Bitcoin has been all over the news in the past weeks and for a reason. It not only went through a chain split but the price skyrocketed to over $3,000.
Since Bitcoin has been in the spotlight, all other cryptocurrencies have been pushed aside, and somehow, we forgot that there’s more to invest in the cryptocurrency market than just Bitcoin.
But if there’s one concern from the investor’s point of view is the never-ending battle between Bitcoin vs Ethereum and which is better to invest in?
It’s unlikely that the Bitcoin value will drop below $3,000, while Ethereum has almost reached $300. The difference in price between these two is massive and it puzzles the investors.
On one hand, if you invest in Bitcoin, the price can even go up to $10,000 in the next three years. But if you put money in Ethereum, you may become a part of the unexpected success similar to Bitcoin.
The Difference Between Bitcoin and Ethereum
Although both Bitcoin and Ethereum use blockchain technology as a backbone, they have different end goals. Bitcoin is considered as a payment method for goods, while Ethereum has its own tokens – Ether – that can be used to pay for smart contracts, crowdfunding etc.
Therefore, Bitcoin is used as a digital currency, while Ethereum serves as a platform for smart contract programming.
Bitcoin is also much older, founded in 2008 by Satoshi Nakamoto who has been identified as a real person. Bitcoin’s history doesn’t help with the bad reputation it acquired at the beginning. The unknown founder, Dark Web and drug trafficking are amongst many things Bitcoin was associated with at the beginning.
Luckily, the public’s demand and wider retail acceptance are changing it. Nowadays, we look at Bitcoin as the future of financial system as opposed to the hacker’s’ tool.
Ethereum was founded in 2015 by a young developer (Vitalik Buterin), who’s the main voice and force behind any Ethereum updates. This on its own gave Ethereum more credibility in investors’ eyes. But the new platform is here to replace a middleman through the smart contract implementation, so it faced a certain level of disparagement.
Another crucial distinction between Bitcoin and Ethereum is the amount in circulation – Bitcoin has a very limited amount of 21 mln and Ethereum over 92 million. This gap is one of the major factors driving the price of Bitcoin up as there’s a very limited amount, hence its gets snatched quicker. The amount of Ether can increase through mining but it’s capped every year at a certain amount.
There’s a false impression that Bitcoin and Ethereum have an inverse relationship, meaning when one increases in value, the other decreases. But since they both work towards different goals, they can coexist.
Bitcoin is striving to provide fast and secure transactions while Ethereum focuses on so much more. With more smart contracts and decentralised applications, Ethereum popularity and profitability will keep on growing.
At the moment, both are volatile and it’s difficult where the price will go, especially with the recent Ethereum cyber attacks and Bitcoin chain split. But long term, the value will definitely keep on increasing.
The Future of Bitcoin
Looking into the future of something that doesn’t physically exists can be tricky. If we cannot predict the cryptocurrency value in the next few days, how can we know for sure what will happen in the distant future?
So instead of looking at charts and price predictions, we will look at how people have started accepting both Bitcoin and Ethereum.
One thing that people expect from cryptocurrency is to be able to easily spend it. Not all of us are investors and some of us will never be. Hence we don’t see the point of putting our money into something not tangible that we cannot even spend in a shop.
Hence the introduction of debit cards that allow paying with Bitcoin. Retailers can start accepting Bitcoin and face lower fees and customers can spend it comfortably.
In addition, several governments around the world (Malta, Australia, Austria) have expressed their support for Bitcoin and blockchain technology. It’s a reassurance whiff for those who are still not convinced to cryptocurrency and a new direction for Bitcoin that will help it to go mainstream. With governments’ assistance, people will feel encouraged to utilise Bitcoin. This will increase the demand and currency value.
All these factors will contribute to Bitcoin’s stability and perhaps even an acceptance as a currency. The growth and demand will only follow and so the value. Except, without the volatility of its infancy.
The Future of Ethereum
In contrary, the future of Ethereum depends on the technology being used. Even though like Bitcoin, is based on blockchain technology, Ethereum has no intention of becoming a digital currency of the future.
Bitcoin opened up a platform for cryptocurrency only but Ethereum is more flexible in terms of possibilities. And that’s what attracts more people to it.
One of the industries exploring Ethereum capabilities is the Internet of Things (IoT). As more devices are connected to the internet, Ethereum gives them a possibility of connecting to each other. With the use of smart contracts, IoT can become more decentralised and autonomous, thus more democratic.
Another big industry looking at Ethereum is the financial industry and banks. Distributed ledgers can settle the accounts and process transactions quicker than traditional methods. This could potentially result in enormous savings for both banks and customers. Ethereum could also eliminate the human error within the banking system as well as the unethical behaviour.
If Ethereum is utilised to its full extent, more companies will be interested in implementing the new technology. Buying Ethereum tokens will give you an advantage in the future of being able to invest in smart contracts. Bear in mind, Ethereum has been around for two years and it’s still a toddler comparing to Bitcoin, hence the value is currently lower.
But with the support of large worldwide organisations and government, there are great chances of Ethereum price going as high as Bitcoin.
The Reason Why You Should Invest in Both Bitcoin and Ethereum
Blockchain technology has a capability to change everything. Thanks to the blockchain, we are about to enter the 3.0 era of the internet.
It’s unlikely cryptocurrency will replace fiat money in the near future, but it’s quite possible it will integrate with the traditional banking system more.
As the old saying goes… You shouldn’t put all your eggs in one basket. And cryptocurrency isn’t any different.
So if you’re torn in between Ethereum and Bitcoin, these are the reason you should invest both as they complement each other:
Bitcoin is experiencing a rapid growth
So far, Bitcoin is the most popular cryptocurrency and thanks to the SegWit update, the network will fix all of the pending issues. The block size will increase and the malleability issue will be resolved.
The price keeps on going up and there are predictions of Bitcoin reaching $10,000 in the next three years.
Ethereum is gaining more attention
If Bitcoin is considered as gold, then Ethereum is silver and it shouldn’t be seen as a competition. It’s a compliment and offspring of the technology that Bitcoin introduced.
The currency is more flexible and it attracts government attention and it’s already been acknowledged by major banks. Don’t be mislead by the lower value in price – with the growing demand, the value will keep on increasing.
Both are facing regulation and legalisation
Long gone are times of cryptocurrency being entirely anonymous. While there are still ways of acquiring it without providing any personal details, the most reliable exchanges will ask for an official ID form.
Tighter regulations will build a bridge between cryptocurrency and public. It will send a clear signal of recognition from the authorities.
Is It Better to Invest in Bitcoin or Ethereum
An award winning study from 2016, recommends a 70% of your capital to be invested in Bitcoin and 30% in Ethereum. The case study was based on a $1,000,000 budget but you can translate to your available funds.
This strategy would limit a risk connected to Ethereum undeveloped technology and dependency on the future of smart contracts. Bitcoin’s blockchain technology is already established, so the uncertainty is smaller.
The study also proved a 2232% ROI within the first 5 years and following this strategy could yield $22,321,145.06 in profits. If Ethereum keeps on growing as it currently is, the price will grow by 136.50% every year. Bitcoin, on the other hand, should expect more conservative and steady growth of 10% every year.
Bitcoin’s price skyrocketed over the last few weeks due to SegWit lock-in but prior to that Ethereum was anticipated to repeat Bitcoin’s success and could ultimately match Bitcoin’s price.
The study is based on a lucrative budget but the crucial question you should ask yourself before investing in anything, and especially cryptocurrency, is how much are you willing to risk. Depending on how much you can put into the investment, you will be able to choose a cryptocurrency you believe in and your strategy.
If you have a limited budget, you shouldn’t start with Bitcoin as you won’t be able to buy much. On the other hand, with Ethereum value being still quite low, you can afford to invest in more tokens.
Bear in mind that investment is different to trading – the ROI will take much longer. Investing in cryptocurrency is also a patience game, during which you have to survive plenty of ups and downs due to high volatility.
In the competition between Bitcoin vs Ethereum, the former is still winning, especially with the recent growth in value. However, you’re trying to choose between two beats who are designed with a similar technology in mind but different end goal. Seeing Ethereum cross a four-digit figure will take longer, but the ROI will be much higher.
Have you invested in Bitcoin or Ethereum already? If yes, share your experience with us in the comments below!