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Kc  · 09/01/22

101: Should I Invest in Bitcoin and Ethereum? What are the differences?

AltcoinTrading.NET Guides
05/24/22 · Onramp

About This Blog Post

  1. Filed as 101
  2. Uses ledger  ( + more posts) 
  3. Bitcoin was created as money
  4. Ethereum was created as platform
  5. There are now other cryptos that are technically more advanced than Ethereum
  6. On the same topic: Altcoin Exchanges: Where to buy and trade crypto in 2020?
  7. On the same topic: Top 10 Things to Know Before You Buy Bitcoin
  8. On the same topic: How to buy a fraction on bitcoin: Where can you do a pocket money DCA?
Intro to the differences between BTC and ETH, and how to choose in which one to invest.
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The world of cryptocurrency is growing by leaps and bounds. Bitcoin alone made an astronomical return on investment, and that’s not even comparable to some newer altcoins. So, it's no wonder that people are asking themselves whether or not they should invest in Bitcoin. Then there’s Ethereum. Should you invest in that as well?

In this cryptocurrency overview, we will compare Bitcoin and Ethereum and help you make an informed decision about which one is right for you.

  • What Is Bitcoin?

    Bitcoin is a cryptocurrency that was created in 2009 as an alternative to the fiat monetary system. It is the first and most well-known cryptocurrency in the USA/EN and many other countries. Bitcoin is decentralized, meaning it is not subject to government control or regulation. Transactions are verified by a network of dedicated devices called miners. Miners are rewarded with bitcoins for verifying transactions.

  • What Is Ethereum?

    Ethereum is also a cryptocurrency, but created with the purpose of creating an application platform, not an alternative money. It is different from Bitcoin in that it can run extremely complex smart contracts. Smart contracts are applications that run exactly as programmed without any possibility of fraud or third-party interference. For that, Ethereum has its own programming language, which allows developers to build a wide range of decentralized applications.

    A lot of investors liked Ethereum’s value proposition and chose Ethereum even though it is much newer and less time-proven than Bitcoin. You can always purchase it on as well as exchange it for other coins.

  • Ethereum 2.0

    Ethereum is currently in the process of upgrading to Ethereum 2.0. This upgrade is much needed, as it will make the Ethereum network more scalable, efficient and cheaper to transact on. It is also intended to make Ethereum more environmentally friendly, as it will move from a proof-of-work consensus algorithm to a proof-of-stake algorithm. The proof-of-stake algorithm requires users to stake their Ether tokens in order to validate transactions. This will likely make this coin more attractive to investors, as it will offer an additional staking yield as part of the return on investment.

Ethereum vs. Bitcoin

So, should you invest in Bitcoin or Ethereum? The answer depends on your investment focus.

Ethereum may be the better option, because it has the potential to become much more than a currency. In the Web 3.0 vision, it could become a platform that changes the way we interact with the internet.

On the other hand, there are already newer altcoins that are doing what Ethereum is doing, and already on the proof-of-stake algo: Binance Smart Chain or Polygon are at the moment arguably in a better technical position to be actually used by masses of people without causing a network collapse.

If you are looking for an easy way to make money over the long term, then trading Bitcoin may be the better option. Bitcoin is well established in its use and is the more conservative investment out of the two coins talked about here.

You can always buy Bitcoin and put it in an interest-earning account on Binance, Bitforex or Phemex - see the current rates below.

Whichever you choose, always remember to invest responsibly and do your research!

phemex interest accounts Interest rates on crypto earning programs change with time. Rates above retrieved from Phemex on May 24, 2022.

How to Invest in Both Bitcoin and Ethereum

Even if you buy both Bitcoin and Ethereum, your personal financial objectives and understanding of cryptocurrency may influence how much of your money you invest in each. Subramaniam suggests the classic 60/40 split in your portfolio, while Sterling recommends an equal 50/50 arrangement.

If you're convinced that you should purchase both Bitcoin and Ethereum, there are a few ways to do so.

  • The first way is to buy both for fiat on a regulated cryptocurrency exchange like Binance or Coinbase or FTX.
  • Another way is to buy both of them on a no-KYC p2p exchange. LocalCryptos have both BTC and ETH marketplaces.

Once you have purchased your coins, you will need to store them in a cryptocurrency wallet. You can use a software wallet like Exodus or a hardware wallet like the new Ledger Nano S Plus.

Whatever the method, experts advise against putting too much of your portfolio into cryptocurrency. However, all decisions are up to you.

Should I Be Considering Any Other Cryptos?

At the moment, Bitcoin and Ethereum are still the two largest and most popular cryptocurrencies. However, there are many other altcoins that you may also want to consider investing in.

Remember that all the options listed below are significantly more risky than BTC and ETH.

Investing in cryptocurrency is a risky endeavor. However, if you do your research and invest responsibly, it can be a great way to make money. Just remember to do your own research and never invest more than you are willing to lose.

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