ethereum vs bitcoin
Cryptocurrency Investment

Is Ethereum A Better Investment Than Bitcoin?

While everybody is talking about Bitcoin’s impressive growth, Ethereum’s development is currently almost even more impressive – the same goes for the underlying blockchain technology.

Compared to January 1, 2017, Ethereum is worth 24 times as much as of May 24, 2017. And yet, media reports are primarily about Bitcoin. Part of the reason for this is that Bitcoin is widely considered to be the first major cryptocurrency, and as such, over the years it has been able to convince an increasing number of interested parties of its merits and soar to the current high price level.

Definitely, this is an edge that the vastly newer Ethereum simply lacks. However, Ether – the name of the platform’s currency unit – is regarded as the second most widely used cryptocurrency among the 700 or so existing digital currencies. In comparison to Bitcoin, the success of the young project can be attributed, on the one hand, to the underlying technology and, at the same time, to the increasing support of corporations.

Ethereum’s Blockchain

Unlike Bitcoin, Ethereum is not just a digital currency, but also a platform for distributed apps, or dapps, that use smart contracts. With this blockchain, the cryptocurrency Ether is used as a means of payment for computing power. Nowadays, numerous startups count on Ethereum to obtain funds by means of crowd investment. Similar to a Kickstarter project, ICOs (Initial Coin Offerings) are tokens issued by the companies, payable in Ether.

ICOs are now often used by startups to circumvent the strict and regulated procedures of venture capitalists and banks when granting capital. In many cases, an ICO can be joined by anyone with the willingness to pay Ether, which means that even private investors can invest in high-potential startups with modest sums.

In addition, the blockchains of Bitcoin and Ethereum have many differences, such as the time it takes to process a block. For Bitcoin, the average block time is approximately ten minutes. In other words, it takes a relatively significant amount of time to process a transaction from A to B. The Ethereum blockchain processes a transaction in roughly twelve seconds.

These are only two highly oversimplified examples of the technical distinctions between Bitcoin and Ethereum. At any rate, Ethereum opens up considerably more opportunities than Bitcoin, and an increasing number of companies are grasping this fact and are forecasting a promising outlook for blockchain technology in particular.

Stepping into the Ethereum Enterprise Alliance

Over the two years since its launch, Ethereum has amassed a host of advocates and supporters among the world’s biggest companies. The Enterprise Ethereum Alliance (EEA) now bundles this support. Its membership includes notable representatives such as BP, Credit Suisse, Deloitte, ING, Intel, J.P. Morgan, Microsoft, Samsung SDS, Santander, Toyota Research Institute, and UBS.

Launched in February 2017, the EEA aims to standardize the usage of the Ethereum blockchain at the business level. Moreover, with major corporations getting behind the platform, Ether as a digital currency is being positively affected.

This level of support could not be achieved by Bitcoin in its early years, and to this day, this blockchain is mainly understood for its financial transactions in a corporate environment. Although the cryptocurrency Ether bears a resemblance to Bitcoin, companies to a greater extent are more interested in learning what’s under the hood. In fact, this technology on which Ethereum is based forms one of the main rationales for EEA’s members to be so passionate about the platform.

That being said, the EEA is not the only group of companies seeking to institute standards for the blockchain. Some of the biggest competitors include the Hyperledger Project, the R3 Consortium, and Digital Asset Holdings.

Is Ethereum a preferable investment than Bitcoin, then?

Absolutely not. As a general rule, diversification applies to cryptocurrencies as to any other investment. If you put all your eggs in one basket, then you are clearly undertaking too high a risk. All the more so for an investment form as young as digital currencies. At the moment, there are roughly 700 altcoins, with many of them destined to fail over the coming months and years. Conversely, the cryptocurrencies which will succeed will have unique selling points and attributes distinguishing them from the masses. Which is true for both Bitcoin and Ethereum.

Whereas Bitcoin benefits, amongst other things, as a result of its status as a first mover, name recognition, widespread use and acceptance as a means of payment, Ethereum impresses with its underlying technology.

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