Bitcoin Vs. Ethereum: Which is a Better Investment?

in #bitcoin7 years ago

Following bitcoin's stomach-churning price drop,  where more than $6,000 in coin value was lost in the span of a month, investors are beginning to think more seriously about diversifying their cryptocurrency portfolios. In the last year, many of bitcoin's would-be competitors have stolen market share from bitcoin, with the trend unlikely to change in 2018.

As part of a continuing series, we will compare bitcoin with the coins that are seeking to displace bitcoin as king of the hill. In this article, we will be looking at Ethereum.

The first programmable altcoin, Ethereum sought to create an altcoin where the developer can determine the use of the blockchain and create an ecosystem suitable to his or her needs without needing to rely on the limits in data transcribing and third-party access that bitcoin offers. Ethereum differs from bitcoin by having a native coin that can be programmed into a smart contract,  an autonomous agent capable of conducting transactions without the need of a third party,  and by offering a virtual computing space where decentralized applications or "Dapps" can operate on the blockchain.

These differences have made Ethereum the preferred altcoin of the fintech world. An increasing number of companies are building applications to utilize Ethereum's unique plasticity, making the blockchain's future usefulness obvious. However, as Ethereum has no monetary value on its own, the question of whether Ethereum is a better investment option than bitcoin is an open one.

Tales of the Tape (as of January 28, 2018)


Bitcoin Ethereum
Purpose of   coin Proof-of-concept for altcoin model; digital currency Programmable platform and agent for customizable transaction systems
Governance Decentralized; overseen by not-for-profit foundation; decisions determined by a democratic vote among nodes and miners Decentralized; overseen by not-for-profit foundation; decisions determined by consensus among nodes and miners
Number of coins 21 million; 16.83 million mined No set maximum, although the supply is not unlimited (The system's decreasing genesis of coins will eventually hit equilibrium with the system's coin   destruction, resulting in zero growth.) ; currently, 97,275,665.59 Ethers (This is determined by reverse inflation of   coin genesis from year-to-year.)
Market   capitalization (as of January 28, 2018) $198.37   billion $117.96   billion
Obstacles to success Changes difficult to achieve; slow transaction times; high transaction fees Potential  development of proprietary fintech blockchain solutions
Transaction time (average) 1,570 minutes  (one day, two hours, and ten minutes); seven-days high: 11,453 minutes (seven days, 22 hours, 53 minutes); current transaction fee: $9.824; transactions expedited by paying miners Less than fifteen seconds, depending on whether is enough gas available to complete the transaction; current average transaction fee: $1.19; median transaction fee: $0.50
Reason for success As the first digital coin, there is a sense that bitcoin must succeed for the industry to succeed. With many of bitcoin's "imitator" coins being tied to bitcoin in an irrevocable way, there is a "we all succeed or we all fail" mentality currently in place. The ease with which Ethereum can be applied to custom distributed ledger solutions makes the platform both desirable and easily-manageable. Also, the Ethereum community takes to change and adaption faster than the bitcoin community.

Understanding Ethereum

Ethereum was created to address key perceived deficiencies in the bitcoin code. Among these are the block size, the number of coins, and the ease in programming platform coins and applications that function in the same virtual space as the blockchain. 

While it took Ethereum more than five years to reach relevance against bitcoin, Ethereum currently has four times the daily transactions as bitcoin. Bitcoin remains king in conveying wealth but pales to Ethereum's potential for scripting data storage over a distributed network. This gives Ethereum extreme usability to, say, a retail store that is looking for a way to upgrade its inventory and sales platform, such as what Walmart is doing with Ethereum. This is one of the reasons why there are more Ethereum-based ICOs than bitcoin-based ones.

With Ether, Ethereum's native coin, predicted to reach $5,000 in 2018, Ethereum is an investment to consider. However, it is worth remembering that Ethereum and bitcoin are not necessarily comparable and that assessments between the two should reflect the uniqueness of both coins.

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i vote for etherum

Personally, I think bitcoin is over hyped. There are not much use cases of bitcoin with this much fees and long time period required to verify the transactions then why it is being ranked the no one crypto currency just because it was the pioneer?
On the other side, Ether is quite more useful and fast. If you take the sum of the wort of all the coins built on BItcoin blockchain( :p ) and ether blockchain then I am sure ether will win. Ether has creadted more value.

I can't agree on Bitcoin being overhyped. "First mover advantage" does have its benefits. Bitcoin is well known, and for most people cryptocurrency = bitcoin, bitcoin can be traded for every other coin. That alone is a big reason for huge market cap. It has issues but it also has strong core development teem who actively working on fixing its issues (e.g. SegWit). So it does have potential to suddenly grow in value once some of it's issues are resolved.

Yes, you have a point there. I am just saying, it has a first mover advantage but if you just track and see the innovation or positive changes bitcoin had in the last two years as compare to other new coins who learnt from bitcoin and implemented it beautifully are not much.

Bitcoin the name itself attracts people because it’s well known. Bitcoin is what people think of when someone says crypto currency no one outside the crypto world knows about the other coins. Until some other coin gets to be as well known as bitcoin, well it will just be on top.

I wouldn't completely dismiss Bitcoin's utility though, comparing Bitcoin to Ethereum is a bit like comparing apples to oranges. Both currencies have completely different goals and both have suffered major drawbacks in the past.

I'm rooting for both of them to succeed.

Yup I like to think of Bitcoin as a currency but Ethereum much more as a stock. You are buying a share of the Ethereum network and basically investing in all the ERC20 coins that are built off Ethereum; it's primary usage is not as a currency.

I like to think of Bitcoin as similar to a stock. For a currency it has impracticalities, but transfer fees and time are quite similar to stocks.

But isn't the point of BTC to be a currency that gives more privacy and is decentralized? The last two points don't mean much if it's not a currency - like what is it giving you a stock in?

Well, I don't mean that it has the features of a stock, just that it shares some of the impracticalities of a stock.

On a side note: If a stock was (somewhat) anonymous, decentralized, did not pay yearly bonuses and represented ownership of a company that would never be sold, then you would have an asset quite similar to Bitcoin.

I don't agree that Bitcoin represents ownership of a company - that would make more sense if it was PoS

Yes I definitely think Bitcoin is overhyped due to it's "first-mover advantage" and the resulting popularity that comes from it (as well as probably having the highest price per coin out of all of crypto). Bitcoin was the first and there have been many coins that have taken the base concepts of Bitcoin and tweaked them to improve it slightly. Like there's ZCash, which acknowledges that it mostly comes from Bitcoin, but has improved how mining works, and even Monero which offers much greater privacy in comparison.

Bitcoin does however have a great dev team and that is one place a few other comparable coins are lacking, like BCash

Probably both will be correlated in some way. For the big profit you will need to find a new hidden gem.

Good article, I agree with you. I invested in both coins but I found myself better with ethereum. Bitcoin has a high price and this is good for the people who bought it when it was cheap, but it is bad for all new investors: the risks are too high and with the same money it is cheaper to buy ethereum. Added to this are taxes, which are higher to buy bitcoins than ethereum.
I believe that ethereum has a very good potential and that in the future it could reach 5,000 dollars since many ICOs are financed exclusively through ethereum, for example Eos and Bankera.

Why are taxes for bitcoin higher than ethereum?

I am investing in both, see my attached portfolio chart. I gotta dump xrp,xvg, and trx replace with neo,html,monero

Thanks to share it,,,,I didn't know it before,,,

I think bitcoin is great because it was first and started it all but the fees are getting crazy and eth might just take that number one spot some day, but as of now bitcoin is still the gold in the market and it only has 21 million of them ever so if every millionaire on the plante wants to buy just one bitcoin they could not because their are over 36 million millionaires and only 21 million bitcoin

Wow... I wont mony bitcoint... Bagaimana caranya...

It is about making you think from a different perspective.
Excellent post good analyses thanks for sharing.