The new-age currency is - Cryptocurrency, an umbrella term used to denote thousands of digital coins that have created a playfield for themselves.
The prominent feature of any cryptocurrency is that it operates on blockchain technology which keeps it free from government regulations. Also, the transactions are recorded in decentralized ledgers, eliminating the role of any intermediary while placing the control right in the hands of people.
The idea in itself was so revolutionary that after the invention of Bitcoin in the year 2008, developers could not resist the temptation of inventing new generations of coins utilizing the fundamentals of cryptocurrency.
The post aims at bringing a thorough analysis of two such coins, Ethereum versus Bitcoin, that are currently leading the pack.
Bitcoin is a digital currency with a limited supply of 21 million tokens. It follows blockchain technology and is based on the distributed public ledger to record the transactions.
Basics in Quick Shot
Bitcoin involves the process of mining which is practised to bring the coin into existence. In other words, a miner is presented with the reward of a bitcoin in return for him performing the mining, which is about solving the computational math problems.
Market Analysis of Bitcoin
Bitcoin has earned the leverage of staying in the market for the longest. Just so that it made the first entry in the cryptocurrency, it gained the trust and confidence of people more than any other cryptocurrency has ever got.
Bitcoin took a huge rise after Elon Musk invested nearly $1.5 billion in it. The backing from Tesla has led Bitcoin to hit the highest of $46000 that speaks a lot about how volatile it can be.
The fluctuations in the price of Bitcoin right between the Tesla investment and its decision to withdraw the Bitcoin payments is a testimony that Bitcoin is still in its transition phase of adjusting itself according to the market conditions.
The primary reason for Tesla withdrawing from receiving bitcoin payments was the climate concerns attached to it. It brings us to the con of Bitcoin - which is the excessive consumption of electricity involved in mining.
Seeing a bigger picture, we cannot say with certainty where Bitcoin is heading, but the graph of its performance suggests that it is yet to have its fair share of ups and downs until it adjusts itself to find a permanent place in the market.
Ethereum, just like Bitcoin, operates on the fundamentals of blockchain technology and decentralized ledger systems with noticeable variations.
Unlike Bitcoin, Ethereum is not a currency but a platform to create decentralized applications and smart contracts. It too has its coin called ‘Ether’ but holds a wider lens which expands the size of its chest by not keeping it limited to just currency.
Basics in Quick Shot
Ethereum is planning to shift to the system of PoS (Proof of Stake) which means the mining of the coins would depend upon the percentage of the coin holding, unlike PoW where the miners are required to solve the complex puzzles - owing to heavy usage of energy resources.
Ethereum extends its application to smart contracts, Defi and NFT’s which offers a wider scope of dealing in this circle.
Market Analysis of Ethereum
Ethereum, in comparison to Bitcoin, holds much less market share in terms of its acceptability. That means the number of companies accepting cryptocurrencies in exchange for their goods and services is much less in number, restricting its trade.
With Ethereum recently announcing the London Hark Fork and planning major structural changes, it can be well ascertained that volatility is one thing that comes along with its dealing.
The subsequent effect it may bring is that the PoS structure enables the cartel of a handful of investors to gain control over the rest.
Performance-wise, the transaction time of Eteherum is much less than that of Bitcoin and promises much more than just being a digital medium of exchange.
The evolution of Defi and NFT states a lot how blockchain technology was just a seed encapsulating in itself the entire dynamic of programmatic contracts and applications.
Bitcoin is a just currency whereas, Ethereum is a ledger technology.
Seeing it from the prospect of earning a better return seems much more plausible with investing in Bitcoin while analyzing the growth prospect of coin tips the balance in favour of Ethereum somehow.
In which one you should invest depends upon the outcome you are expecting in return.