What to Buy: Bitcoin or Ethereum?

What to Buy: Bitcoin or Ethereum?

Cryptocurrency, popularly known as “crypto” for short, acts in some ways like any other currency: it allows you to buy goods and services.

You can also trade them to turn a profit, which is how many are coming to cryptocurrency with the recent surge in interest.

Since the development of cryptocurrency, many companies have established their own currencies, which are often referred to as tokens. In this sense, they’re akin to casino chips.

What Are Cryptocurrency and Blockchain?

But what makes cryptocurrency different from fiat currency like the U.S. Dollar (USD)? Unlike USD, which is centralized under the U.S. Federal Reserve, cryptocurrency works via blockchain technology.

But what is blockchain? Blockchain is a decentralized technology that works across many different computers to manage and record transactions in an ostensibly more secure fashion.

According to CoinMarketCap.com, a research website in the crypto space, there are now more than 6,000 different publicly traded cryptocurrencies!

With some of these, such as the now-infamous Dogecoin touted by Elon Musk, rocketing up thousands of percent in a matter of weeks or even days, it’s easy to see why money continues to pour into the space.

As of April 2021, there was more than $2.2 trillion in all cryptocurrencies combined, according to CoinMarketCap, with the total value of all bitcoins valued at $1.2 trillion, or roughly 55% of the total cryptocurrency market.

Cryptocurrencies are increasingly popular because “crypto bulls” or supporters, view them as the future of currency. These bulls want to buy up the coins now since they believe that they will only appreciate with time.

There is also an appeal to people in terms of the removal of centralized banks and the heavy hand that they can wield in terms of manipulating inflation, raising interest rates, etc.

One aspect of cryptocurrency is called DeFi, which stands for decentralized finance and continues to draw a lot of interest from people who like the technological implications of cryptocurrency.

For example, some crypto bulls view blockchain as an innovative technology with lots of potential future applications as a decentralized processing system that offers more security than traditional payment systems.

Finally, some simply see it as a way of making money, as they have ascended rapidly in value since the last cryptocurrency correction. Bitcoin, for example, is up roughly 500% in the past year, while the popular stock market index the S&P500 is up roughly 30% in the same span.

There are some potential issues with cryptocurrency that some of these crypto bulls fail to recognize (or simply choose to ignore). For one, with its extreme volatility, it doesn’t make sense for them to serve as a means of exchanging goods or services.

Another aspect of this volatility that disincentives spending is straightforward: why would I spend my bitcoin when it could very well be three times as valuable tomorrow?

Nonetheless, cryptocurrency appears here to stay, and we’ll start by looking at the one with by far the most name recognition.

What Is Bitcoin?

If you’re reading this, you’ve probably heard of Bitcoin. Not only is it the very first cryptocurrency, but it’s also the best known among the thousands of cryptocurrencies that now exist.

With increasing adoption and investment by major financial players, e.g. hedge funds, Paypal, Tesla, etc., Bitcoin now maintains an unavoidable presence in both the financial world as well as popular culture.

Bitcoin’s creator, Satoshi Nakamoto, whose identity is still unknown to the public, first described the need for “an electronic payment system based on cryptographic proof instead of trust.”

By dispensing with the intermediary of a bank, Satoshi, as he’s commonly referred to, had an innovative idea that has since appealed to millions.

As a decentralized currency, bitcoins aren’t backed by anything, neither governments nor issuing institutions. Instead, they rely on a general belief that they have value, somewhat like precious metals, although those also have some utilitarian and aesthetic value.

The blockchain underlying Bitcoin is incredibly difficult to defraud. To correctly guess the key code to a Bitcoin wallet, the thief in question would have to have the same sort of luck that would win him the Powerball lottery nine times in a row, according to Crypto Aquarium’s Bryan Lotti.

Bitcoin’s prized level of security works because new transactions are constantly added to the Bitcoin blockchain. Crypto “miners” deploy computers to solve complex mathematical problems, which helps authenticate transactions.

With this high level of security and its name recognition, it’s no surprise that people are asking themselves if Bitcoin is a good investment for them. I’ll be covering that later in this article. First, let’s look at what some people see as Bitcoin’s little brother, Ethereum.

What Is Ether?

Started in 2015, Ethereum is a platform and Ether is its cryptocurrency. Ethereum’s platform relies on its own blockchain to offer a platform for its own cryptocurrency, known as “ether.” Open-sourced, Ethereum has largely risen in popularity due to its ability for anyone to contribute to its platform, making it more versatile than the blockchain supporting Bitcoin.

The Ethereum blockchain, for example, permits SmartContracts and Distributed Applications (DApps) to run with no risk of significant downtime, potential fraud, control issues, or unwanted interference from third parties.

These DApps run on Ethereum’s token, Ether. Ether permits you to move around on the Ethereum platform, kind of like how gas powers your car, so that apps can be developed and run.

Beyond that, Ether is traded much like Bitcoin and other cryptocurrencies. Like Bitcoin and the crypto space in general, Ether has had a huge run since its inception, and particularly in 2021.

One of the main benefits to Ethereum is the rate of speed that its transactions are completed: a mere 15 seconds or so compared to Bitcoin’s 10 minutes.

The second-largest cryptocurrency behind Bitcoin, there are also far more units of Ether in circulation than there are Bitcoins.

Should I Buy Bitcoin?

Bitcoin is the undisputed leader of cryptocurrency. As previously mentioned, with more than 50% share of the crypto space as well as the greatest name recognition, Bitcoin reigns supreme.

Another compelling factor about Bitcoin is its recent mainstream adoption. Companies as big as Tesla and Square (owned by Jack Dorsey of Twitter fame) hold Bitcoin as part of their company’s investments.

This level of institutional support might potentially stabilize prices. Either way, it adds a great deal of legitimacy to the crypto space in general, but particularly to Bitcoin.

Bitcoin also doesn’t rely as heavily on its own platform like Ether does with Ethereum. Should the Ethereum platform lose its popularity, the value of Ether will almost certainly decline.

Some point to Ether’s faster transaction speed as a reason to buy Ether rather than Bitcoin.

It’s worth noting, however, that Bitcoin is slow on purpose to some extent. This is because it makes security its main priority and thus takes longer to process its transactions.

Should I Buy Ether?

Ethereum’s website claims that their platform can be used for a wide variety of applications: to “codify, decentralize, secure, and trade just about anything.”

And this corporate legitimacy provides increasing fuel for more mainstream adoption of Ethereum/Ether, making it currently one of the safest bets in crypto.  

Some also feel that buying into Ether is an investment in the Ethereum platform as a whole, “making a bet on the continued success of the decentralized ecosystem built on Ethereum,” as Phil Bonello, the acting director of research at Grayscale Investments, puts it.

Nonetheless, Ether, like the crypto space in general, is a highly speculative, and thus highly volatile, investment.

It is drawing both increasing interest and investors every day, however, so this suggests continued appreciation—at least in the short term.


So, Bitcoin or Ether is your burning question, right?

Well, as with any financial decision, you ultimately have to (or should) come to your own conclusions.

And, as unsatisfying as it may be, it’s ultimately quite difficult to predict which of these two cryptocurrencies will make for a better long-term investment.

That said, Ethereum appears to have a slight edge over Bitcoin if we take into account Ether’s recent bull run and Bitcoin’s relative stagnation.

There are bulls on each side, though, who will passionately argue for their own belief. In any case, future research is highly encouraged before you invest in the crypto space in general.

One strategy is to hedge your bets and buy into both Bitcoin and Ether, which also helps you diversify your money.

You could split this investment 50/50 or, depending on your belief in the greater likelihood of one’s long-term success, tilt the balance in favor of that one.

You can also apply the time-tested investment strategy of dollar-cost averaging, i.e. investing the same dollar amount at habitual intervals into a given position (in this case, one or both of these cryptocurrencies).

Either way (ether way?), it’s likely going to be a wild ride!

Image by [TheDigitalArtist]