Following bitcoin's stomach-churning price drop, where more than $6,000 in coin value was lost in the span of a month, investors are beginning to think more seriously about diversifying their cryptocurrency portfolios. In the last year, many of bitcoin's would-be competitors have stolen market share from bitcoin, with the trend unlikely to change in 2018.
As part of a continuing series, we will compare bitcoin with the coins that are seeking to displace bitcoin as king of the hill. In this article, we will be looking at Ethereum.
The first programmable altcoin, Ethereum sought to create an altcoin where the developer can determine the use of the blockchain and create an ecosystem suitable to his or her needs without needing to rely on the limits in data transcribing and third-party access that bitcoin offers. Ethereum differs from bitcoin by having a native coin that can be programmed into a smart contract, an autonomous agent capable of conducting transactions without the need of a third party, and by offering a virtual computing space where decentralized applications or "Dapps" can operate on the blockchain.
These differences have made Ethereum the preferred altcoin of the fintech world. An increasing number of companies are building applications to utilize Ethereum's unique plasticity, making the blockchain's future usefulness obvious. However, as Ethereum has no monetary value on its own, the question of whether Ethereum is a better investment option than bitcoin is an open one.
Tales of the Tape (as of January 28, 2018)
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Bitcoin | Ethereum |
| Purpose of coin | Proof-of-concept for altcoin model; digital currency | Programmable platform and agent for customizable transaction systems |
| Governance | Decentralized; overseen by not-for-profit foundation; decisions determined by a democratic vote among nodes and miners | Decentralized; overseen by not-for-profit foundation; decisions determined by consensus among nodes and miners |
| Number of coins | 21 million; 16.83 million mined | No set maximum, although the supply is not unlimited (The system's decreasing genesis of coins will eventually hit equilibrium with the system's coin destruction, resulting in zero growth.) ; currently, 97,275,665.59 Ethers (This is determined by reverse inflation of coin genesis from year-to-year.) |
| Market capitalization (as of January 28, 2018) | $198.37 billion | $117.96 billion |
| Obstacles to success | Changes difficult to achieve; slow transaction times; high transaction fees | Potential development of proprietary fintech blockchain solutions |
| Transaction time (average) | 1,570 minutes (one day, two hours, and ten minutes); seven-days high: 11,453 minutes (seven days, 22 hours, 53 minutes); current transaction fee: $9.824; transactions expedited by paying miners | Less than fifteen seconds, depending on whether is enough gas available to complete the transaction; current average transaction fee: $1.19; median transaction fee: $0.50 |
| Reason for success | As the first digital coin, there is a sense that bitcoin must succeed for the industry to succeed. With many of bitcoin's "imitator" coins being tied to bitcoin in an irrevocable way, there is a "we all succeed or we all fail" mentality currently in place. | The ease with which Ethereum can be applied to custom distributed ledger solutions makes the platform both desirable and easily-manageable. Also, the Ethereum community takes to change and adaption faster than the bitcoin community. |
Understanding Ethereum
Ethereum was created to address key perceived deficiencies in the bitcoin code. Among these are the block size, the number of coins, and the ease in programming platform coins and applications that function in the same virtual space as the blockchain.
While it took Ethereum more than five years to reach relevance against bitcoin, Ethereum currently has four times the daily transactions as bitcoin. Bitcoin remains king in conveying wealth but pales to Ethereum's potential for scripting data storage over a distributed network. This gives Ethereum extreme usability to, say, a retail store that is looking for a way to upgrade its inventory and sales platform, such as what Walmart is doing with Ethereum. This is one of the reasons why there are more Ethereum-based ICOs than bitcoin-based ones.
With Ether, Ethereum's native coin, predicted to reach $5,000 in 2018, Ethereum is an investment to consider. However, it is worth remembering that Ethereum and bitcoin are not necessarily comparable and that assessments between the two should reflect the uniqueness of both coins.
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i vote for etherum
Personally, I think bitcoin is over hyped. There are not much use cases of bitcoin with this much fees and long time period required to verify the transactions then why it is being ranked the no one crypto currency just because it was the pioneer?
On the other side, Ether is quite more useful and fast. If you take the sum of the wort of all the coins built on BItcoin blockchain( :p ) and ether blockchain then I am sure ether will win. Ether has creadted more value.
I can't agree on Bitcoin being overhyped. "First mover advantage" does have its benefits. Bitcoin is well known, and for most people cryptocurrency = bitcoin, bitcoin can be traded for every other coin. That alone is a big reason for huge market cap. It has issues but it also has strong core development teem who actively working on fixing its issues (e.g. SegWit). So it does have potential to suddenly grow in value once some of it's issues are resolved.
Yes, you have a point there. I am just saying, it has a first mover advantage but if you just track and see the innovation or positive changes bitcoin had in the last two years as compare to other new coins who learnt from bitcoin and implemented it beautifully are not much.
Bitcoin the name itself attracts people because it’s well known. Bitcoin is what people think of when someone says crypto currency no one outside the crypto world knows about the other coins. Until some other coin gets to be as well known as bitcoin, well it will just be on top.
I wouldn't completely dismiss Bitcoin's utility though, comparing Bitcoin to Ethereum is a bit like comparing apples to oranges. Both currencies have completely different goals and both have suffered major drawbacks in the past.
I'm rooting for both of them to succeed.
Yup I like to think of Bitcoin as a currency but Ethereum much more as a stock. You are buying a share of the Ethereum network and basically investing in all the ERC20 coins that are built off Ethereum; it's primary usage is not as a currency.
I like to think of Bitcoin as similar to a stock. For a currency it has impracticalities, but transfer fees and time are quite similar to stocks.
But isn't the point of BTC to be a currency that gives more privacy and is decentralized? The last two points don't mean much if it's not a currency - like what is it giving you a stock in?
Well, I don't mean that it has the features of a stock, just that it shares some of the impracticalities of a stock.
On a side note: If a stock was (somewhat) anonymous, decentralized, did not pay yearly bonuses and represented ownership of a company that would never be sold, then you would have an asset quite similar to Bitcoin.
I don't agree that Bitcoin represents ownership of a company - that would make more sense if it was PoS
Yes I definitely think Bitcoin is overhyped due to it's "first-mover advantage" and the resulting popularity that comes from it (as well as probably having the highest price per coin out of all of crypto). Bitcoin was the first and there have been many coins that have taken the base concepts of Bitcoin and tweaked them to improve it slightly. Like there's ZCash, which acknowledges that it mostly comes from Bitcoin, but has improved how mining works, and even Monero which offers much greater privacy in comparison.
Bitcoin does however have a great dev team and that is one place a few other comparable coins are lacking, like BCash
Probably both will be correlated in some way. For the big profit you will need to find a new hidden gem.
Good article, I agree with you. I invested in both coins but I found myself better with ethereum. Bitcoin has a high price and this is good for the people who bought it when it was cheap, but it is bad for all new investors: the risks are too high and with the same money it is cheaper to buy ethereum. Added to this are taxes, which are higher to buy bitcoins than ethereum.
I believe that ethereum has a very good potential and that in the future it could reach 5,000 dollars since many ICOs are financed exclusively through ethereum, for example Eos and Bankera.
Why are taxes for bitcoin higher than ethereum?
Thanks for info
I am investing in both, see my attached portfolio chart. I gotta dump xrp,xvg, and trx replace with neo,html,monero
I think this a great comparison of the two even with their unique differences. It would be nice to see $5000 Ethereum at the end of the year and would make the current price around $1000 seem cheap. Wonder if this is the year of the flippening.
Great information comparing the two. This gives me a better understanding and wants me to rethink some of my investing.
Nice artical but bitcoin invesment is best bcz i invest in crypto currency and my invesment is in bitcoin right choise
For me, the two coins are not comparable! Since Bitcoin is a pure payment and my eighth to look like gold in the Fiat world.
Ethereum is peppered with applications and smart contracts. Technically, I see ETH in the long term before the BTC. My personal opinion.
I think bitcoin is great because it was first and started it all but the fees are getting crazy and eth might just take that number one spot some day, but as of now bitcoin is still the gold in the market and it only has 21 million of them ever so if every millionaire on the plante wants to buy just one bitcoin they could not because their are over 36 million millionaires and only 21 million bitcoin
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It is about making you think from a different perspective.
Excellent post good analyses thanks for sharing.
Ethereum is best investment
If i would have invest in the very moment i would choose Ethereum, it just looks way more promising in the future.
Of course, the user always prefers to make transactions simpler, in less time and of much more value
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Thanks for posting this. So to make sure I'm understanding this correctly and using Walmart as an example. When you say Ether uses smart contracts, Walmart would have a program run on Ether that tracks all of its sales & inventory as well as the currency exchanged? Whereas bitcoin will only help with the currency transaction and Walmart would have to keep a separate sale & inventory record?
That is pretty accurate. Ethereum could be used to create a new smart contract application that Walmart could use to track inventory (for example). In theory, bitcoin could be used as a currency (Overstock accepts bitcoin as payment, for example), but in practice people are currently buying and holding bitcoin as an asset. As the price of bitcoin stabilizes, it would have more use to Walmart as a currency or payment option.
Thanks to share it,,,,I didn't know it before,,,
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Etherium is better
Great convincing arguments, will continue digging into Etherium to see if I will invest a little in it just for fun.
Bitcoin transaction time and costs are real issues, we will see what happen in the futur!
It would be nice to see where Steem stand at the moment and an historic view of the growth of the 3 crypto currencies overlayed with their creation slided at the same time.
Personallyi would prefer. Bitcoin ...easy to gan and trade.... And very popular way of earning now.... I disagree with bitcoin getting over hyped...
I found the part of the table addressing Bitcoin transaction times really hard to understand. Also, while I agree that transaction times and fees of Bitcoin are high, either can easily be compensated for by the other: Paying high fees gives low transaction times. In that sense, only one of them is a problem (Since so many use Coinbase these days, high fees are automatically selected, providing acceptable transaction times). I wonder how the transaction fee/time ratio would have been if Coinbase wasn't around.
That is a little confusing to understand. Thanks for the feedback. This article helps explain bitcoin transaction times in more detail.
This is a very interesting read and I am curious to see which one of the two will come out on top.
If I understand this all correctly, in my opinion, Ethereum will come out on top when it comes to everyday trading and transactions. Bitcoin might still be a stronger long-term investors choice as it is limited. Both having there own pros and cons the market will find a place for both give it enough time!
Thank you for the read @bitcoin-journal
Definitely, of the three coins I invested a small amount in this year, I’ve been most impressed by, and optimistic about Ether. The potential is greater, as is the quick usability. Because of the terms I set for my experiment, I’m not going to put my Bitcoin in Ethereum, but if I were just being smart with my money, I probably would.
Bitcoin is the door opener. Ethereum is what is behind that door. But I personally believe in Steem👍😎🥇
Steem is just much more fun.
My bet is on ethereum. It has the advantage of early adoption for dapps. Decentralised applications are the true value that blockchain can offer. Bitcoin will be superseded by faster and cheaper currencies.
,I didn't know it before ,, thanks to you .. follow me @neljoe