Last Updated on December 1, 2022 by Tayyaba Khan
Bitcoin and Ethereum are the market’s leading cryptocurrencies. Although Bitcoin is the first digital currency ever created, and Ethereum came along later, they now compete for supremacy, while over 20,000 cryptocurrencies are fighting to remain relevant for users.
Both have a lot in common since the founder of Ethereum was inspired by the way Bitcoin was built. But the difference between them is that Ethereum is more than a way to perform transactions: it’s an environment where users can write codes and create apps, organizations and NFTs. Ethereum blockchain also has a strong community that works towards continuous development, which is why it officially switched its consensus systems to POS (proof-of-stake).
But which one of them is a better investment? We’ll discuss their safety, use cases and future expectations in the following paragraphs.
Bitcoin was launched in 2008, and its purpose was to encompass a digital currency system free of any organization or government’s control. Although it gained trust gradually, it became a reliable way to make transactions, and now El Salvador and the Central African Republic are now using Bitcoin as a legal tender. Since bitcoin’s popularity has increased, specialists talk about global adoption in the future, but that requires an enormous collective effort.
Overall, Bitcoin had many ups and downs, but it showed stability and consistency in the market. However, what concerns investors is its maximum coin supply, which is expected to end soon. Currently, the level has reached 19,20 million coins― close to 21 million bitcoins, the maximum number of bitcoins that can ever be issued. Given that Bitcoin has become more difficult to mine in the past years, and the trend is to continue in the same manner, investing in Bitcoin might not be that wise anymore. However, it’s the safest cryptocurrency so far.
After the last bitcoin is issued, there won’t be any other coins in circulation, but that’s expected to happen more than 100 years from now. Since these are only simple forecasts, we’ll wait and see what happens to Bitcoin in the near future.
Ethereum is the second-leading cryptocurrency after Bitcoin. It was launched in 2015, and its mechanism was based on Bitcoin’s system. However, its creator wanted more than another way of making digital transactions, so its platform, the Ethereum blockchain, allowed users and investors to create and exchange diverse digital assets, from apps to NFTs. Similar to Bitcoin, Ethereum has its moments where volatility goes up and down. Still, since it’s developed into a reliable cryptocurrency, Ethereum went through them all and persisted in the market.
Even if the ETH price changes frequently, that shouldn’t shock you since it’s an enormous platform, and its volatility can be affected by investors’ sentiments and supply and demand. At the same time, media hype is another crucial factor that influences Ethereum’s direction.
However, what makes Ethereum interesting is the unlimited coin supply. Unlike Bitcoin, this cryptocurrency has already issued over 120 million coins, and the number is expected to keep growing. Mining Ethereum is even faster than Bitcoin, and you can verify an Ethereum block in a matter of seconds, while mining one bitcoin takes around ten minutes.
Finally, the Ethereum blockchain is unique due to its strong community. Many users contribute to the development of the environment, which is why they support all beginner developers in creating apps, organizations and businesses on the blockchain. Lately, Ethereum went through a massive change from proof-of-work to proof-of-stake, which made mining easier and reduced the enormous quantity of carbon emitted by the extensive computational power.
Pros and Cons
Now that we briefly explained what these two cryptocurrencies could do, let’s compare them and see what are their advantages and disadvantages. Let’s not forget they have many similarities so that some aspects can be related.
First, let’s start with Bitcoin. Its top three advantages are:
- Outsized returns: bitcoin is accepted as a store of value by the majority of investors, which means it keeps its value over an extended period;
- Security: bitcoin’s public key cryptography ensures that every transaction is authentic, which reduces the chances of it being manipulated;
- Divisibility: each bitcoin is divisible into an extended number of satoshis (bitcoin’s smallest unit), meaning that you can use any fraction of bitcoin for any micro-payments;
On the other hand, Bitcoin’s disadvantages include the following:
- Competitors: while bitcoin is the leading cryptocurrency, many others (like Ethereum) are being created with updates and new features that bitcoin lacks;
- Prohibition: Bitcoin was banned in China, which is one of the biggest investors in terms of cryptocurrency;
- Energy concerns: Bitcoin still works through POW, which is known to consume way too much energy and is not a sustainable system anymore;
Now, let’s analyze Ethereum. Its benefits are:
- An expanded developer community: as Ethereum provides the space for innovation, more and more developers tune in and contribute to the blockchain;
- Decentralization: Ethereum’s structure makes it transparent and scalable enough to become an alternative to traditional banking systems;
- Attractiveness for businesses: through DApps and DAOs, more enterprises choose to create a private platform on Ethereum to perform and maintain a business;
However, Ethereum also lacks the following:
- Stability: its fees and volatility can push investors away since it doesn’t regulate as much as other cryptocurrencies;
- A simple programming language: even though many developers contribute to the blockchain, Ethereum has its own language (Solidity) that can be tricky to learn;
- Scaling solutions: Ethereum has the potential for scalability, but since it’s such an enormous platform, many bugs, breakdowns and hacks can occur;
After briefly analyzing both cryptocurrencies, we can say that none is perfect. Each of them lacks features, and both need to work on their issues if they want to outreach the volatility issues (that are permanent in any other cryptocurrency). However, Ethereum has the capability to become the leading blockchain, especially since the last update. Still, Bitcoin might’ve been more stable, but given the maximum supply, we’re concerned regarding its future.
What is your opinion? What would you choose between Ethereum and Bitcoin?