Similar in some areas, these two networks also have their unique differences. In some cases, some investors choose to include the two cryptos in their portfolio along with some other assets. However, due to the unique differences between Bitcoin and Ethereum, there are crypto users who believe that one is better than the other.
To better understand why the Bitcoin maximalists and the supporters of Ethereum have contrasting opinions, let us consider a bit about the history of the two cryptos and how they came about.
History of Bitcoin
Bitcoin is the first ever cryptocurrency. Before the creation of the asset, there had been previous attempts at creating online currencies like B-Money and Bit Gold with ledgers secured by encryption, although they ended up not fully developing them.
Bitcoin was created in 2008 but was released as an open-source software in 2009. The Bitcoin network is based on ideas from the whitepaper by its pseudonymous creator and owner, Satoshi Nakamoto.
As the first, Bitcoin opened the way for other cryptocurrencies, which are collectively known as altcoins. After its release as an open source software, mining of the asset started. The first Bitcoin block, Block 0, also known as the “genesis block” alongside the second block, Block 1, was mined the same year the coin was launched.
Unlike most crypto assets, Bitcoin has a limited supply. The maximum number of units of Bitcoin that will be circulated is 21 million, not more, not less. New units of coins are released as rewards to miners for completing a block of transactions. The number of Bitcoins released is halved every four years or after the completion of 210,000 blocks.
After the last halving on May 11th, 2020, the rewards that miners receive were reduced to 6.25 Bitcoins. Since its creation, the price of Bitcoin has gone through highs and lows. The current market cap of Bitcoin is at $789 billion, it has a circulating supply of 18 million units while one unit of the coin is currently sold at around $41,000.
History of Ethereum
Ethereum is a decentralized, open source blockchain platform that is used to verify and record transactions through smart contracts without the need of a third party. It was launched in 2015 by a programmer named Vitalik Buterin although he came up with the idea in 2013 at the age of 19.
The native currency for the network is Ether (ETH) and it uses its own programming language called Solidity. On the Ethereum network, there are decentralized apps available that users have access to known as “dApps.”
Before they can be allowed to access those apps, the users on the platform have to pay fees first. The fees are known as gas fees and the amount a person pays depends on the amount of computational power required.
Ethereum has recorded feats since its creation and has continued to grow such that it is currently the second-highest crypto after Bitcoin in terms of market cap. The cryptocurrency has a market cap of $335 billion, a circulating supply of 117 million units where one unit is sold at around $2,800.
Why the Two Cryptocurrencies Are at War
Like every product in the same line of business and possessing a number of similar features, Bitcoin and Ethereum have most likely at some point acted as competitors.
While the two assets have different roles they play in the crypto space, there are still investors that side with either of the two, stating that one is better than the other, as mentioned at the onset of this article.
Below are some reasons why they believe that Bitcoin is better than Ethereum and vice versa:
For Bitcoin, decentralization is a critical issue. Due to the fact that the creator of the asset is unknown and goes by the pseudonym Satoshi Nakamoto, he has no control over Bitcoin, making it more decentralized than Ethereum.
For the latter, although created to be fully decentralized, it has shown to be more centralized than Bitcoin through the network downtime in addition to the random and impulsive changes made to the protocol at times.
Features and purposes
Bitcoin is a digital currency used to perform everyday financial transactions, more popular than Ethereum, and also a store of value. For Ethereum, however, it is more than that. In addition to being a cryptocurrency, the platform creates and builds smart contracts and DeFi apps.
Bitcoin has a limited supply of 21 million units, which will cause the value of the asset to rise overtime and prevent inflation. For Ethereum, however, with an unlimited supply, the appreciation of the value of the currency will happen at a slower rate than Bitcoin.
Bitcoin transaction fees are much lower compared to that of Ethereum. While Bitcoin transaction verifiers are rewarded, those participating in Ethereum transactions are required to cover the fee.
It takes 10 minutes to add a block to the Bitcoin blockchain, while it takes only about 12 to 15 seconds for Ethereum.
Bitcoin uses a hashing algorithm known as SHA-256, to maintain privacy and secure the network, while Ethereum uses a cryptographic algorithm called Ethash.
Should You Buy Bitcoin or Ethereum?
The controversial issue going on between the supporters of the two assets as to which is better should be put to rest given that Bitcoin and Ethereum both have different unique features they provide. Both cryptocurrencies arose from different ideas and so the choice of which asset to choose or buy should depend on individual investors’ preferences, risk profile, and requirements.