital currency rests on Ethereum, Bitcoin, and a few other assets. With the growing appeal of Bitcoin and Ether as a means of exchange, several big firms are buying in.
Several reputable companies have investments in one or both cryptocurrencies. If these digital assets have no potential to match or replace fiat currencies, chances of their acceptance would have dipped.
Decentralized design
Apart from its dependence on a ledger to confirm transactions, Bitcoin has a liberal design. The idea of a currency that lacks dependence on any central authority is what gave Bitcoin its initial popularity.
In addition to Bitcoin, Ether follows a fully decentralized framework and operates without support from any central authority.
Trading currency
Besides support for a distributed ledger framework, Bitcoin and Ethereum are ideal currencies for exchange. Several exchange platforms see daily trade activity in tens of billions of dollars from these two crypto assets. Many investors tend to trade Bitcoin and Ethereum due to their exchange ease from fiat-crypto and vice versa.
If not all of them, most exchange platforms start trading in crypto with Bitcoin and Ethereum before allowing other coins.
Major Differences Between Bitcoin and Ethereum
Purpose
Bitcoin was designed mainly as a store of value and alternative means of exchanging fiat currencies before anything else. Satoshi Nakamoto created Bitcoin to make inter-border money transfers possible without any control by government authorities or regulatory bodies.
With Bitcoin’s popularity and value skyrocketing over a decade, much hasn’t changed its design, except some blockchain technology tweaks.
However, Ethereum wasn’t created to be a store of value like Bitcoin. The Ethereum network powers the blockchain technology designed to verify and record several transactions in real-time. One of its major features is to be a platform that supports smart contracts and the creation of applications.
Companies like Microsoft Corp use Ethereum for their blockchain offering, but Ether can be a means of exchange.
Block time
Bitcoin transactions tend to take 10 minutes to be complete in each block. However, Ethereum takes currently has an average block time of about 15 seconds. The speed of Ethereum over Bitcoin is one of its major upsides and helps in completing transactions in record time.
Liquidity
Every 24 hours, BTC continues to be the most liquid cryptocurrency, with millions of dollars traded in that time. Ether, on the other hand, has a much lower liquidity ratio when compared to Bitcoin.
Algorithms
Bitcoins run on an SHA-256 algorithm, while Ether runs on the ethash algorithm. Ether can perform more complex transactions in record time based on its support system than BTC.
Bitcoin vs. Ethereum Market Cap
When it comes to soaring demand and market size, Bitcoin is the largest cryptocurrency. Bitcoin has a market cap of about $650 billion, down from $1.1 trillion in early May.
Ether currently has a market cap of about $260 billion in May 2021.
ETH is fast catching up with Bitcoin when it comes to gains by market cap. In Jan 2021, BTC held about 67% of cryptocurrencies’ entire market cap in comparison to Ether’s 10%. Fast forward to May 2021, and BTC currently holds about 40% of the entire market capitalization compared to Ether’s 19%.
Security protocols
Ethereum depends on deployed smart contracts and decentralized apps designed to run without input from any third party.
Un-mined coin tokens
There will only be 21 million BTC tokens ever in circulation. Out of the total number of coins that can be available, more than 80% of these tokens have been mined.
But the ETH token, Ether, is quite different. There’s an annual cap on how much Ether can be available to the public. Even if the annual supply will reduce later, there’s no sign of a fixed cap on available Ether tokens yet.
Mining rewards
Any computer geek that succeeds in mining 1 BTC usually gets a percentage as a bonus. The appeal of mining Bitcoin has created a massive craze for solving hashes correctly to unlock new cryptocurrencies.
However, there is no such reward for mining Ethereum coins. And since Ethereum coins could evolve to allow indefinite supplies, its general mining appeal may never skyrocket.
Evolving technology
When it comes to evolving technologies to meet current industry needs, many investors flock to Ethereum. While Bitcoin has several limitations that hamper its development, Ethereum was built as a dynamic token.
Ether has several technologies currently running (and more on the way) to advance how blockchain works.
Besides being a great store of value, Ether supports advanced tech like non-fungible tokens (NFTs), DeFi dApps, and Smart Contracts. Several cryptocurrency experts rate Ether as the future of cryptocurrencies due to its potential and market appeal.
Advantage of Ethereum over Bitcoin
Speed
Ethereum transactions can be completed within 15 – 40 seconds, but BTC could take about 10 minutes to run.
Evolution
The multiple use cases of ETH make it a preferred option for many cryptocurrency traders, investors, and developers. The Ether coin can be used in peer-to-peer exchanges, and some developers can create an initial coin offering (ICO). Ether is also ideal for data input onto the blockchain.
As time goes by, other uses besides smart contracts and dapps keep springing up from Ethereum. But we can’t say the same about BTC.
The limitations around Bitcoin have already created several variants, called hard forks, over time. One of the most common BTC variants is Bitcoin Cash (BCH). And since Bitcoin is designed to be a store of value first
Advantage of Bitcoin over Ethereum
Stability
Even if all cryptocurrencies are highly volatile, Bitcoin experiences lesser volatility over time in comparison to Ethereum. Billion-dollar companies currently stake their money on exchanges, mostly with Bitcoin.
The massive trading network Bitcoin commands across exchanges look less likely to be broken soon. With such a huge hold on markets, Bitcoin sometimes dictates how other cryptocurrencies behave. And despite some sharp drops over the years, this crypto asset has always gained its previous value.
However, some lesser-known crypto never makes it back up after a massive price dump. But Bitcoin has continued to thrive over the years, giving it a stable cryptocurrency for many investors.
Security
The slow speed associated with completing Bitcoin transactions is due to its focus on security. Bitcoin uses C++ as its coding language, which makes incursions from hackers less likely. People who tend to store assets using Bitcoin are less likely to lose their money when compared to other currencies.
Better trade appeal
Any newcomer to cryptocurrency exchanges will usually opt to trade in Bitcoin before any other digital currency. Bitcoin is the most popular currency across exchanges based on its massive popularity.
Some Factors that Influence the Price of Bitcoin and Ethereum
Bitcoin and Ethereum have some strange market movements and could sometimes follow similar trends. Generally, factors that affect the price of Bitcoin also influence the Ethereum network. Here’s a look at some of the factors that could cause price swings between both cryptocurrencies:
Bad press
News about the regulation of Bitcoin and Ethereum or an outright ban on their use in some countries causes price dips.
Take, for example, China’s systematic crackdown on cryptocurrencies in May 2021. Within days of the announcement, Bitcoin and Ethereum lost more than 40% of their total market cap. Besides market cap dips, the price of BTC and ETH halved from $62,000/BTC and $4,000/ETH to $34,000/BTC and $2,000/ETH, respectively.
Such bad press has happened multiple times in the past, but somehow, these assets always find a way back up. Bad news like the use of crypto in crime-related activity affects the prices of BTC, ETH, and other coins and tokens.
Supply cap
The supply cap of Bitcoin is 21 million, meaning there will be a shortage of these coins soon enough. Currently, about 18 million BTCs have already been mined and are in circulation. When miners get to extract all BTC, there’s a huge chance Bitcoin will see a massive price jump.
However, Ethereum adopts a different format as the total amount of mine-able coins are released each year. Other features of ETH could cause a price spike, even if there’s no cap on its available coins.
Acceptance and integration into conventional banking systems
Bitcoin and Ethereum tend to increase in value when an established company or financial system incorporates them into their services.
For example, after Microsoft Corp announced it would be investing in Ethereum, ETH price jumped. The same thing happened with Bitcoin with JP Morgan Chase, and Goldman Sachs invested in cryptocurrency.
Even as an alternative means of exchange, BTC and ETH have continued to garner massive appeal, even in conventional markets.
Is Ethereum a good investment in 2021?
Ethereum is one of the cryptocurrencies with good potential for investment returns in 2021. Besides being an ideal asset for store of value, Ethereum has easier accessibility for snap traders and offers long-term growth.
Will Ethereum overtake Bitcoin?
As of May 22, 2021, 1 BTC is worth about 18 Ether, the coin token of Ethereum. Over the years, Ethereum has gained on Bitcoin in value, leading experts to believe it will surpass Bitcoin in the future.
Which is better, BTC or ETH?
ETH has a superior transaction completion rate to BTC, but that doesn’t make it better than Bitcoin. But when it comes to the store value at current market prices, Bitcoin has a higher worth than Ethereum.
Generally, all cryptocurrencies compete with Bitcoin based on its immense value, market cap, and overall appeal.
Will Ethereum be worth more than Bitcoin?
Ethereum has several uses besides being a tradable digital asset and could be worth more than Bitcoin at some point. With new, increasingly popular additions like non-fungible tokens and DeFi dApps, Ether continues to amass greater market appeal. Such additions to the Ethereum technology could cause a snowball in its price sooner rather than later.
Final Thoughts: Bitcoin vs. Ethereum
When it comes to investment appeal, Bitcoin’s market size and general appeal make it a favored crypto asset. However, the appeal of Ethereum isn’t stifled by Bitcoin’s market size, as it adopts an evolving design.
Several similarities exist between both cryptocurrencies and differences too. Differences like programming language these currencies run on may not matter to some investors.
Generally, the Ethereum platform has continued to gain on Bitcoin in terms of market cap figures and value. While Bitcoin has lost some market cap figures over six months, the Ethereum platform and its currency, Ether, have gained.
Ultimately, when it comes to expanded use as a means of exchange, Bitcoin holds sway. However, in terms of adaptation to evolution, multiple use cases, and faster transactions, Ethereum is better.
Some investors also tout new cryptocurrency entrants like Dogecoin and Starbase as big investment bits. But take this investment advice to heart – starting digital currency trading with Bitcoin and Ethereum could be a great idea. Missing out on the gains of one crypto asset may be painful. You don’t want to be left out. With the right market approach and trading decisions, you can make more over time from these alternative currencies.