Did you know that an estimated 89 percent of adults in the United States of America have heard of Bitcoin? The two most prominent forms of cryptocurrencies in the world are Bitcoin and Ethereum, and while they might have the fact that they’re valuable commodities in common, there are quite a few differences to consider.
If you’re someone that is interested in taking steps to buy crypto then it’s a good idea to know the differences between Bitcoin vs. Ethereum. They’re both sound investments so you shouldn’t be afraid to purchase Bitcoin or Ethereum after doing your research.
The good news is that you’ve found the perfect resource to help you decide if you should buy Bitcoin or buy Ethereum to add to your investment portfolio and digital wallet. Keep reading this article to learn more about both forms of crypto today!
What Is Bitcoin?
Bitcoin stands out when it comes to cryptocurrencies in part because of its value, but it’s also the first form of cryptocurrency to go mainstream. You could say that it was the harbinger of things to come regarding digital assets and currencies.
Bitcoin is decentralized, meaning that Bitcoins aren’t issued and there is no governing body that has control over the value or number of tokens in circulation. It’s been in use since its inception back in 2009, and it’s rapidly gained value. The promise of Bitcoin is that it allows consumers to use a decentralized form of currency that is entirely digital.
You won’t find any physical Bitcoins. All of the tokens are online on a secured public ledger. It also results in the most transparency of any form of currency out there.
Bitcoin wasn’t the first attempt by programmers to develop a digital currency. It’s the first one that has had major success with consumers and paved the way for plenty of other forms of crypto to emerge. Many governing bodies are coming to terms with these digital currencies and allowing them to get used for transactions.
Pros of Bitcoin
There are some definite benefits that you’ll gain when you choose to buy Bitcoin from a Bitcoin ATM or public exchange. A big part of the popularity of Bitcoin is the fact that it’s quite accessible and it has a high level of liquidity. You won’t find any borders to navigate when it comes to using Bitcoin to make purchases.
It’s a great option if you plan on transferring money to friends or colleagues since it allows for instantaneous transfers. More and more stores are starting to accept it as a viable form of currency to purchase goods or services.
Many users also enjoy investing in Bitcoin because it allows them to have more privacy when it comes to their finances and personal information. Using Bitcoin won’t provide complete anonymity but it will allow you to get identified by a code number associated with your digital wallet rather than your name.
Even if hackers got ahold of your digital wallet’s address you’d still be good. It’s simple to change the address of your digital wallet to keep your information safe when you’re using Bitcoin.
Some people also love to buy Bitcoin because it allows them to own a currency that is independent of a government or higher power. It’s also impossible to impose taxes on Bitcoin as governments do with fiat currencies. If you’re seeking a greater level of control with your money then Bitcoin is a great option to consider.
You can also expect an impressive return on your investment with Bitcoin. It’s grown immensely over the past decade and could continue growing as supply dwindles.
Cons of Bitcoin
You also need to take some time to consider the cons of Bitcoin prior to choosing to purchase Bitcoin for your digital wallet. You’ll have the potential for a great return on investment with Bitcoin but that volatility in the crypto market can also work against you. The cap for Bitcoin was set at 21 million coins by its founder, making the prices much more volatile.
The scarcity of Bitcoins adds to their value, but you could find yourself losing hundreds of dollars per coin in a day if the value changes. The only variable that comes into play with the value of Bitcoin is the demand. If there is a significant amount of demand then you can expect your return on investment to climb.
The fact that there are no government regulations for Bitcoin also creates some difficulties. Using fiat currency to make a purchase offers you a certain level of protection by a central bank or government. That protection isn’t there when it comes to using Bitcoin as your main form of currency.
You should also remember that any transactions or trades that you make with Bitcoin are irreversible. If you accidentally transfer Bitcoins to the wrong wallet then you’re out of luck, as there is no way to reverse the transaction. You also risk losing all of your Bitcoins by keeping them in your digital wallet.
If you lose your private key to your digital wallet then you can kiss all of your cryptocurrencies goodbye. You won’t have access to those coins which could result in you losing hundreds of thousands of dollars over a simple mistake. Many crypto users have run into this issue with getting locked out of their digital wallets.
Another drawback of choosing to purchase Bitcoin is the fact that many places don’t accept it as a form of payment. More companies are starting to come around to accepting Bitcoin, but it’s still not a mainstream currency option. You could get stuck paying with your credit or debit card at stores that won’t accept your Bitcoins.
What Is Ethereum?
Ethereum is to Bitcoin what silver is to gold in the world of precious metals. Bitcoin will always have more value because it’s the first form of cryptocurrency to make it big and bring blockchain technology to the forefront. The technology that Ethereum uses for its currency is also great for other applications. That’s led to it becoming the largest open-ended software platform on the market.
Many law firms and businesses are turning to Ethereum as a great option for using smart contracts as well as decentralized applications. You’re able to create these documents without tampering from third parties. You also won’t experience any downtime or fraud while in the process of creating these documents.
The opportunities and applications when it comes to Ethereum are seemingly endless. They make use of the usual Ethereum token for encryption and security measures. The developers that use Ethereum use these coins as a sort of fuel source to continue creating new programs and applications.
What makes Ethereum different when it comes to Bitcoin vs. Ethereum is that it has multiple uses. Bitcoin is solely a digital token that has value. Ethereum acts as a digital token that you can purchase and trade but you can also use it on the software platform for creating applications.
You’ll find a lot of things to like about Ethereum if you’re interested in buying a decentralized currency that is less expensive than Bitcoin. Arguably the biggest benefit that it brings to the table is the fact that it’s decentralized so it isn’t tied to any government or higher power. This makes it quite similar to Bitcoin when it comes to the freedom that you’ll gain with your finances.
It’s also a currency and technology that makes quick deployment a breeze. It’s quite simple to make blockchains from scratch using different software applications. This rapid rate of deployment is something that sets Ethereum apart from Bitcoin and other cryptocurrencies.
Ethereum also allows for globalized transactions, making it one of the best digital currencies for people that enjoy traveling. You’ll gain an inexpensive and efficient option for making purchases without needing to worry about any transaction fees. It allows you to enjoy quick and easy transactions.
The mining process is also much quicker with Ethereum compared to Bitcoin. If you’re looking to get into mining cryptocurrencies then Ethereum offers a great starting point for your journey. Mining Ethereum is a great way to supplement your income with something that will continue gaining value.
Another great perk of investing in Ethereum is the fact that big businesses are looking at using its blockchain technology. Both JP Morgan and Microsoft are interested in how Ethereum can help them. Big businesses choosing to use Ethereum will open more doors for the public to use it.
Cons of Ethereum
If you’re looking to buy Ethereum then it’s a good idea to learn more about the drawbacks that you might encounter. Ethereum runs into issues at times with scalability compared to Bitcoin. A large part of these issues stems from the fact that Bitcoin has one purpose while Ethereum has many.
Ethereum gets used as a digital ledger, a platform for software development, and a way to use smart contracts. These different uses lead to bugs that Bitcoin and other cryptocurrencies don’t deal with. The fact that it offers multiple functions is great, but it also opens the door to more issues.
The programming language that Ethereum uses is also quite complicated. Ethereum’s language, Solidity, is similar to Java, Python, and C++ but it has factors that make it unique and tricky to use. You’ll have a difficult time finding tutorials to help you get started with learning the language.
Ethereum also has some of the highest transaction fees of any cryptocurrency. These higher fees have pushed developers away as they seek a more affordable alternative. There were points in 2021 when the transaction fees with Ethereum were close to $75.
The high transaction fees make it much trickier for businesses to create digital apps using the software platform. The amount of ether needed for development would change from day to day, making it difficult to budget.
You also need to remember that those fees make Ethereum more like a fossil fuel for powering app development than anything else. Bitcoin is similar to gold in the sense that it has value but it has only one function. Ethereum requires more ether in order to produce dApps and smart contracts.
Key Differences Between Bitcoin vs. Ethereum
On paper, Bitcoin and Ethereum offer many of the same features and benefits. They both act as digital ledgers that use cryptography and they’re both considered the most valuable forms of cryptocurrency.
The biggest difference that you’ll find between the two currencies is that one is designed to replace traditional fiat currencies while the other offers a programmable blockchain. Ethereum provides value in many areas while Bitcoin provides value as a way to make purchases.
It’s important to remember that Bitcoin is a currency while Ethereum is a platform. Ethereum offers a cryptocurrency that you can purchase and trade, but the uses extend far beyond currency. You’ll also get much faster transactions with Ethereum versus Bitcoin.
Bitcoin was initially created to offer a medium of exchange that is secure and quick. It knocks those two things out of the park but that’s where the uses end. Ethereum was created with multiple purposes in place. This allows Ethereum to do many things well while also giving you a way to store value.
The market cap of the two cryptocurrencies is also worth noting. The market cap for Bitcoin as of May of 2022 was $550 billion while the Ethereum market cap is set at $240 billion.
Now You Know the Difference Between Bitcoin vs. Ethereum
When you’re on the fence about whether you should buy Bitcoin vs. Ethereum there are a number of things that you should consider. Bitcoin is designed as a medium of exchange that makes transactions quick, private, and secure. It has more value and it’s better at operating as a form of currency.
Ethereum is a great form of cryptocurrency, but it offers much more potential. It’s a great platform for creating digital applications and smart contracts. It also is much easier to mine compared to Bitcoin.
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