In 2021, the cryptocurrency market reached unprecedented heights. The decentralized finance market was a huge catalyst for this growth, as well as the increased interest from institutional investors in the crypto space. The two most popular crypto projects with retail investors are, of course, Bitcoin and Ethereum. Both of these cryptocurrencies set the pace for the market and act as market leaders. They are also some of the most sound investments one can make in the crypto markets. In the long term, they present little-to-no drawbacks and have proven over the years to provide steady profits for investors. That said, choosing between Bitcoin and Ethereum can be quite challenging. For this reason, this article will present you with their main differences, advantages, and drawbacks. We will also look at which one has the best profit potential, as well as highlight some of the best places where you can buy BTC and ETH.
What Are the Key Differences Between BTC and ETH?
Bitcoin is the original cryptocurrency that jump started the entire crypto industry. This pioneering status makes it incredibly popular. Over the years, its network has been distributed across hundreds of thousands of nodes, which ensures the highest level of security for transactions. An important characteristic of bitcoin is that its supply is limited to 21 million coins, of which nearly 19 million have been already mined. This scarcity has proven to have increased its value over the years. Regarding use cases, bitcoin is quite limited. Its only purpose is to serve as a means of exchanging value over the internet. However, because of its popularity and steadily increasing value, many consider it as the perfect asset store for long-term investment. Ethereum is the first blockchain with smart contract capability. As a technology, it exponentially increased the use cases of blockchain and allowed the creation of the decentralized finance (DeFi) ecosystem. The ETH cryptocurrency is used within its network to pay for the transaction fees for deploying smart contracts and dApps. As such, it has more use cases than just transferring value. It’s worth noting that ether doesn’t have a limited supply. However, it uses a burning function that destroys a small portion of ETH tokens at each transaction. This mechanism has the goal to keep ether a deflationary currency, the same as bitcoin. Both cryptocurrencies currently use the Proof-of-Work consensus model. This means that miners need to spend huge amounts of electricity to produce new coins. However, Ethereum will be switching to a much more eco-friendly Proof-of-Stake mechanism in 2022. The smart contract platform should become carbon neutral and assuage concerns about its environmental impact.
How to Choose Cryptocurrency?
When choosing a cryptocurrency to invest in, there are multiple factors that you need to consider. First of all, it’s important to note that a cryptocurrency like ethereum or bitcoin can be extremely volatile and present huge risks when investing. That said, in the long term, their price action has kept an overall positive momentum, steadily increasing over the years. So, which one should you choose? Consider the following:
- Bitcoin has been around for longer and has a larger userbase. Consequently, it’s the more secure network of the two.
- Ethereum has more use cases and can be used to create NFTs and deploy decentralised apps. This means that its value might grow together with the growth of its network and the number of people using it.
- Both Ethereum and Bitcoin use mining, which is detrimental to the environment. Ethereum, however, is switching to a greener mechanism for confirming transactions and creating new coins.
- Transaction costs on Ethereum can be very high, so Bitcoin might be the better choice for money transfers.
All in all, choosing between BTC and ETH will be a personal preference, depending on what you wish to do with your cryptocurrencies. Both cryptos present decent investment potential, but their value growth depends on different factors.
Which Is More Profitable?
Since its release in 2009, Bitcoin has reached a store of value status and is praised by institutions for hedging against inflation. Its price has increased from a very modest $0.3 per BTC to a staggering $69,000 per coin at the all-time high in November 2021. This steady increase in value has made many early adopters very wealthy. Ethereum has also proven to be an almost flawless investment over the years. Released in 2016 through an initial coin offering (ICO) at $0.31 per coin, it reached an all-time high of $4,800 in November 2021 as well. While Ethereum has still a long way to go to reach Bitcoin’s market cap and coin value, it has performed much better in the past year compared to Bitcoin. In 2021, bitcoin only managed to record around 240% growth, whereas ether’s price increased over 370%. And many analysts seem to believe that the upcoming growth in DeFi could contribute to Ethereum outperforming Bitcoin once more in the following year.
Where to Buy BTC and ETH?
In 2022, we have a wide variety of choices for where we can buy both bitcoin and ether. You can’t go wrong by opting for either of the following options:
- Crypto kiosks such as Paybis and Coinmama that will allow you to quickly purchase BTC or ETH with your credit card.
- Crypto exchanges like Binance or Currency.com where you will be able to purchase coins, but also trade them for various assets as well.
- P2P marketplaces such as Paxful that act as an escrow (third-party bridge) between buyers and sellers and provide a variety of payment options.
Just make sure to keep your data safe and your private keys secret, regardless of the option you choose.
Investing in Bitcoin and Ethereum can be a great opportunity to make some profits in the coming years. Just make sure you understand that, like with any investment, there is some risk involved with this decision. To protect yourself from the high volatility of the market, ensure you never invest more than you can afford to lose and set your profit goals on a larger time frame.