Ethereum vs Bitcoin: What the best choice in 2024

Bitcoin vs Ethereum

What is Bitcoin (BTC)?

Bitcoin (BTC) is an electronic payment system, i.e., an environment in which two participants can make transactions via the Internet.

A transaction in the Bitcoin system is a sequence of numbers that one user will send to another one, which occurs exclusively via the Internet. This sequence of numbers will have certain mathematical properties which are necessary to protect the system from fraud. After all, Bitcoin is just a bunch of numbers. Every day more and more sellers are ready to accept Bitcoins for payment.

You may have another question: why do you need Bitcoin at all when there are so many other, more familiar payment ways? Bitcoin has features that are worth noting.

First of all, it is confidentiality. With Bitcoin, people can make transactions anonymously, which is very different from paying in cash when it’s clear who you are, or paying with a credit card when you need to provide a name, billing address, etc., or with an electronic check which has to be connected with bank details.

Another property of Bitcoin lies in its openness. Every Internet user can make a transaction using Bitcoins. The mechanism and details of the transaction are transparent to a user. You just need to decide how much money you want to transfer, the program will do the rest by itself. Many people cannot conduct a transaction via the Internet in the traditional way, but they can do it using the Bitcoin system. It doesn’t matter where you are located, as long as you have an Internet connection, you can use Bitcoin.

Another notable feature of Bitcoin is its decentralization. There is no bank or centralized organization that can control this system. Everything happens in a specially created environment. Using Bitcoin, one user transfers money directly to another one, without the participation of a bank.

What is Ethereum (ETH)?

Ethereum (ETH) is the main altcoin. It ranks second among cryptocurrencies in terms of capitalization after Bitcoin.

If Bitcoin is digital gold, then Ethereum is the economy, Ether is programmable money. Ethereum and Ether are not the same, the first one is a network, and the second one is an asset.

Ethereum has the following advantages:

• Mining is easier than Bitcoin. This means that people do not need to come together in pools to mine cryptocurrency. They will not have to divide it equally among the participants.
• Ethereum’s block is optimized several times better than the Bitcoin block. If the transaction speed for bitcoin is on average 2 minutes, then for Ethereum it is 12 seconds.
• ETH has its own Ghost protocol. Because of this, even outdated resolved blocks continue to generate income for the owner.
• For each block solved, the miner receives income that does not decrease over time. For Bitcoin, the opposite is true: every 4 years, income is reduced by 3 times.
• Ethereum is used by programmers for cryptography and centralization, and Ether is also popular among optimizers. This means that the demand for crypto coins will be supported by programmers, optimizers and other people working with smart contracts and businessmen.
• Ether is not at all like the popular Bitcoin; you can create decentralized projects on the platform. The Ethereum network became available for use in 2013, founded by Vitaliev Buterin and Gavin Wood.

The technology turned out to be promising, so investors are actively investing in it. They often compared bitcoin vs ethereum, trying to determine the prospects for the development of networks.

Similarities Between Bitcoin and Ethereum

Bitcoin and Ethereum are often compared and this is not surprising. Both cryptocurrencies are blockchain-based platforms. In both cases, the Proof-of-Work protocol is used, which guarantees protection against double spending and hacker attacks during mining. Both systems are publicly viewable and built on open source software. Both Ethereum and Bitcoin also rely on humans who participate in the computations used to verify transactions and who are rewarded in the form of a newly released digital currency (miners). Given the fact that the price of digital coins is completely dependent on the ratio of supply and demand, both cryptocurrencies are highly volatile (like all other cryptocurrencies). Their rates can change at times in a few weeks or even days.

Differences Between Bitcoin and Ethereum

Investors who are just getting started with cryptocurrencies compare Bitcoin vs Ether. They believe that they are not much different from each other. Their value is the only criterion by which they can evaluate virtual coins. The difference lies not only in the technical side, but also in the realm of opportunities that people can take advantage of. 

To compare BTC vs ETH, it is worth paying attention to the technology of issuing cryptocurrencies, the number of coins and methods of their production.

BTC is the embodiment of the ideology of cryptocurrencies, which are designed to “free” the money supply from the power of governments, central banks and regulators. Bitcoin is a huge brand in the digital currency segment and it is popular with large investors as its high market capitalization provides ample liquidity.

As a decentralized currency beyond the control of the Federal Reserve or any other central bank, Bitcoin has another distinguishing characteristic: its emission is finite. It attracts those market participants who oppose the “helicopter money” policy and other monetary policy measures that manipulate the money supply for political purposes.

Moreover, the dynamics of the last 12 years have made Bitcoin a popular asset, as nothing stimulates investors and speculators like a bull market. The architecture of the Bitcoin network assumes the presence of an emission сap of 21 million tokens (89.91% of which have already been received by miners).

Ethereum, in turn, is a decentralized network and many cryptocurrencies are built on top of the Ethereum network. Bitcoin is the currency, while Ethereum is the infrastructure that can revolutionize fintech.

While the Bitcoin network is “owned” by the miners, Ethereum developers are planning to change the PoW to a  proof-of-stake protocol. Then Ethereum’s utility will be limited only by the imagination of the developers, which will keep the platform active.

The creation of new Ethereum tokens takes place through “proof of stake“, where the collateral is a token (network validator). The more tokens are, the more powerful the network is.  

ETH vs BTC: Currencies

The features of the internal currency of these cryptocurrencies also differ. In the case of Bitcoin, it primarily performs a payment function, in the case of Ethereum, Ether is used, which is essentially a token for conducting smart contracts. In addition, if Bitcoin has an emission cap of up to  21,000,000 BTC, Ether does not have it. On the other hand, Bitcoin copes better with payment functions, more online resources accept it, and the status of digital gold is not a dime a dozen. Ethereum should not be considered solely as a cryptocurrency, but rather as a universal platform for creating decentralized programs based on smart contracts, a wider range of possibilities. Besides, its ecosystem is constantly improving, which makes it revolutionary.

Conclusion: Bitcoin vs Ether: What is the best choice?

When choosing what is more profitable to invest in Ethereum vs. Bitcoin, you need to take into account their price forecasts. Currently, based on this criterion, it is more profitable to buy Bitcoin. But it should be borne in mind that there can be no single correct opinion on this issue. Some investors buy only BTC, the other invests in both assets.

The optimal investment strategy would be to invest in both coins.

FAQ

Is it better to buy Ethereum or Bitcoin?

Bitcoin and Ethereum are the leaders of cryptocurrencies, however, the usefulness and structure of Ethereum should be the basis for its faster growth compared to BTC. Bitcoin is just a blockchain token, while Ethereum is a token and platform with solid potential.

Bitcoin is growing in price amid interest of such large companies as Micro Strategy, Tesla, Morgan Stanley, J.P. Morgan Chase in it. The cryptocurrency is used by them in the creation of funds or investments.

Ethereum is increasing its value amid interest in it from the side of developers and startups. Ethereum is one of the most commonly used in various blockchain projects. While it may take years for Ethereum to gain the BTC upper hand when it comes to value, ETH seems to have more growth potential.

Cryptocurrencies could suffer from regulatory tightening or even the prospect of their adoption. In addition, prices could plummet; some market experts warn of a potential bubble.

Most traditional financial advisors are against investing in cryptocurrencies over 5% of the total portfolio and warn clients that they must be prepared to lose their investment. However, for those looking to enter the crypto space, the rationale for buying both coins lies in the age-old quest for diversification and hedging tools.

Can Ethereum replace Bitcoin?

Crypto hedge fund manager Rahul Rai believes that by the middle of next year in the crypto market, Ethereum will overtake Bitcoin in terms of market capitalization, which is called “flipping” by the experts. ETH’s increase was fueled by a series of events that highlighted the growing dynamics of the digital market beyond pure cryptocurrencies.

Facebook recently has announced that it will be rebranded as Meta in a sign of its ambition to expand its operations in the metaverse, while the metaverse gaming platform Sandbox has raised $ 3 million in a day.

Even K-pop sensations named BTS are going to release digital photo cards in the form of non-fungible tokens (NFT) thanks to a collaboration announced this week between their agency and South Korea’s largest cryptocurrency operator.

Is Ethereum a good investment?

Bitcoin and Ethereum have divided over 60% of the entire crypto “pie” among themselves. However, it’s worth noting that Ethereum has been growing lately at the expense of Bitcoin.

Perhaps Elon Musk and his Tesla will sooner or later switch to Ethereum, as it fits better with the company’s policy to reduce carbon dioxide emissions. And while EV batteries still contain toxic metals that pollute the environment, the company’s engineers are probably working hard to fix the problem.

The entire class of cryptocurrencies must solve four problems: storage reliability, network security, carbon footprint, and regulatory opposition. Ethereum could close the greenhouse, but storage and security remain pressing issues.

And do not forget that digital currencies threaten the power of regulators over the money supply. China’s recent ban, which has halved prices, demonstrates that politics remains the main threat to the entire asset class.

Disclaimer: Please keep in mind that the content of this article is not financial or investing advice. The information provided is the author’s opinion only and should not be considered as direct recommendations for trading or investment. Any article reader or website visitor should consider multiple viewpoints and become familiar with all local regulations before cryptocurrency investment. We do not make any warranties about reliability and accuracy of this information.