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Bitcoin vs. Ethereum – Which is the More Worthwhile Investment?

May 11, 2018
Bitcoin vs. Ethereum
Which is the better investment – Bitcoin or Ethereum?

When standard investment options such as property and the stock market aren’t looking as lucrative as you would have liked, then you may instead be considering investing in cryptocurrency. While to many, cryptocurrency is a foreign concept that’s better to stay away from, knowing more about your options can more than satisfy your curiosity and concern.

The hardest part about investing in cryptocurrency is understanding what options are out there, and how leading cryptocurrencies stack up against each other. If the time has come to put your money where your mouth is and choose an investment option, consider Ethereum or Bitcoin – or even both. We’ve outlined the pros and cons as well as information about both to help you to make an informed decision.

What is Bitcoin (BTC)?

Bitcoin is the most well-known cryptocurrency available, and it’s also worth the most. It was first released in January 2009 and became known as the first decentralized currency in the world. However, there are two sides to Bitcoin.

Bitcoin is a token that represents money, value, and digital currency. But, it is also a protocol, a network with a ledger of balance that handles and controls the token. You can use the Bitcoin system to enable payments of the Bitcoin token, and it’s held electronically. They aren’t physical fiat currency you can carry or touch, instead they are electronically produced digital coins that are mined using computer software.

What is Ethereum (ETH)?

Ethereum is very similar to Bitcoin in the respect that it’s both a network and a coin called Ether. It arrived on the world stage six years after Bitcoin’s inception but didn’t follow along with the same goals or aspirations as that of Bitcoin.

While Bitcoin aims to be an electronic cash system for making payments with Bitcoins, Ethereum focuses on helping to run code for decentralized applications. Rather than mine for Ether as you would with Bitcoin, you work to earn it. Application developers also use Ether to pay for fees and services on the network provided by Ethereum.

What is Bitcoin’s Value?

The value of Bitcoin is a little tricky to determine because it still holds the award for being one of the most volatile coins on the market. In as little as an hour it can drop by several hundred dollars, and in as little as a day can grow by thousands. Therefore, it has often been referred to as the Russian Roulette of investments. And, for a good reason.

For a long time, the price of Bitcoin was stagnant. Investors were all too willing to invest in it to see what would happen, but for years nothing did. Then, in 2017, that all changed. By January it had reached a value of $900 before skyrocketing to over $3,000 just a few months later in May. By mid-October, it was worth over $5,000 before exceeding all expectations just months later.

In December 2017, it reached an all-time high of $19,783.21, not far short of hitting the $20,000 mark. In the following months, it would experience a rapid decline, being worth as much as $9,000 in May 2018.

What is Ethereum’s Value?

Ethereum’s value, while conservative when compared to Bitcoin, is set to be the point of focus for many investors. While at the beginning of May it was falling just short of $800, there are many predictions to see it reach as much as $2,500 in a 12-month period. In fact, in two years there is hope for it to be worth as much as $14,000. There’s every reason to believe we’ll see Bitcoin-like growth.

Ethereum’s value still has significant growth left in it for a number of reasons. It is now being used for different applications, more companies are adopting cloud-based applications that are decentralized, and there is also a growing number of people using smart contracts.

These are all areas in which Ethereum focus, unlike Bitcoin which aims to be a transactional method. Experts also predict that Ethereum will become the second-most valuable cryptocurrency determined by its market cap. This all reassures investors that when compared to Bitcoin, it may be the more sensible investment choice.

Pros and Cons of Bitcoin

There are many pros and cons of Bitcoin, which is what makes choosing to invest in it challenging. On the one hand, there is money to be made, but on the other, you can lose just as much as you invest as well.

Pros –
More Acceptable as a Payment Method
Unlike most other coins on the market, Bitcoin is more widely accepted by merchants. You can purchase both physical and virtual items with it while reducing the need for fiat currency in the process.

Better Liquidity
The liquidity level is far better than Ethereum and other coins. As a result, you lose less of it when you convert it back to fiat currency.

Lower Fees
If you were to compare Bitcoin to the likes of PayPal and credit cards, it does have lower fees of around one percent. Most other payment methods are upwards of two or three percent.

Keep Your Anonymity
While governments around the world are fighting back against the anonymous use of cryptocurrency, Bitcoin still ensures your privacy is protected. It has built-in privacy protections that enable you to keep your fiat and digital currency separate.

It’s Limited
Unlike Ether which has no limit to how many coins can be created, only 21 million BTC will ever exist. As the law of economics demands – scarcity creates demand which drives up the value. There’s every possibility we can see more significant highs than we’ve ever seen before – especially as over time, more and more users can lose their coins.

Cons –
Environmental Damage
It’s hard to believe that a virtual coin could have a detrimental impact on the environment, but it can. Mining bitcoin uses up a substantial amount of energy, and it’s thought that at the current rate of mining, the world will need to produce twice as much power as it currently uses by 2020.

Volatility
Unlike fiat currency where the value of one dollar is always one dollar, Bitcoin fluctuates dramatically. While this may have been of benefit you if you invested back in 2009, it’s not so helpful now. The volatility means that if you buy one BTC for $9,000 today, it may be worth significantly less in, say, a week’s time.

Pros and Cons of Ethereum

Just like Bitcoin, Ethereum comes with its own list of pros and cons. It’s up to you to decide whether those pros outweigh the cons when you’re looking to invest.

Pros –
Bright Future
One of the most standout features of Ethereum is how bright its future looks. As it’s designed to run code for decentralized applications – a growing trend – it’s more than likely going to help establish an increasing value for Ether. The more businesses that run decentralized cloud-based applications, the more popular Ethereum and Ether will become.

Growing Value
Unlike Bitcoin which is currently on a downward trend, Ethereum’s value is less volatile. While it’s only worth a mere fraction of what Bitcoin is worth, its gains are, as a whole, more significant. Experts believe that in a few years it could be worth as much as $31,000. Therefore, investing now can seem like a good idea.

It Offers More
Bitcoin, while building on its features all the time, didn’t start out with the same objective as Ethereum. Ethereum, from the beginning, aimed to establish itself as both a network and a coin. It wanted to provide a service, and that service has now become exceptionally valuable. A coin and system that can continue to flourish and offer more than its competition is going to be more valuable in the long run.

Cons –
Not as Valuable
Of course, we mentioned above that Ethereum’s value is continuing to grow, but if you wanted to make money now and quickly, Ethereum is not a good choice. It has been lingering around the $900 mark for a while now, whereas Bitcoin will likely hit $10,000 by the end of May 2018.

Ether Needs Ethereum
The success of Ether as a cryptocurrency wholly depends on the success of its network – Ethereum. If a bigger, more lucrative cryptocurrency and system hit the market, with more potential, there’s every reason to believe Ether will become next to worthless. For example, the revolutionary NEM project has investors already torn between investing in NEM or Ether.

In conclusion, in the Bitcoin vs. Ethereum battle, there is no real outright winner. The winner for you as an investor will be which cryptocurrency can satisfy your bank balance and business operations the best. Right now, Ethereum’s future is looking far brighter than that of Bitcoin, but Bitcoin’s volatility makes it a possibility to make incredible gains in a short space of time.