Having spent just over a month in the cryptosphere, I keep noticing that the number one debate raging across most forums is which is the superior coin out of ETH and BTC. This is totally understandable, as with the recent rise in popularity of cryptocurrencies many investors are now trying to determine how to best invest into this new type of asset. No-one wants to have to trigger a stop-loss because they jumped on board with the wrong coin.
Unfortunately, the comparison between BTC and ETH is a complex one. As with any investment into a new technology there are many factors that must be considered when assessing their future, and the likelihood of their success. To help make an informed decision we must look at the origins of the technology as well as the potential applications and limitations in the foreseeable future. In this article we will evaluate what the differences and value propositions of BTC and ETH are, and what they may be down the line. From this information we can then make a sound decision on which of the two coins should be added to your personal crypto portfolio.
Bitcoin
As the cryptosphere stands today, Bitcoin is the undisputed most widely known - and used - cryptocurrency in the world. At the time of writing, its market capitalisation stands at just over 41 billion USD.
The coin was conceived in 2008 by Satoshi Nakamoto to function as a strictly peer-to-peer (and thus decentralised) electronic payment system, with an inbuilt double spend protection. As a result of this, it eliminated the need for financial institutions or trusted third parties when making transaction. The fact a public ledger encompassing digital signatures is included allows for anonymous transaction to be made securely without any need for inherent trust, as the public network will validate every transaction independently through node consensus.
To date, Bitcoin has been primarily used for efficient facilitation of transactions without including third parties, as well as an investment or speculative vehicle. It is very easy to adopt as a means of exchange in markets that lack traditional financial infrastructure provided by the banking sector in the West, provided there is access to mobile data. Further, Bitcoin has great utility in markets where the currency has been debased or hyper inflated as an alternative medium of exchange that isn't fixed to the local economy.
Ethereum
The value proposition that ETH brings to the table is the integration of 'smart contracts' within its code.
While tracking far behind BTC through 2016, it has demonstrated immense growth in the past months and now sits at a market capitalisation of just over 22.5 billion USD - over half that of BTC. That being said, even though the underlying Ether currency has exploded in value and is now on a correction course, the true value of ETH is realised by its extensive utility and ability to eventually eliminate third parties’ involvement in determining contractual obligations.
Further to this, the ETH network enables us to cast votes, swap data between users, and many other unforeseen opportunities. What this indicates is that there is the possibility for use cases well beyond simply serving as a disruptor to the current financial institutions.
The currency of the ETH network is not the key player, and in effect serves only as the 'fuel', if you will allow me the analogy, that powers the true function and purpose of the ETH network. As a matter of fact, the ETH network features what is called a 'Turing-Complete' language. This means the network is able to simulate ANY single taped Turing machine and thus it could theoretically solve any computational problem. The possibilities this allows are nearly endless, if but a team of talented programmers were to apply themselves to utilising the tech.
The Comparison
As most of us will be aware, both ETH and BTC are mined currencies based on the POW concept, utilising the extensive hashing power of their respective mining networks. Furthermore, they both feature asymptotic difficulty barriers that will see the supply of ETH and BTC climb at reducing rates as the circulating supply increases.
Bitcoin is easy and clearcut in its design and intent - an alternative means of electronic transaction that can enable the disruption of the banking sector. The benefits of ETH are much less easy to pinpoint so succinctly, as there is the possibility of an eventual collosal impact.
To look at it from a different angle, BTC has been set up to take maximum advantage of changes within both the banking sector and other industries, whereas ETH is more likely to be the cause or driving force behind these innovations. This leaves us with ETH being the player with greater long term potential.
Summary
So where does that leave us with the respective positions of BTC and ETH?
Ethereum:
- Enables 'smart contracts' with as-of-yet unknown utility
- Boasts a Turing-complete backbone programming language
- Drives innovation through other projects on its chain
- Is incredibly versatile
- Has seen unfathomable growth in the past months
Bitcoin:
- Has capitalised and dominated the transaction niche
- Has enjoyed very widespread adoption due to being 'first on the scene'
- Leverages innovation to foster adoption
- Has a limited range of other uses or room for growth
Both Cryptocurrencies:
- Enable anonymous transactions without the need for trust
- Are built upon a mining model with asymptotic mining rates
What this demonstrates is that the comparison between ETH and BTC is largely folly to begin with, as beyond discussing potential investment gains the comparison is like comparing apples and oranges. Bitcoin has well established dominance in a small niche, while Ethereum has unrealised potential in a massive niche that it may find harder to lock down. Which coin to invest in depends on what application you think will demonstrate more value over time.
The most beautiful part about cryptocurrency is that even if you don't like either of the two discussed above, there are over 700 other altcoins to get involved with.
Image Credit, in order of appearance:
Crypto, Cointelegraph
Bitcoin, Eventbrite
Ethereum, Forbes
Eth-BTC Coins, Ethereum
Very good.... upvoted and followed. I could not decide between the 2 so I bough $100 each of Bitcoin, Ethereum and Litecoin.... I am down about 10% overall in one month.
10% Down? Sure, but I would still advice you to hold your coins. They keep going up and down all the time. These three coins are good ones.
When I add in the cost to buy them and the exchange on dollar exchange rate
I agree entirely, especially after the recent market correction. Now is a bad time to sell.
The entire crypto scene is down at the moment, on a correction course after the insane climb of the last month.
HODL =)
Can they coexist as two major players heading forwards?
As far as I am concerned, they 100% can, and in all likeihood they will. Neither is designed to compete directly with the other, as their value propositions are entirely different. ETH is the driving token of an invention platform, while BTC is primarily a currency.
Thank you sir!
Thanks for the great post first of all mate.
Secondly I would like to ask you how do you think July will turn out to be for the BTC and ETH? It's been around $2500 for a while now, do we see a crash soon?
Very good post, But we all know that one thing is sure; Both dropped enormous last week ,.... so there is something familiar ,......
BUY BITCOIN
Bitcoin Sign Guy!
This is the picture of the guy who held up the "Buy Bitcoin" sign.
Thanks for sharing all of this important info
You're welcome, and thank you for the feedback! =)
Thanks, please if you have time, visit my blog
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