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Ethereum vs. Bitcoin: Evaluating Long-Term Investment Potential



13 May, 2021


The first thing that comes to mind when you think about cryptocurrency? Most likely, that would be Bitcoin, naturally. It is seen by many to be the de-facto digital currency and shaped the image of what the general public recognizes as crypto currency. Bitcoin is not alone, though, as Ethereum is another popular cryptocurrency that has successfully risen in the ranks to be a constant subject of comparison to Bitcoin.

If the Bitcoin Vs Ethereum rivalry debate came up some previous years ago, everyone would agree that Ethereum could not stand a chance where Bitcoin is concerned. However, quite recently Ethereum on its own has recorded a massive 232% in the past few months as a result of the introduction of (DeFi) the Decentralized Finance.

With the enormous acceptance and adoption that Ethereum has enjoyed in this short term period, one can arguably say it is on the right course to rival Bitcoin for the top spot in some few years to come.

The question that is frequently raised is which of these cryptos is a better investment?

It would be easy to answer this by simply looking up the current Bitcoin and Ethereum price, but cryptocurrency is notorious for being volatile. Knowing the prices is not enough; there are more factors to take into consideration.

Key Differences

  • Bitcoin is a cryptocurrency, and Ethereum is a platform, with Ether being the actual cryptocurrency.
  • Bitcoin transactions are mostly monetary, whereas Ethereum transactions are typically executable code.
  • Transactions on the Ethereum network are considerably faster than on Bitcoin’s.
  • Bitcoin functions as a store of value and medium of exchange; Ethereum does not. Its creation was out of a desire to make a compliment to Bitcoin, but it ironically went on to become a competitor.

Bitcoin and Ethereum share quite a few similarities, with the obvious being that they are both digital currencies. They are tradeable through online exchanges and can be held through a range of crypto wallets. Both tokens are decentralized, which means that a central bank or other authority does not issue or regulate them, and they frequently utilize blockchain technology.

However, for all their similarities, there are plenty of distinctions between the two that make them separate entities.

Bitcoin is a peer-to-peer electronic cash system that operates securely without the involvement of a central figure of authority. The value of all other cryptos – like Ether – generally moves in tune with Bitcoin, and Bitcoin is still traded much more than any other coin. The key intent of Bitcoin was to establish itself as a worthwhile alternative to fiat currencies that are backed by countries. In other words, traditional currency. First and foremost, it is a medium of exchange and a store of value.

Ethereum, however, is not technically a cryptocurrency. Actually, Ether is the cryptocurrency, and Ethereum is simply the platform that Ether is based on. The purpose of Ethereum launch in 2015 was to serve as an upgrade to the weaknesses of Bitcoin. Its use cases offer developers more opportunities to build new applications, and in doing so, it went on to become its own thing.

DeFi boosted Ethereum

With the vast chunk of its growth attributed to the DeFi sector, the digital asset has grown to a figure around 580% when the value locked in is taken into consideration. The relationship is beneficial since the majority of the DeFi project use the Ethereum network; they, in turn, help the network grow significantly.

This move has given major Bitcoin enthusiasts sleepless nights as they don’t know what the future holds for both coins when the year ends.

Even though Bitcoin itself has enjoyed massive favoritism in the Bitcoin Vs Ethereum debate since the year began, a small part of Bitcoin holders are impressed by the performance of Ethereum this year. 

While some are still confident that Bitcoin would still make massive price moves, others are not so sure as regards the movement of investors away from Bitcoin to the Ethreum market. 

However, in this regard, a few experts have said that the rivalry between both digital assets is not something that should be taken seriously because each of them provides their essential contribution to the crypto ecosystem.

The better choice

Ethereum has the potential to give bigger gains. While Ethereum will close out a year with considerably less than Bitcoin, investors would quadruple their investment if it went back up to its all-time high. In the case of Bitcoin, if it reached its all-time high, investors would not even double their money.

If an investor wants a cryptocurrency that they can buy and forget about, Bitcoin would be the better option, as it has proven itself to be a reliable store of value. However, if the intent is to acquire crypto that investors are likely to use, then Ethereum is the best choice.

In the end, there is a consensus among the more knowledgeable crypto investors, entrepreneurs, and experts on the subject matter. They are of the belief that Bitcoin is a better buy than Ethereum. That being said, there are plenty of Ethereum supporters who argue that, while not as coveted as Bitcoin, Ethereum can work out just as well in the long run.

The decision is ultimately up to the investor. The pros and cons are there; it is up to them to decide which is better suited for them.

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