Bitcoin is the dominant cryptocurrency with the biggest market cap, but recently Ethereum is gaining ground and has an ROI higher than that of Bitcoin in 2020. So, Bitcoin Vs Ethereum, many people want to know which cryptocurrency has more investment value. These two cryptocurrencies are very different in various aspects such as their architecture and use cases. If you want to dip into investing in Bitcoin or Ethereum, this article will guide you on the differences between Bitcoin and Ethereum.
Table of Contents
Background: Bitcoin vs Ethereum
Bitcoin was created by Satoshi Nakamoto in 2008. The original reference implementation of bitcoin is written in the bitcoin white paper titled Bitcoin: A Peer-to-Peer Electronic Cash System. The white paper introduced a novice idea: a digital currency that is not subject to any central authority.
Its payment system aims to charge lower transaction fees than traditional payment systems and bypass intermediaries, such as a bank, enabling Bitcoin to be sent on a peer-to-peer network. Although Bitcoin was not the first digital currency of this type, it was the most successful and people take it as a predecessor to almost all cryptocurrencies.
In 2015, a small group of blockchain enthusiasts launched the Ethereum network. The founders include Vitalik Buterin and Joe Lubin. Ether (ETH) is the token of the Ethereum network.
The Ethereum network is a decentralized public ledger that allows users to create, publish, monetize and use applications. And “dapps” is the abbreviation of decentralized applications.
Characteristics: Ethereum vs Bitcoin
Bitcoin has a limited supply of 21 million and it goes through an event called “halving” that will cut half of its production every 4 years. This is one reason why Bitcoin owns the nickname “digital gold” and becomes a store of value.
As for Ethereum, it currently doesn’t have a capped supply. But the Ethereum Improvement Proposal 1559 scheduled to launch in July will introduce a burn mechanism into the network. In this burn mechanism, the Base Fee is burned. The more transactions occur, the more ETH gets burned. Although it doesn’t necessarily mean ETH will become deflationary, it helps to control ETH’s overall supply.
Bitcoin and Ethereum have very different use cases due to the different nature of their network. If we consider Bitcoin as gold that can pay as well as a store of value, Ether is more like fuel that can pay for network services.
Currently, investors generally buy Bitcoin to hedge inflation or to wait for its price to increase. But ETH is mostly used to fund transactions. With more and more people using DeFi, the amount of ETH needed continues to increase, thus the price of ETH is boosted.
Bitcoin Vs Ethereum 1: Bitcoin Price History and Ethereum Price History
Bitcoin is the bellwether of the crypto market and Ethereum generally follows the trend of Bitcoin. These two cryptocurrencies both started out as virtually worthless and soared in 2020 and 2021.
Bitcoin’s first peak came in 2013 and the all-time high then was $1,200. But Bitcoin soon lost momentum and dropped to $300. In 2017, Bitcoin had its second bull rally and quickly mooned to $20,000 after clearing the resistance of $1,200. However, the price of Bitcoin dropped to $10,000 in 2018 and had been trading sideways for two years. In March 2020, Bitcoin’s price was cut in half due to the pandemic. But with the government printing more money to boost the economy, Bitcoin’s hedge against inflation narrative became more popular. Continued institutional interest and FOMO propelled Bitcoin’s price upward and it reached $24,000 by the end of 2020. In April 2021, Bitcoin skyrocketed to $64,843. Now one Bitcoin is worth about $35,000.
Ethereum had its first rally at the end of 2017, rising to as high as $1,400. Its price gradually decreased and traded at around $100 between 2018 and the beginning of 2020. Following Bitcoin’s bull run, Ethereum climbed to $4,300 in May before declining to $2,500.
Bitcoin Vs Ethereum 2: Price Prediction For BTC And ETH
How high Bitcoin could go is a frequently asked question. In the long term, many analysts predict that Bitcoin could reach $1 million by 2025. Meanwhile, the highest prediction for ETH is $10,000.
The $1 million per Bitcoin prediction is provided by PlanB based on his Stock-to-flow model. The Stock to Flow model measures the scarcity of resources and their prices. As for ETH, a forecast by FundStrat put the target at $10,000 by the end of 2021. With more and more countries and businesses adopting BTC and ETH, the prices of these two crypto coins are expected to increase in the future.
Bitcoin Vs Ethereum 3: how to buy bitcoin or ethereum
How To Buy Bitcoin
Buying Bitcoin With Credit Cards/ Debits Card
Yes, you can buy bitcoin with a credit card or a debit card. Simply choose your broker or exchange, open an account and link your debit card or credit card to your account. After finishing paying and receiving your bitcoin, you can transfer your bitcoin to a cold wallet if you don’t plan to trade regularly.
Buying Bitcoin With Paypal
Paypal began to offer bitcoin buying and selling services in 2020. First, you will need to have a PayPal account. Login to your account and select “Cryptocurrency” in the top right of the dashboard. Second, select “Bitcoin” and choose how much you want to buy. Then select the payment method you prefer and hit the “Buy” button.
A Bitcoin Debit Card
Now you can make online or in-person purchases or withdraw cash from ATMs with Bitcoin debit cards. Cardholders need to preload their debit card with cryptocurrency and the cryptocurrency will be automatically converted at the time of purchase.
Buy Bitcoin Via An Exchange
Exchanges such as Coinbase and Binance allow you to buy Bitcoin. You can either buy Bitcoin through OTC or deposit other cryptocurrencies to exchange them into Bitcoin.
How To Buy Ethereum
Unlike Bitcoin, you can only buy Ethereum via an exchange or brokerage. Simply open an account, connect your account to a payment option and place an order. After buying ETH, you can trade it or deposit it into a wallet for safe storage.
Which One Is A Better Buy
It is very hard to say which cryptocurrency is a better investment due to their huge differences. In some way, Ethereum is more flexible than Bitcoin because of the various usages of the Ethereum network. However, Bitcoin is still the largest cryptocurrency and has the biggest potential of going mainstream. Investors should probe deeper into their mechanism and diversify portfolios.
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