People who first get introduced to cryptocurrency tend to group all of them together. They assume that because price action tends to be similar across all cryptos they must all have similar qualities. But, in reality, cryptos can be very different from each other even if they behave the same in the markets. Bitcoin and Ethereum are often mentioned in the same sentence, for instance, but are two very different projects with different functions, purposes, and ideologies, and you must understand these differences before you invest a single dollar in any one of them. Let’s take a closer look at both cryptocurrencies and see which one would be the better investment for you.
Bitcoin vs Ethereum – The Major Differences
The biggest difference between Bitcoin and Ethereum is that bitcoin was made principally to be used for transactions and as a store of value while Ethereum is not even a cryptocurrency per se. Ethereum is the name of the blockchain network on which the token, Ether, is used as a form of “gas” to power and maintain decentralized apps hosted on it.
Another difference between Bitcoin and Ethereum is that Ethereum has a very visible and active group of directors that can influence its course and supply. Bitcoin, on the other hand, has a decentralized governance system that can influence the direction of the coin to some level, but will never be able to control the supply of coins since it is capped.
What does that mean as an Investor?
This means that you will need to look at your objectives when looking at each coin. You also have to know how much you are willing to study the technology behind each of them.
If you have some knowledge of coding or a computer science background, then understanding the changes in protocols that often happen with Ethereum will be much easier for you, and you could use this knowledge along with your understanding of finance to gauge whether a certain move could hurt or help ETH.
If you are in this category, then it would be wise to start looking up ETH prices on places like OKX and test your knowledge. Ethereum is about to go through serious changes over its staking system, which could have a significant impact on the price of ETH, and now could be a great time to start studying its movements and predict where it could go in the future.
What is Bitcoin for?
Everyone should have at least some bitcoin in their portfolio, but it can be very tricky as an investment. Predicting movements can be more difficult than with a coin with a clear direction like Ether. But there are some areas where bitcoin could be a better option.
If you’re looking for a reliable store of value in the long term, then betting on bitcoin now could be a good option. That’s because bitcoin will always be deflationary and is very cheap at the moment, and we could very well see a scenario where people start using it as a shield against rising inflation and start fighting over it as the supply becomes increasingly scarce.
Both Ethereum and Bitcoin are great investments that should be considered. They have their advantages and inconveniences, and one may be better for you depending on your expertise and needs, so look into both in-depth and take your time before you make your final decision.