Do you know what cryptocurrencies are? We are guessing you probably know because that is why you are here today reading this blog on Bitcoin vs Ethereum. Still, we will cover the basic definition of cryptocurrency for those who have landed on this page by accident and are eager to learn. Cryptocurrency, in simple terms, refers to a digital currency that enables you to purchase goods and services in a cashless manner or even trade for profit. Do you know the two most famous cryptocurrencies? Yes? Kudos! You have guessed it right. The two most famous cryptocurrencies of today’s time are bitcoin (BTC) and Ethereum (ETH).
Interestingly, bitcoin and Ethereum are known as the Coke and Pepsi of the crypto world. In terms of total market cap, they are considered to be in the 1st and 2nd positions. But, as we dive deeper into the intricate concepts of cryptocurrency, bitcoin, and Ethereum, we come to know that these two serve entirely different purposes. It is more or less like making a comparison of coke with a vending machine. Therefore, gaining knowledge about both – bitcoin and Ethereum will indeed help you in digging deep on the path of technological advancements, where everyone is growing together as a culture.
Nowadays, bitcoin and Ethereum are witnessing exponential price growth, which is inviting more investors every single minute to the crypto industry. Even though bitcoin and Ethereum are generating huge amounts of interest, many people still face confusion in currency selection. And that’s totally normal. Many new investors don’t know the exact difference between the two. If you are one of those, then fret not! We are here to your rescue. In this blog, we will cover the nitty-gritty of bitcoin and Ethereum. We will start by understanding the market cap of both these valuable assets.
We measure the performance of any cryptocurrency by its market cap. If we talk about the market cap of Ethereum as of/till 17th August 2021, you would be surprised to see the results. Ethereum’s market cap has reached new heights as it has grown over to 250 billion USD. It is for the first time Ethereum has reached this feat. Its market capitalization in August 2020 was half this amount. But, in comparison to bitcoin, Ethereum’s market capitalization isn’t very high.
In April 2021, the market capitalization of bitcoin was around 1000 billion USD. The capitalization fell to roughly 600 billion USD in July 2021, still way higher than Ethereum’s market capitalization.
History of Crypto Asset
If you’ve been up with cryptocurrency recently or are just curious to know about how they work, then you should first understand the history of digital cash and cryptocurrencies like bitcoin and the underlying blockchain technology associated with it. While the creator of cryptocurrency is a mystery, there is ample information about the history of cryptocurrency that will help you navigate your decisions around crypto investing and trading in this relatively new asset class.
One of the biggest names associated with cryptocurrency is David Chaum, a computer scientist, and mathematician who invented Digicash and had a role in the development of cryptocurrency. But the true origin of crypto remains somewhere else. Modern cryptocurrencies were first described in 1998 by Wei Dai. The concept was fully discovered after the release of a white paper that explained bitcoin and blockchain technology. “Satoshi Nakamoto” is presumably the author of this white paper.
Bitcoin or cryptocurrency in general runs on a technology called the blockchain. Blockchain technology works on a triple book-keeping system in which the sender, the receiver, and the third party must confirm the new transaction every time one occurs.
Supply of the Cryptocurrency and Key Price Drivers
With regards to the total; supply of bitcoin and Ethereum, there is quite a difference. Bitcoin caps its supply of 21,000,000 coins. The Bitcoin strategy ensures the preservation of scarcity in the market. On the other hand, Ethereum doesn’t have any cap amount. The network has to produce more ETH to cover the gas fees. Currently, there are 114,467,625.91 ETH in circulation.
The key price drivers that influence Bitcoin and Ethereum are:
- Supply of Bitcoin and Ethereum and the demand for it in the market.
- Cost of production through the mining process
- The rewards are given to miners for verifying blockchain
- The number of competing cryptocurrencies
- Number and type of exchanges they trade on
- Rules and regulations governing their sale
- Internal governance
Mining Process and Rewards
Mining is the process of creating a block of transactions added to the Bitcoin/Ethereum blockchain. The mining process of both of these cryptocurrencies is somewhat similar.
Well, on each cryptocurrency network, the nodes get different mining rewards. The bitcoin miners get a mining reward of 6.5 BTC when they complete the SHA 256 equation and add blocks to the blockchain. On the other hand, the Ethereum miners get a mining reward of 2ETH for taking part in validating blocks of transactions.
All-Time High Values since Inception
- 2010- $0.39
- 2011- $31
- 2013- $260
- 2014- $440
- 2015- $360
- 2016- $1000
- 2017- $20,000
- 2018- $17,000
- 2019- $13,600
- 2020- $41,973
- 2021- 4,362.35
- 2020- 30
- 2019- 361.40
- 2018- 1,432.88
- 2017- 881.94
- 2016- 14.43
Pros and Cons of Investing in Bitcoin and Ethereum
Even though cryptocurrencies seem fun, they too have pros and cons. As it is rightly said- ” Every coin has two sides”.
|Bitcoin||Potential for high returns||Highly volatile and can cause loss|
|Diversification and high liquidity||black-market activity|
|Ethereum||High security and authentication||Struggles with scaling|
|Not capped||Uses a complicated programming language|
As we look into the future, it becomes clear that Bitcoin will make strides to become an accepted currency worldwide. But, neither Bitcoin nor Ethereum can be considered a “safe” option for investing. So far, they both have had Rollercoaster years since inception, full of ups and downs. Bitcoin carries less risk than Ethereum because of its long track record and greater name recognition. On the other hand, Ethereum too has growth potential in the coming years.
Make sure to choose an option only when you’re comfortable handling risks. Do your research and then proceed. Cryptocurrency isn’t right for everyone, but choosing the right investment based on correct research can help you make the most out of your investment.