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Bitcoin or Ethereum: Which Cryptocurrency Should Investors Pick?

Bitcoin or Ethereum: Which cryptocurrency Should Investors Pick?

For years, Bitcoin and Ethereum have led the charge to make digital cash the global choice of currency for anyone with internet access – but which should you choose if you want to invest in cryptocurrency?

It’s a pay your money and make your choice situation because everyone has different reasons for investing and a different threshold for how much pain their risk-taking attitude causes.

Continue reading for an overview of the two competing cryptocurrencies, as well as opinions from professional investors on Bitcoin and Ether.

Bitcoin and Ether – the cryptocurrency term for the token – are the two cryptocurrency titans, but they are as dissimilar as chalk and cheese.

If you are a seasoned crypto investor, you will understand that the possibility of making a large profit with Bitcoin and Ether comes with the risk of losing all of your money.

Bitcoin And Ether – Digital Gold v Smart Contracts

Bitcoin and Ether are two distinct offerings, each with their own set of advantages and disadvantages.

The main difference between Bitcoin and Ether is their intended use. Bitcoin is a completely digital currency that has grown in popularity as a value store, similar to how gold holds its value over time. It is the most widely accepted type of cryptocurrency payment and has the highest trade volume.

Furthermore, Bitcoin has an advantage over Ether in terms of scarcity and adoption rate. There will be no more than 21 million Bitcoins mined. Because the supply of Bitcoin is limited, increasing demand is all that is required to increase the value of each coin.

In contrast, the smart contract capabilities of Ethereum allow a programmable blockchain platform to expand functionality.

The value of ether is not determined by scarcity or current applications. Those who invest in Ether do so in the hope that the technology will reach its full potential.

DeFi Determines Ether’s Future

DeFi – decentralized finance – is the key to the door, as it bypasses traditional financial institutions by putting financial services on a blockchain.

Ethereum was founded in 2015 by Vitalik Buterin. He had been involved in the blockchain space for a long time, but he quickly realized that Bitcoin was too limited. Ethereum is like a smartphone that can run smart contracts and decentralized applications, similar to how Bitcoin is like a pocket calculator that does one thing well.

Smart contracts are small, self-executing pieces of code that allow developers to create Ethereum-based applications and other cryptocurrencies. Smart contracts are essential for a wide range of industries, including the DeFi business.

Over 200,000 ERC tokens are currently supported by Ethereum, with several of them ranking among the top 100 largest cryptocurrencies. The DeFi ecosystem, which is built on the Ethereum blockchain, contains a plethora of cryptocurrencies.

With the latest Taproot upgrade, Bitcoin is fighting back. Taproot extends the Bitcoin blockchain with smart contract functionality. It’s too early to tell how Taproot will fare against Ethereum, but the finish line is still a long way off. Although developers are beginning to design smart contracts for Bitcoin, Ethereum already has swarms of developers and is years ahead of the competition.

The total value locked in DeFi has increased dramatically since August 2020.

Decentralized finance appears to be a viable competitor to traditional centralized finance, with Ethereum playing an important role in attracting investors and driving up the price. The greater the demand for DeFi, the more valuable it becomes, and the greater the rise in the price of Ethereum.

Ethereum Challenges

  • Bitcoin Average Cost Per Transaction: 173.02 USD/tx
  • Bitcoin Transactions Per Day: 301297.0
  • Ethereum Average Transaction Fee: 4.719 USD/tx
  • Ethereum Transactions Per Day: 1.248M

In comparison to some newer crypto systems, Ethereum has a slow network. Although it is not as fast as Bitcoin, Ether miners earn significantly less.

The average Ethereum user performs several transactions per day, and sometimes several transactions per hour.

The average Bitcoin user completes a couple of transactions per day.

This causes Ethereum transactions to take an abnormally long time, raises transaction fees, and leads to lost transactions. Some users are enraged by this, wishing they could use a different smart contract solution.

Another issue for Ethereum is gas fees. The Ethereum network charges users gas fees in order for them to complete a transaction or execute a contract on the platform.

Due to Ethereum’s limited transaction capacity of 15 transactions per second, gas fees rise when the network becomes congested. The average network fee for a transaction reached USD$62 on November 9.

Buterin has proposed a new Ethereum Improvement Proposal (EIP) to address the network’s gas charge grumbling by imposing a limit on total transaction call data, lowering transaction gas costs.

According to BitMEX Research, a market research firm, the update could result in a fivefold reduction in gas fees.

The event that the crypto world is anticipating is ETH 2.0, a forthcoming update that will increase Ethereum’s transaction rate to 100,000 per second.

 Experts Say

Some analysts believe the release will result in a massive increase in the value of Ether.

JP Morgan, America’s largest bank, believes that if interest rates begin to rise, Ethereum will tip the balance against Bitcoin.

“Ethereum’s growing number of applications—peer-to-peer lending, non-fungible tokens (NFTs), gaming, and stable coins—should help it sustain its value in a rising interest-rate environment,” the bank said.

However, Bitcoin’s role as a value store works against it when interest rates and bond yields rise, as investors can opt for low-risk returns rather than relying on the volatility of the cryptocurrency.

Another major Ethereum investor, Goldman Sachs, believes the cryptocurrency is growing faster than Bitcoin and predicts the price will double by the end of the year, after rising more than 500 percent in 2021. Coinbase, the largest cryptocurrency exchange in the United States, is well-positioned to benefit from an increase in Ethereum by charging a fee on each transaction that passes through the exchange.

Coinbase trades a variety of cryptocurrencies that are based on the Ethereum blockchain, so betting on Coinbase is effectively betting on Ethereum. Their futures appear to be inextricably linked.

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