CRYPTOCURRENCY: ETHEREUM VS BITCOIN

You might have probably heard about these two giant coins of the cryptocurrency world, and your biggest question has been;Bitcoin or Ethereum which of them should I invest in?

Bitcoin is the most popular digital currency in the world, with its highest concentration in Germany. Germans account for 8% of the crypto market.

On the other hand, Ethereum is the second most popular cryptocurrency with the second-largest market capitalization.

1 Ethereum equals 80,189.96 naira, which is a little lower than Bitcoin’s value. But if you wish to advance to the level of becoming a Cryptocurrency expert, then money value is not the only thing you should think about.

Ethereum, as of Feb 2020, is on a market Cap rate of $30.5 billion and a circulating supply of 109,712,230, and as of April 2020, it hit a massive supply amount of 110.5 billion.

With this review, I will be showing you major scopes of these currencies; then, you can choose which you wish to venture in.

It will be a fun fact for you to know that Bitcoin’s founder remains anonymous. He never introduced himself with his real name; instead, he launched the project with a pseudonym “Satoshi Nakumuto.”
Ethereum, on the other hand, is founded by a 24 years old, Vitalik Buterin. Should this be a cause for alarm?
No.

The origin of the founder has little or nothing to do in the cryptocurrency space, as there are major things you should look out for.
There are nine major areas I will be drawing my analysis as these nine areas are significant features of a good cryptocurrency.

As I said earlier, I am not a broker, but you can take this as my opinion on this matter.

DECENTRALIZATION

In the world of fiat currency, the financial system is controlled by a central bank or an authority.
This is not so in cryptocurrency trade as transactions are licensed, processed, validated, and distributed by an open network.

Transactions are verified by a digital ledger known as the blockchain.
Bitcoin and Ethereum are decentralized but on a different basis.

Ethereum runs on a decentralized platform known as Smart-Contract, which is also powered by the blockchain technology. This offers users and traders the opportunity to use a programming language to build on the already existing language.

But Bitcoin is, however, different. It does not give room to build, but to store.

However, Ethereum’s blockchain was released in 2015, as compared to Bitcoin’s 2009 release. Although the year of release has nothing to do with its security as programs that run on blockchain technology are always continuously updated for security reasons.

Read also : Cryptocurrency:The business of the new economy

SUPPLY

Fiat Currencies, as we all know, have an unlimited supply. The Central bank determines this supply span as they can evaluate as in line with the authority’s directive, how much of a currency should be in circulation. This factor has been manipulated over the years by different countries as part of their economic policy. This manipulation greatly determines if the economy will be inflationary or deflationary.

Bitcoin has a supply limit of 21 million, and with this, no new Bitcoin is produced once this limit is reached. This makes existing Bitcoins that are in circulation to have more value as they become attractive as an asset.

This supply limit has helped in placing a deflationary value on the currency, as traders don’t need to worry. Because no matter how much the rush for the coin is, the limit remains the same, allowing sellers to hype their price when circulation becomes favorable.

Ethereum has no supply limit. As of 2018, Ethereum hit the 100 million mark, and this raised huge concerns on inflation.

It should be noted that in 2016, Vitalik, the Co-founder of Ethereum, projected that the supply wouldn’t cross 100 million in the foreseeable future, but the reverse became the case.

In April 2018, Vitalik introduced an Ethereum Improvement Proposal(EIP) to help put Ethereum supply at a limit of 120 million. Still, to date, the EIP has not been accepted, as Ethereum lies bare without a cap limit.

SECURITY

Bitcoin is the most secured decentralized network in the history of cryptocurrency. As an above the normal cryptocurrency, Bitcoin runs an independent encrypted platform. Bitcoin, which runs on the over ten thousand nodes scattered through different servers all over the world, helps keep track of transactions on the system using the blockchain technology.

You can’t use the Ctrl-C option to get more coins as blockchain makes sure that each coin is encrypted to its unique code and form and also keeping track of how many coins are in your wallet.

Blockchain Technology also keeps track to know how every coin in your wallet is acquired. This means that if a currency is obtained in a means other than mining and trading, then the coin won’t have any value.

There were rumors a few years ago that Ethereum was hacked.
This rumor is true.

The smart contract used by Ethereum has posed alot of security threats to the system. This smart contract was hosted by an old digital asset/financial service provider(E network).
In the past years, this network was attacked by a group of hackers, who ended up successfully stealing numbers from the service providers, which got Ethereum affected as well.
Ethereum smart contract has been known to come with existing bugs, which, when properly analyzed by a hacker, can be a significant vulnerability factor.
And until these factors are taken care of, traders are still out for another big hit.

VALUE RATE

According to Coin desk, Bitcoin holds an amazing coin demand value. As Bitcoin=$9178.25 with a 4.33% 24-hour change, a market cap of $168.76 billion and 18.39 million supply as of 27th May 2020.

Ethereum, on the other hand, is on a market cap of $20 billion. And with reference to the expensive nature of Bitcoin, it can be a reality that Bitcoin has so much value than Ethereum irrespective of its supply limit.

USABILITY

The rate in which Cryptocurrency is used determines its adoption for transactional purposes. This is to say, the more a currency is used and accepted globally in the everyday transaction, the more valuable it can be.

Bitcoin has been facing huge criticisms as in line with usability because of its price index. Bitcoins, which are costlier to purchase, has left the potential investors seeking alternative coins to trade in because they have lesser purchase value and higher potential profit rate.
But with the high price, Bitcoin users still massively increase as the day goes by.

TRANSFERS

A notable factor that an investor should take note of is the easibility of exchanging your Cryptocurrency to cash and how quickly it is to trade between users.

It should also be noted that additional fees attached to each transfer.
Bitcoin, as of May 8th, rose to a transfer fee of $3.19, an increase from the $3.00 fee of July 2019.

Ethereum transfer fees are based on gas.
This total cost of an Ethereum transacted is multiplied by the actual amount of gas.
It is worthy you note that the current gas price for Ethereum transaction is 0.00000002 Ethereum, which is way cheaper than Bitcoin fees.

LIFE CYCLE

It is vital you know the life cycle of a crypto coin. The lifecycle of a cryptocoin begins from its mining, halving, and all that.
Some coins never grow, some look promising, some skyrocket in value over a short period, only to crash and burn.
You should be very careful not to fall prey to a Ponzi scheme.

MINING

Bitcoin mining is the process where Bitcoin traders their computers to process Bitcoin transactions on the blockchain network, and they are rewarded for doing this.

Bitcoin mining reward network uses a system known as proof of work, which shows a miner is rewarded according to the amount of time and effort he invests in the process.

They solve mathematical problems which could involve complex equations and also confirm the legitimacy of a transaction.
They make sure these transactions are added to the end of a block, to create new chains of these blocks of transactions.

A miner is rewarded once the block he worked on is filled with transactions.


HALVING

Halving is the process where every 210,000 blocks mined or after four years Bitcoin transactions, the reward earned by miners during this period is divided into two.

Bitcoin network uses this means to checkmate inflation. Bitcoin sets a supply limit for 21 billion coins, and currently, there are 18,361,438 bitcoins in circulation, which shows that there are just 2,638,562 bitcoins left to be released into the market.

In 2009, the reward for each block was 50 coins. But after the first halving, it was 25, then 12.5, and with its recent halving on May 11, it became 6.25 coins.

Bitcoin had its first halving in November 2012, with an increase from about $11 to almost $1,150. The second Bitcoin halving, which occurred in July 2016, increased the value of the coin from about $650 to $20,000 by December 16th, 2016.
Ethereum works with a similar mining process.


COMMUNITY INTERACTION

The community behind a crypto trade hugely determines the existence of the coin.

If a small group of developers markets the coin, then there is cause to worry as it will take a long slow growth curve for it to grow. A curve which most dies of, leading to the crash of the coin’s life cycle because some members of the community might have given up on the long wait and struggle.


RELIABLE CUSTOMER SERVICE

Having a helpline goes a long way to help you as an investor to know who to lay complaints to, deliver feedbacks when you need to.
And this also determines how legit the business you intend to join is.

Bitcoin has a helpline with this number +1-888-593-4845, or you can visit there website @ https://www.bitcoin.com/Contact us/

There is a parody account posing to be Ethereum’s customer care with this number +1-888-417-3209. Don’t be deceived into dialing that number as they are scammers.

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