Which to Choose Between Ethereum and Bitcoin
If you were asked to choose between Bitcoin (BTC) and Ethereum (ETH), which one would you pick? Interestingly, these two are like Android and Apple in the crypto market. While there are over 9,000 digital currencies available today, BTC and ETH are the stars of the show in the crypto arena. But in terms of payment features and real-world uses, which one is the better choice? Should you buy Ethereum or Bitcoin?
Let’s get down to the basics
Choosing between the two best-performing digital currencies can be tricky, especially when you aren’t very familiar with how they work and the wonders they can do. To help you make a decision that you won’t regret later on, we’ve rounded up the basic things you need to know about Bitcoin and Ethereum.
🥇 Bitcoin (BTC)
Let’s start with Bitcoin, the key player in the crypto market. It’s a cryptocurrency developed and introduced by the mysterious Satoshi Nakamoto back in January 2009. Bitcoin was created to fix the double-spending problem in the digital cash scheme using a peer-to-peer (P2P) network. This innovative payment system cuts the need for banks and other third parties, which allows for cheaper, faster, and more convenient transactions.
As of the time of writing, here’s how BTC’s market profile looks like:
- Rank: 1st
- Price: 52,000+ USD
- Market Capitalization: 0.98 trillion USD
- Maximum Limit: 21 million BTC
- Circulating Supply: 18.6 million BTC
Interestingly, Satoshi Nakamoto designed Bitcoin to have a supply cap of 21 million BTC. This maximum limit is the driving factor behind its unpredictable price swings. With its highly volatile value, Bitcoin is often compared to gold. But apart from its worth, Bitcoin is also very much similar to gold in the way it is acquired.
Like gold, Bitcoin is mined too. But instead of using heavy-duty gold mining equipment that digs underground, BTC uses digital pickaxes in the form of powerful computers with specialized mining software. It often takes 10 minutes to complete a BTC transaction, but it’s important to note that this can take a little longer depending on the required amount of confirmations.
🥈 Ethereum (ETH)
Moving on to the second most dominant coin in the market—Ethereum, also known as Ether. This powerful token introduced in July 2015 was developed by a young Russian-Canadian computer whiz Vitalik Buterin. Ethereum is a technology that allows you to make crypto payments, execute smart contracts, and create decentralized applications in its programmable blockchain—the very reason why it’s famous for programmers and developers.
But why do lots of people also choose to buy Ethereum? Let’s take a look at how ETH’s market profile currently looks like:
- Rank: 2nd
- Price: 2,400+ USD
- Market Capitalization: 283.73 billion USD
- Maximum Limit: Unlimited
- Circulating Supply: 115 million ETH
Unlike Bitcoin, which needs highly specialized equipment to be mined, Ethereum mining uses a different system where you can use consumer Graphics Processing Units (GPUs). This encourages more independent miners to set up their own operations, which builds a more robust Ethereum network. Interestingly, the block formation of Ethereum only takes 12 seconds—that’s nearly 50 times faster than BTC!
Digging deeper into the technicalities
Before you decide whether you should buy Ethereum or Bitcoin, it’s crucial to understand how each works. While these cryptos may have lots of key differences, both still share some outstanding features.
🔐 Decentralized Nature
Most cryptocurrencies run in a decentralized system. This means that they don’t need any central authority or governing body to keep their operations running. Since Bitcoin and Etherum do not have any central point, compromising or hacking their systems can be a very tough—if not impossible—job.
Let’s take social media networks, for example. If a hacker or cyber fraudster successfully hacks the company that runs and maintains the entire platform, all data in that social network can be easily obtained illegally. Yikes!
With BTC and Ethereum’s decentralized nature, financial transactions are not only made efficient but more secure as well. This means that you can sleep well at night, play video games, or binge-watch your favorite tv shows without having to worry about the safety of your crypto funds.
🌐 Blockchain Technology
We’re pretty sure you’ve heard of blockchain before, but let’s have a quick review in case you haven’t fully grasped what it is and how it works. Blockchain technology is the powerful brain behind cryptocurrencies. It is a public, distributed ledger where every transaction is stored and recorded.
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For better comparison, you can just think of it like the passbooks issued by banks where all your account transactions are recorded and monitored. The main difference is that passbooks from banks are available for the owners’ eyes only. Since it covers every transaction made by the owner, this small booklet is considered a confidential document.
With blockchain technology, all transactions are accessible to all individuals in the network. This implies that everyone can see if someone has a transaction going on. The good thing is that no one can quickly know who’s transacting with whom. Apart from that, blockchain uses cryptographic techniques to ensure that every transaction will become irreversible once confirmed.
The distributed ledger side of blockchain means that many nodes, or computer systems, work together to confirm and process all data. The more computers or nodes there are, the safer and more secure the blockchain becomes. This suggests that for hackers to compromise a blockchain network successfully, they have to go through the exhausting process of reversing every confirmed transaction on the blockchain.
Many crypto whizzes say that with the robust security features of blockchain, attempting to reverse every verified transaction isn’t only daunting and time-consuming, it’s also nearly impossible to achieve.
📂 Smart Contracts
Among the two reigning cryptos, Ethereum was the first to introduce the use of smart contracts. This decentralized tool allows you to automate transactions and eliminate the need for intermediaries. Interestingly, the Ethereum network allows you to build applications that can operate 24/7 with features that are impossible to be altered by anyone else.
Let’s say you want to buy a house or property. With smart contracts, you would no longer have to coordinate with your broker or lawyer constantly to verify your payments and documents before receiving your property’s title. You can set certain conditions that will prompt a transaction when completed. For example, assuming the legislation catches up, you could automatically receive your property ownership documents after completing your payment—wouldn’t that be efficient?
Apart from real estate transactions, smart contracts can also be used in other businesses such as car dealerships, e-commerce websites, car dealerships, and a lot more, especially for contracts with less state-regulated requirements.
Ethereum vs. Bitcoin: How do they differ?
After getting down to the technical aspects, market performance, and other important points about both coins, you’re probably wondering which crypto is most suitable for your trading and business needs. Now, let’s cut to the chase by delving into the significant differences between Ethereum and Bitcoin.
Bitcoin was created as an innovative payment system. To put it simply, you can think of it as money, but purely digital. On the other hand, Ethereum is like a gas that fuels applications to perform different tasks. While ETH can also be used for payments, its programmable network allows you to do so much more.
As we’ve mentioned earlier, Ethereum’s programmable system allows you to build decentralized applications and use smart contracts. The cryptocurrency can also be used for payments and other monetary transactions. Apart from that, this asset also holds value and is tradeable.
Bitcoin, on the other hand, was designed solely for payments. You can use BTC to protect your money’s value against the effects of unpredictable economic shifts, transfer money in and out of your country, send gifts to your friends and loved ones, make everyday purchases, build and grow your business, support charities and philanthropic initiatives, and earn money by engaging in crypto trading.
The final verdict
Bitcoin still stands on top of thousands of other cryptos in the market in terms of market price and capitalization. With its remarkable payment features, BTC adoption is undeniably on the rise in different countries today. BTC is much more volatile in terms of price stability than ETH, making it ideal for market investors and businesses alike.
Ethereum, on the other hand, gives you endless possibilities with its programmable system. Like BTC, Ethereum is very popular in crypto markets because it’s highly liquid, which means you can easily exchange it with your preferred currency.
While both are highly valued digital assets, each provides very distinct advantages. We hope this guide helps you decide which crypto to try out! Can’t decide yet? Go to your Paxful account, buy Bitcoin or Ethereum from reputable vendors, and experience their benefits for yourself.