Sep 18, · Bitcoin was meant to be an alternative to fiat currencies as it has always been known and is, therefore, a means of transaction payment and value storage. Ethereum is developed as a platform that facilitates peer-to-peer (person-to-person) contracts and . Feb 21, · These are called tokens and will become an increasingly big part of the cryptocurrency trading landscape. This is a current screenshot from bitmoneylab.de four out of five of the top five currencies, by market capitalization, are built on the Ethereum platform. The other big platform is Omni, which is built on top of the Bitcoin blockchain. Bitcoin and Ethereum are the most popular cryptocurrencies and are rated the top two cryptocurrencies by market capitalisation. For a trader, it's important to know the difference between them to take advantage of the market. As you may know, a trader's strategy is very different from that of an investor.
Trading with ethereum or bitcoinEthereum vs Bitcoin: which project has the upper hand in ?
Ethereum is one of these examples. Its creator, Vitalik Buterin, became enamored with Bitcoin at a young age and sought to improve various aspects of the cryptocurrency. In cooperation with other founders like Joseph Lubin, Buterin launched Ethereum as a platform for smart contracts.
These smart contracts can be coded to act as an agreement or contract of any type, mimicking computer code or legal documents like real estate sales agreements or stock sales. Ethereum can also be used to launch new cryptocurrencies and helped create thousands of new altcoins during the ICO boom of So while Ethereum may not exist without Bitcoin paving the way for more crypto assets, the crypto industry would be very different looking without Ethereum fostering innovation at every turn.
As mentioned, Bitcoin is slow, with transactions taking as long as ten minutes at minimum, but even days when the network is clogged up. Ethereum has also recently suffered from slow transactions and soaring transaction fees due to the DeFi boom and the asset being used to power ETH-based gas transaction fees.
New tokens being minted at a rapid pace, such as YFI, Uniswap, Aave, and more, have benefitted Ethereum, but it has made next to no difference for Bitcoin. Instead, the value in these assets is in the underlying network and the substantial impact they can have on the world of finance in many ways.
Bitcoin currently has a capacity of roughly seven transactions per second, while Ethereum is expected to reach as much as , transactions per second during phase 1 of ETH 2. At five times the supply of Bitcoin, supply is less of a factor compared to the leading cryptocurrency by market cap, but it is still essential to supply and demand dynamics causing valuations in crypto assets top rise more quickly compared to other assets.
Ethereum was distributed through a token pre-sale, and Bitcoin was distributed by mining in the earliest days. Both are considered to be well decentralized, and even the SEC has deemed them to be commodities as a result. Ethereum vs Bitcoin have vastly different use cases and target markets, despite both being attractive to crypto investors. For example, Bitcoin is more of an aspirational store of wealth and payment currency, so users who invest in Bitcoin want to hold it for the long term.
Ethereum, on the other hand, is more often used as gas fees in transactions for other tokens and benefits significantly as a result. As ETH is used to fund transactions at rising costs, DeFi users, for example, must buy up Ethereum to pay for associated fees.
Doing so drives up the price of Ethereum. Ethereum can be seen as an ecosystem and the fuel that powers it, while Bitcoin is a currency in and of its own right. Both have extreme value and potential, both as a technology and investment, but only one can be the best of the best.
Because these two crypto assets are vastly different, it is difficult to say exactly which is the best investment. Both Bitcoin and Ethereum started out their lives at prices that were virtually worthless. Around this time is when Ethereum was first created.
Meanwhile, Ethereum started to benefit enormously from the emergence of initial coin offerings — a trend that saw the creation of thousands of new altcoins built on top of the Ethereum blockchain as ERC20 tokens.
The popular crowdfunding and fundraising method let investors get in early to what they expected to be the next Bitcoin.
This suggests that Ethereum could climb a lot faster than Ethereum per coin, but Bitcoin price predictions go a lot higher than Ethereum price predictions. Both are reasonable estimates for each cryptocurrency. Signs suggest that this over performance in Ethereum is over for the time being, with Bitcoin set to regain some lost ground against the second ranked cryptocurrency and top altcoin. Bitcoin and Ethereum rise together as part of the greater crypto tide, but there are times when each outperforms the other.
However, Bitcoin could be ready for a massive explosion and break out into a bull run — which could leave Ethereum behind on its ratio. Clearly, investing in these two cryptocurrencies can be challenging due to the ratio on cryptocurrency trading pairs. Although they can perform well together, when crypto assets are falling, altcoins like Ethereum tend to drop far more sharply and are more volatile.
The best case scenario for investors is to trade the Bitcoin and Ethereum ratio, along with positions in Bitcoin and Ethereum itself, so that profits can be made whichever way the crypto market turns while taking full advantage of the swing opportunities that take place between Ethereum vs Bitcoin. PrimeXBT also offers crypto-to-crypto trading pairs, allowing for the most varied trading positions and diverse trading portfolio.
Traders can even hedge their Bitcoin holdings with Ethereum or short one on the ratio to profit from the ebb and flow between them.
The process takes just a few clicks and less than a minute. The Ethereum network, through its Virtual Machine and smart contract functionality, allows for the development of real-world applications on top of it.
You can think of it as the decentralised app store. At the moment, both Bitcoin and Ethereum networks are using proof-of-work PoW consensus algorithms. PoW networks are very secure but tend to be relatively slow and resource-intensive. The Ethereum network, however, is in the process of migrating to a proof-of-stake PoS consensus.
The transition is meant to address the scalability issues that have plagued Ethereum for many years. In PoS, miners are replaced with validators, who stake their coins to secure the network. The Ethereum community chose to go with the Casper PoS protocol, which has a punishment mechanism to prevent malicious behaviour. Arguably, supply is the key difference between Bitcoin and Ethereum networks.
Bitcoin has a limited supply, with only 21 million coins set to be mined. This adds a scarcity element to the bitcoin economics. Furthermore, the new supply of BTC is reduced roughly every four years, through a process called halving.
Ethereum, on the other hand, has no hard cap on the amount of ETH that can be created. As it attempts to be a decentralised app store, supporting an entire ecosystem of applications, capping the supply would be counterintuitive. The concept of transaction fees is another differentiating feature in the Ethereum versus Bitcoin comparison.
On the Bitcoin network, transaction fees are paid for each and every transaction. These fees go to the miners who then validate transactions and place them into a block. Ethereum network uses the concept of gas, priced in ETH , instead of transaction fees. Every interaction with the Ethereum blockchain requires a certain amount of computational effort. Gas is used to pay for that computation. Simple send orders, for example, require little effort.
Complex interactions with smart contracts, on the other hand, are very gas-intensive. So the cost of an Ethereum transaction depends on its complexity and the gas price, which is set by the miners. Block size is important in comparing Bitcoin vs Ethereum. It plays a key role in determining the transaction costs, confirmation times and scalability of a blockchain. Historic oil price drop Don't miss your trading opportunities.
Blocks on the Bitcoin network are currently 1 MB. Disagreements over the block size eventually led to the creation of Bitcoin Cash as the fork of Bitcoin. Bitcoin Cash increased the block size to 8 MB, while Bitcoin maintained its block size at 1 MB and implemented the Segregated Witness SegWit soft fork to increase the number of transactions that can fit into a block. On the Ethereum network, the block size is measured in gas and each block is limited to The gas limit was increased as recently as June , from 10 million, to alleviate the stress on the network, increase processing capacity and reduce fees.
The sell-off coincided with a broad decline in asset prices, from stocks to gold , partially attributed to a rally in the US dollar. So, what are some of the recent news and developments related to Ethereum and Bitcoin? For quite some time, the main focus of the Ethereum community has been on the PoS migration. It should be able to address the scalability concerns and high transaction fees of the network. The most recent estimates put the launch of the Beacon Chain at the end of or beginning of More recently, the emergence of decentralised finance DeFi applications have pushed transactions and fees on Ethereum to all-time highs.
Not only that, but the total amount of gas used on Ethereum is more than double the peak of level, while the price of gas is almost five times higher. Another exciting development has been the introduction of tokenised Bitcoin on the Ethereum network. Remember, the two projects operate on different blockchains that are not compatible. This represents just 0. As always, predicting asset prices is a thankless task.
Instead, we can look at the fundamentals of both networks to assess their future potential. BTC , for instance, is underpinned by strong institutional interest and limited supply acts as an inflation hedge, ever more valuable in the world of easy monetary policies. ETH , on the other hand, supports a growing ecosystem of decentralised applications and the transition to PoS will further cement its position as the only meaningful smart contracts platform.
On fundamentals, both cryptocurrencies are well-positioned for future growth. According to a stock-to-flow price model, BTC is closely following the trend of the previous two halvings.
So, which coin should you invest in right now, Ethereum or Bitcoin? Overall, both cryptocurrencies could be attractive investment opportunities and have a place in an investment portfolio. But as always, investors should exercise caution and do their research before investing in any crypto project.
There are several ways to invest in Bitcoin or Ethereum, as well as other cryptocurrencies. A CFD is a derivative product where a broker agrees to pay a trader the difference in the value of an underlying security between two dates; the opening and closing dates of the contract. You can either hold a long position, speculating that the price will rise, or a short position, speculating that the price will fall. Besides, when trading ETH and BTC via CFDs, you have greater flexibility as you are not tied to the asset: you have merely bought or sold a derivative contract without having to hold the coins themselves.