Bitcoin and Ethereum have enjoyed a wild ride this year. Despite the enormous fall they’ve both seen in recent weeks, and Bitcoin vs Ethereum topic is trending discussion topic. Bitcoin’s price has increased by almost 300 per cent over the last year, and Ethereum’s price has increased by more than 900 per cent.
Because cryptocurrency prices are now decreasing, it may be a good time to “buy the dip” and invest in Bitcoin or Ethereum while they are more inexpensive. But, if you have a limited amount of money to invest, which cryptocurrency would provide you with the most bang for your buck? Here’s what you should know.
Three Key Differences Between Bitcoin and Ethereum
Keep in mind that Bitcoin and Ethereum are not the same things. Ethereum was not introduced to compete with Bitcoin. Instead, it was intended to be a De-Fi platform. Yet, almost by chance, the popularity and prominence of its platform propelled Ethereum’s token (Ether) to become the world’s second-largest cryptocurrency. Here are three significant distinctions between the two coins:
1. Currency vs Platform.
Bitcoin has shown to be a legitimate alternative to existing fiat currencies. As a result, Bitcoin is a pure cryptocurrency that primarily serves as a means of trade and a store of wealth.
Ethereum, on the other side, is designed as a platform for running programmable contracts and apps using its currency: “Ether is a blockchain platform that operates similarly to the Apple store or the Android app store.” Bitcoin, like gold, is a commodity or a store of value.
2. Security vs Speed.
In two crucial measures, Bitcoin stands substantially behind Ethereum First,
- Ethereum block times are now under 14 seconds, compared to 10 minutes for Bitcoin.
- A bitcoin transaction takes around 40 minutes to complete, but an Ether transaction takes approximately 5 minutes.
3. Finite Supply vs Infinite Supply
Bitcoin has a finite supply of 21,000. Once the supply is exhausted, that’s it. That’s why investors consider bitcoin as a store of value and investment against inflation. Contrary to Bitcoin, Ethereum offers an unlimited number of Ether but does cap the amount released each year.
| Bitcoin (BTC) | Ether | |
| What is it? | A currency | A token |
| Inventor | Satoshi Nakamoto | Vitalik Buterin, Joseph Lubin, Gavin Wood, etc. |
| Went alive | January 2009 | July 2015 |
| Supply Style | Deflationary (a finite # of bitcoin will be made) | Inflationary (much like fiat currency, where more tokens can be made over time) |
| Supply Cap | 21 million in total | 18 million every year |
| Smallest Unit | 1 Satoshi = 0.00000001 BTC | 1 Wei = 0.000000000000000001 ETH |
| New token issuance time | Every 10 minutes, approximately | Every 10 to 20 seconds |
| Amount of new token at issuance | 12.5 at the moment. Half at every 210,000 blocks | 5 per every new block |
| Utility | Used for purchasing goods and services and storing value (much like how we currently use gold). | Used for making dApps (decentralized apps) on the Ethereum blockchain. |
| Price | Around $18,000 (in 2020) | Around $610 (in 2020) |
| Purpose | Bitcoin is a new currency created to compete against the gold standard and fiat currencies. | Ethereum is a token capable of facilitating Smart Contracts (For example, a lawyer’s contract, an exchange of ownership of property, and voting) |
Which one should you choose?
Cryptocurrency generally is a high-risk investment, so be sure you’re ready to endure the high levels of risk and volatility before you invest.
While none of these cryptocurrencies is a “safe” investment, Bitcoin may be less risky than Ethereum due to its long track record and better brand recognition. Ethereum, on the other hand, may offer more significant potential for development over time.
Whatever choice you select, be sure you’ve done your homework and are willing to take risks. Of course, cryptocurrency isn’t for everyone, but making the proper investment might help you get the most out of your money.
Bottom Line
Ether has tremendous potential with its Defi platform, which is only restricted by developers’ ingenuity. However, the danger is greater. Bitcoin is the cryptocurrency market leader, and billion-dollar businesses choose to keep Bitcoin a value store. Bitcoin is regarded as safer than Ether due to its first-mover advantage and brand awareness. However, keep in mind that all cryptos have traditionally been volatile.