Crypto-currencies have gained in importance and popularity in the past years. Bitcoin (BTC) alone is often mentioned. However, in addition to the oldest crypto currency, Ethereum (ETH) in particular has established itself, which follows a somewhat different concept in important details. What are the differences?
In times of economic uncertainty, more and more citizens talk about Bitcoin (BTC). The mother of all crypto-currencies promises, through its principle of decentralisation, to be a store of value protected from the influences of monetary policy and central banks. Meanwhile even institutional investors are shifting parts of their funds into BTC, and in addition to protection against inflation, considerable profit opportunities are cited as a reason. Among the many thousands of Altcoins that exist today, it is Ethereum (ETH) that has proven to be the second most important crypto currency. ETH is also technologically based on a block chain, which guarantees the decentralized principle. But there are differences between BTC and ETH that investors should know about.
Basic information about Bitcoin
- BTC practically started in January 2009, a few months earlier an anonymous person under the name Satoshi Nakamoto had published his white paper on Bitcoin.
- By 2011 at the latest, Bitcoin began to spread more and more, the idea of a currency free from the influence of others was convincing in a captivating way. At the same time, the first projects began, which BTC partly imitated and partly scored with additional functions.
- When the first major crypto-boom began in 2017 and Bitcoin reached its all-time high of $20,000 per BTC, which is still valid today, dominance was cemented. With market capitalization as a benchmark, Bitcoin accounted for almost 87 percent of the total market for crypto currencies in 2017.
- In August 2020, more than $200 billion was invested in Bitcoin and BTC has proven to be technologically stable for more than a decade now – no hacker has been able to crack Bitcoin’s code.
Basic information about Ethereum
- The story of Ethereum began in 2013, when a young computer scientist named Vitalik Buterin presented a white paper. Buterin was convinced that crypto currencies should do more than just a network with payment functions.
- In 2014, Buterin and his team, via ICO, collected the equivalent of almost 20 million US dollars in BTC to put the Ethereum idea into practice. Ethereum was to make it possible to link remittances to binding agreements (smart contracts).
- In July 2015, Ethereum went live and immediately succeeded in presenting an alternative to Bitcoin. In addition to the ability to use ETH in Smart Contracts and DApps, it was the higher speed in the network that was impressive.
- By 2020, Ethereum is the undisputed number two among crypto currencies with a market capitalization of more than 40 billion US dollars. ETH’s technological basis is so good that it is being copied en masse by so-called ERC-20 tokens (https://block-builders.de/was-sind-erc20-token/).
What distinguishes ETH and BTC?
- Ethereum’s block chain usually takes only seconds to confirm an action. With Bitcoin, the average waiting time in minutes should be taken into account.
- In a transaction from BTC, a comment can be inserted. But ETH allows code to be attached that controls Smart Contracts and decentralized apps.
- ETH wants to make itself future-proof with Ethereum 2.0 and change the technological protocol for this purpose. With Bitcoin, the proven technological basis will not be shaken; innovations such as the Lightning network will be set up from outside.
- The two largest crypto currencies, which were long seen as complementary alternatives, have become competitors from the point of view of investors. The long-term price developments of ETH and BTC indicate that Bitcoin will remain the leading currency. However, Ethereum can increasingly play out its strengths by offering a wider range of functions.
Conclusion: Bitcoin and Ethereum – two unequal brothers
Current market data in late summer 2020 show If a crypto currency is to be used as a value store, Bitcoin is the first choice. One decisive point here is that the maximum number of BTCs is set at 21 million; ETH has no such upper limit. Investors can also benefit from price developments and the use of financial instruments such as Bitcoin Futures.
These opportunities are also available at Ethereum, but the capital invested there is still about five times smaller in direct comparison to Bitcoin. In return, ETH is demonstrating its technological advantages in the rapidly developing industry DeFi and has so far confidently fended off all competitors who wanted to shake Ethereum’s status as the number two crypto currency.
In the end, investors have two solid options for entering the crypto-currency market. The short formula is: Bitcoin is digital gold and Ethereum is digital silver. Both crypto-currencies reflect the increasing popularity of digital currencies, which meet the requirements of the online world through decentralization and tamper resistance. Those who think long-term will discover in BTC and ETH the concepts that have already begun to revolutionize the financial world.
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