Almost everyone has heard of Bitcoin these days. The massive media hype and the Bitcoin price explosions have sparked the imaginations of millions all around the world. But dig a little deeper into the cryptocurrency market, and you’ll quickly find that Bitcoin is only one example of many new cryptocurrencies and other types of blockchain applications. Bitcoin’s share of the cryptocurrency market has dropped from over 80% in 2017 to below 35% as strong rivals have come into the market.
One of those rivals is Ethereum. However, Ethereum is a completely different application to Bitcoin, and they both do different things. So, which is better to buy? Having a good grasp of what they both have to offer will help you make an informed decision when choosing which cryptocurrency you should buy.
The first ever blockchain application
The real technological breakthrough with Bitcoin was its use of a blockchain – a public record of transactions available to everyone who uses Bitcoin. It’s this public record, or ‘ledger’ in crypto-speak, that allows Bitcoin users to transact with each other quickly, safely, and without the need for the third parties, such as banks.
Bitcoin was the first technology anywhere to use a blockchain. Since then, software developers and entrepreneurs are using blockchain technology in new and exciting ways to build more than just currencies. Blockchain technology is now used in hundreds of different applications and platforms. One of the key examples is Ethereum.
The platform for application development
Bitcoin is primarily a currency and only one example of what can be done with a blockchain.
Ethereum takes blockchain technology to a whole new level. It’s a software platform that makes it possible for users to build applications in a decentralized way, all on the Ethereum public blockchain. So, instead of just swapping Bitcoins in a way that’s permanent and safe from censorship, corruption, and tampering, you can do all sorts of cool things.
Take “smart contracts.” These are special contracts that can be written using Ethereum. They automatically execute themselves once the preset conditions are met. Once you’ve signed, you can be sure that the contract will be fulfilled automatically and no party to the contract can back out or tamper with anything. This could be useful in many parts of our lives, such as in legal issues, voting, and regulatory compliance.
Ether is the crypto-token used to make the Ethereum network tick. It can be traded like a currency, but it is also essential to run the network. Developers use Ether to pay for transactions on the Ethereum network.
Reasons to buy Bitcoin
Bitcoin was the original cryptocurrency and the first blockchain application. Its value has gone through the roof in the last year, but it has its issues. Problems with scalability and the limited amount of transactions per second are currently preventing it from becoming the prominent global payment platform that many thought it would be.
Instead, Bitcoin has become a kind of ‘digital gold,’ meaning it is seen as the main store of value in the digital world. It has currently got a market capitalization of over 250 Billion dollars with many investors, big and small, all over the world. Bitcoin is currently the most widely recognized and well-supported application that uses blockchain.
The price of Bitcoin is extremely volatile, but it’s still considered safer than other cryptocurrencies. When you buy any cryptocurrency, you are betting on its future in the cryptocurrency market. With Bitcoin at the very heart of the whole industry, it looks like a safer bet for now, and this drives many investors to buy Bitcoin. Every crypto-enthusiast should own at least a little Bitcoin.
Reasons to buy Ethereum
When you buy Ethereum tokens, you are buying an entrance ticket into the Ethereum network, sort of buying shares. It’s a great way to get invested in blockchain technology more generally and diversify your blockchain portfolio. If you don’t quite ‘get’ Ethereum yet, don’t worry, you’re in the majority. But buying Ether is like investing in a company – it’s a good idea to do your research before you put your money on the table.
If it’s not the technology you are interested in, then price performance may also be a good reason to buy. The price of Ether rose from $10 at the start of 2017 to over $1,000 at the start of 2018. That’s an increase of 10,000%, which is impressive even for cryptocurrency standards. Nobody knows if this rise will continue or not, but the Ethereum platform is growing quickly and things are looking good for the long-term.
Ethereum is also handling the recent surge in demand for cryptocurrencies a little better than Bitcoin. Congestion on the Bitcoin network has pushed fees to well over $16 per transaction, even for small transactions. Those numbers are unsustainable and will hurt Bitcoin if they aren’t fixed. Ethereum transactions still cost just a few cents, so if you want a small amount of one cryptocurrency, it could be a better option.
Reasons to buy both
Many would argue that it’s a good idea to have a bit of both. When investing it’s always good to diversify in order to minimise your risk and exposure to sudden changes in the market.
Whichever you choose, remember that all cryptocurrencies are still in their infancy and prices can be volatile. Only invest what you can afford to lose.
Bitcoin has the fame, recognition, and coolness factor, while Ethereum has a more complete platform. Bitcoin is at the center of a huge cryptocurrency movement rocking the world, and it is a good place to start your involvement in cryptocurrencies. Ethereum, on the other hand, boasts a platform for building decentralized applications and has much smaller transaction fees. The future looks bright for Bitcoin and Ethereum, so getting your hands on both is a great idea.