Bitcoin vs Ethereum: Everything You Need to Know

Did you know that 13% of all people in the United States alone have traded cryptocurrency? Since that adds up to millions of people, it’s easy to see that buying and selling cryptocurrency has become very popular.

Also, cryptocurrencies have achieved faster global adoption than any other technology in recorded human history, including cell phones and the internet, which were the fastest to date. Clearly, crypto isn’t a passing trend.

Among the most traded cryptocurrencies of all time, Bitcoin tops the list. However, Bitcoin isn’t the only cryptocurrency on the market. There are countless other cryptocurrency options such as Ethereum, although they may not be as popular as Bitcoin.

But, what is the difference between Bitcoin vs Ethereum?

If you’re new to the concept of buying and selling cryptocurrency, you might have no idea where to start.

In this article, you’ll learn all about Bitcoin vs Ethereum and how determine which cryptocurrency is the right choice for you. Let’s get started with the most popular cryptocurrency of all time: Bitcoin.

What Is Bitcoin?

Bitcoin, known as BTC on the market, was first created by Satoshi Nakamoto in 2009. Bitcoin is unique because buying, selling, and trading it is not controlled by a central intermediary, such as a bank or government, for example. Increasingly, Bitcoin can be used to buy almost anything that cash can.

Bitcoin wasn’t always as popular as it is now. In fact, when Bitcoin first hit the market, each coin only cost around a single cent. Bitcoin only became a major hit in 2017 when the price skyrocketed and made many people instantly rich.

Today, a single Bitcoin costs tens of thousands of dollars and the total market cap for Bitcoin has grown to over one trillion dollars.

At the time of this writing, Bitcoin has just soared to a new high of $67,000.

If you’re asking yourself the question, “Should I buy Bitcoin or Ethereum?” there are a few things you should consider before deploying your hard earned money.

The Benefits of Investing in Bitcoin

Because Bitcoin has been around for some time and is so popular, investing in it can come with several benefits. For example, Bitcoin is known to be a very stable investment choice that is reputable and vastly accepted. It also exists outside of the control of governments, unlike physical money.

The original purpose of Bitcoin was to become an alternative currency. Today, it fulfills this purpose well since it can be used to rent hotel rooms, buy clothes online, pay for food, and more.

There is also a limited supply of Bitcoins. Unlike gold which can be continuously discovered and mined, adding approximately 2% to the gold supply per year, only 21 million Bitcoins will ever exist. One of the reasons Bitcoin prices are continuously increasing is that 90% of Bitcoins have already been mined. There are not many Bitcoins left.

Because of this, an investment into Bitcoin is likely grow over long periods of time. The downside of investing in Bitcoin is that the prices can be volatile in the short-run and there is a lack of regulation.

However, during times of money printing—like the COVID-19 era that has caused trillions of dollars to be added into circulation— investors tend to flood into verifiably scarce assets, such as Bitcoin. For this reason, Bitcoin is often purchased as a hedge against inflation.

With an appalling one in five US dollars being created in 2020 alone (an 18% increase in the money supply in only a year’s time), you can see why Bitcoin appears to be a safer store of value than cash.

Since banks are not involved when you buy Bitcoin, you store it in specialized cryptocurrency wallets for safekeeping. This keeps it safe from being stolen by hackers.

So, how does Ethereum compete with Bitcoin?

What Is Ethereum?

Ethereum, known as ETH on the market, is a cryptocurrency similar to Bitcoin but with several notable differences. One of the major differences is that its coding is different.

While Bitcoin uses the common programming language C++, Ethereum has its own unique programming language known as Solidity.

Ethereum is part of a blockchain network and is decentralized from any government or corporation control much like Bitcoin. Blockchain refers to information that is chronologically sorted into blocks and every transaction is recorded.

While Ethereum is not as popular as Bitcoin at this time, it is the second most popular cryptocurrency on the market. Ethereum’s market cap, estimated at approximately $250 billion, is second only to Bitcoin, which has a market cap of approximately 1.15 trillion.

Ethereum is also much younger than Bitcoin. Bitcoin was created in 2009, while Ethereum didn’t come to fruition until six years later in 2015. Since then, Ethereum has become popular enough for some vendors to accept it as a form of payment.

Additionally, Ethereum has more functional uses than Bitcoin. The information on the Ethereum blockchain allows for developers to create games and apps known as decentralized applications, or “dApps”. The original purpose of Ethereum was to act as a type of currency for these apps, but it has since broadened its horizons.

Today, Ethereum is the most common network on which DeFi applications are being built and most non-fungible token (NFTs) are created and stored on the Ethereum network.

So, if you thing you might want to buy “one-of-a-kind” digital assets (that is, NFTs), then it’s likely that you’ll need some Ethereum in your wallet.

What Are the Benefits of Investing in Ethereum?

One of the major benefits of investing in Ethereum is that there is little risk of deflation. This is because of how Ethereum’s programming is designed.

Another benefit is that Ethereum is considered a very liquid financial asset. You can easily trade your Ethereum for physical assets such as gold or other valuable items.

Volatility, while it may not sound like a benefit at first, can come with some advantages when it comes to Ethereum. This is especially true if you’ve watched the Ethereum market for some time and have become skilled at picking up patterns in the Ethereum prices.

Another benefit of investing in Ethereum is that it’s a great way to bet on the future of smart contract technology. Ethereum was the first cryptocurrency to launch smart contract functionality which is the reason that around 80% of decent decentralized applications (called “dApps”) run on Ethereum’s network.

Plus, most nonfungible tokens (NFTs) can only be purchased with Ethereum. If you don’t know what NTFs are, they are simply a way that artists, influencers, and companies can monetize unique digital items, such as unique digital artwork, in-game items, or tickets, for example.

If you’re confused by all this technical jargon, don’t worry.

All you need to know is that when you invest in Ethereum, you’re simply betting that ETH-based technologies like the ones listed above will grow in popularity over time, driving up demand for Ethereum and propelling its market value to new heights.