Investing in Ethereum vs. Bitcoin

By March 28, 2017 No Comments

BitcoinWhen it comes to Crypto currency investing, Bitcoin has been one of the most well-known among the general public for a considerable amount of time. However, another crypto currency has entered the fray. Ethereum is currently facing an incredibly fast adoption rate.

Many investors are asking about whether they should consider investing in Ethereum given its recent incredible price rise. The most important question then seems to be whether you should consider cashing in on your Bitcoin and exchanging it for Ethereum.

The Difference

Before you can decide on whether to invest in Ethereum or Bitcoin, you have to know the basic differences between the two currencies. Most of these come down to the technicalities of block chain and protocols.

Firstly, when it comes to blockchain processing times, the average bitcoin chain takes about 10 minutes to clear. However, Ethereum takes a mere 12 seconds to process through its chain. This is mainly down to the specific protocol that Ethereum uses (the GHOST Protocol).

Also, when it comes to the money supply between the two, Bitcoin is approaching its natural limit (as intended). More than two thirds of the available BTC has already been mined. Ethereum has a long way to go before it starts approaching any limits. In fact, only about half of Ethereum coins will have been mined by its fifth year in existence.

Another main difference between BTC and ETH is that Ethereum runs Turing-complete smart contracts. These are essentially applications that rely on if-then statements to execute specific terms of an agreement. In other words, a smart contract ensures that once a predetermined condition is met, the clause in the smart contract is fulfilled.

Which should you Buy

In terms of public awareness, Bitcoin clearly has an advantage over Ethereum. This could impact on demand for a certain period of time and hence the price. Indeed, we are seeing many more online shops accepting Bitcoin as a form of payment. Its low transaction fees as well as anonymous nature give it widespread appeal.

However, many others are of the view that the technology behind Ethereum is much more advanced than that of BTC and hence makes it a “smarter” crypto currency for the future. This is due to the many applications of the smart contracts that Ethereum is run off of. They could have widespread applications as many developers could use them to create certain markets.

This could range from such applications as ride sharing, sports betting, gambling and binary investing.

However, when it comes to potential increases in the value of the currency, Bitcoin appears to be more certain. This is because of the predictability of the supply strictures. In the Bitcoin market, the supply rate is consistent due to hard coded rules. There will only ever be 21 million bitcoins produced. This rate is also limited at only 25 BTC per 10 minutes.

Given that Bitcoin has been around for over 7 years, it is often heralded as one of most secure blockchains. There are also particular concerns around the security of Ethereum. Indeed, in 2016 last year the DAO (Decentralised Autonomous Organisation) suffered a severe hack that needed to be patched quickly.

Therefore, it seems as if Bitcoin is indeed a better currency to hold for the next 5 years. Indeed, based on many trends, analysts are predicting that BTC is likely to increase by as much as 600 percent by 2020. Not until Ethereum has demonstrated a considerable improvement in its security protocols can it be a reasonable competitor to Bitcoin.

Trading Bitcoin

Bitcoin is indeed a volatile asset to invest in currently. This is evidenced by its dramatic swings over the past month. There was the brief period post the Non Farm Payrolls when the price breached 1,300 and was above that of gold. Then, as suddenly as reached an all time high, it fell to 1,000 after the announcement that a Bitcoin ETF was not going to be authorised by the SEC.

However, for reasons as given above, Bitcoin has strong fundamental positioning behind it. Similarly, there appears to be a strong support that has formed between the $900 and $1,000 level. You could also make use of forex trading signals from a reliable provider which can help to confirm your view of when is the best time to enter a trade.

However, as with most things trading related, the investor should carefully monitor his position and have adequate stops in place.

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