Cryptocurrencies can be a bit confusing. Are they digital money or more like gold? Are they a new way to buy things online or a way to retain value? Those aren’t simple questions to answer when you’re talking about several different cryptocurrencies. When you just focus on Ethereum versus Bitcoin, though, there are some distinct, evident differences.
Their age is the most self-evident, with Bitcoin having entered this world as the first global cryptocurrency in 2009 and Ethereum just appearing in 2015 as a potential option. Despite the fact that it is less proven than its predecessor, Ethereum has a couple of clever features that give it much more potential than its older counterpart in some major areas.
For this guide, we’ll look at two shared aspects of the cryptocurrencies, and we’ll also look at some of the particular features that make them differ.
As a Safe-Haven.
The best cryptocurrency for retaining value continues to be Bitcoin. As the most valuable coin globally and by a large margin, and the precursor of the whole cryptocurrency revolution, Bitcoin has proven itself. It affords far more recognition than any other coin, and that makes it simpler to buy, store, and sell.
That’s not to imply that Ethereum and its coin, Ether (ETH), have been unsuccessful. For a much newer currency, Ethereum has become one of the most popular. Its market value and 24-hour trading volume are only topped by Bitcoin. However, the actual value of a single ETH is small in comparison to Bitcoin, so owning a few ETH is less attractive than holding a few Bitcoin.
This is Partially down to Bitcoins’ built-in supply. There is a limit on the total number of Bitcoins, with smaller returns for miners as it reaches the mythical 21 million point. One day no more Bitcoins will be created regardless of how many have been lost. Because of supply and demand, Bitcoin should, in theory, grow in value.
In comparison, Ethereum will release the same amount of ETH regularly forever, so its supply will remain constant and expanding.
As a Transactional Coin.
Although Bitcoin is better at retaining value than Ethereum, at least for the time being, ETH has quickly become the coin of choice for transferring wealth between people. In 2017, it surpassed Bitcoin in the number of daily transactions, and there is no sign of stopping, with more than triple the number of transactions occurring with ETH consistently.
The difference in speed is because Ethereum can be a platform for other cryptocurrencies, also ETH transactions on average are confirmed faster on the blockchain. It’s designed to be more efficient than Bitcoin, mainly due to it being a newer and more optimised cryptocurrency. The details of it are more complicated, but if you are interested to read more about this there are lots of articles out there that cover this topic.
Another advantage of Ethereum over Bitcoin for transactions is that its charges tend to be lower. There is the potential that Ethereum will face increased charges as it gets to the point of scale-up as did other cryptocurrencies. However, it is unlikely to happen in the same way as it has for Bitcoin, so costs will likely remain lower for the foreseeable future.
Useability.
While the main uses of Ethereum and ETH make it very different from Bitcoin, the most significant difference is in the underlying technology behind each and what that implies for other cryptocurrencies. Technically, Ethereum isn’t a cryptocurrency at all, but a unique kind of blockchain technology. This technology, not only powers ETH transfers between people but can be used to create a wide range of other cryptocurrencies.
The reason there are so many cryptocurrencies today is partly due to the fact that many are built on Ethereum’s underlying technology and in some cases they are entirely reliant on it. While the details of that are too in-depth for this guide, it is possible because of one major feature that Ethereum has that Bitcoin doesn’t, smart contracts.
Where Bitcoin uses more simplified scripting (relatively), Ethereum can deal with much more complexity thanks to its smart contract system. It makes it possible to set basic rules that have to be followed, effectively forcing contractual compliance in a way that would never be possible with a real-world contract and without a middleman.
So, Which Do You Invest In?
Although you will find many willing to tell you that one cryptocurrency is better than the other, that would do a disservice to whichever the loser is. Both Bitcoin and Ethereum have their advantages, and like most other cryptocurrencies, which one is right for you is down to your financial situation and what you want out of your investment.
If you want to buy into the most successful cryptocurrency with the most developer support, Bitcoin is the better option. It’s the most expensive, though, and the transaction fees are high, so if you want a good profit on your investment, you’ll need to be willing to spend and be patient. Bitcoin has repeatedly fluctuated in value in recent weeks, and it has historically been devastating when it’s crashed for those with large money invested. But as some experts say, just “hold.”
If you’re looking to make more regular transactions, to pay for goods or services, or to send cryptocurrency to others, Ethereum is much more suited. With a lesser scaling problem, its blockchain is far more open, and you’ll see your transaction confirmed quicker. You’ll be charged much less for it too. It’s not perfect, but it’s much better than Bitcoin in that regard.
As with all of my articles, this should not be considered financial advice. If you want to buy Bitcoin or Ethereum, do your research first. Cryptocurrency is still a new venture, and the future of them is clearly uncertain.
