Bitcoin vs Ethereum: Which Is Better for Long-term Investment?

Bitcoin is well-known and stands "at the head" of the crypto market since its creation, but it is not the only option for long-term investments in the crypto world. Ethereum, like most cryptocurrencies, was created under the influence of Bitcoin, as its improvement, Ethereum is even often referred to as Bitcoin v2.0. Although it's hard to call it a second version. There are certainly some similarities between Bitcoin and Ethereum; for example, both have the ability to conduct financial transactions (purchases, transactions).

Today we will look at the features of the two largest cryptocurrencies, consider the difference ETH vs Bitcoin and try to give an answer, which coin will be the best investment in a certain case.

Key Takeaways

• Bitcoin serves primarily as digital money and a store of value, often referred to as "digital gold." In contrast, Ethereum provides a platform for decentralized applications (dApps) and smart contracts, enabling a broader range of use cases like NFTs and DeFi.

• Bitcoin uses a Proof of Work (PoW) consensus mechanism, which is energy-intensive. Ethereum, transitioning to Ethereum 2.0, is moving to a Proof of Stake (PoS) mechanism, making it more energy-efficient and scalable.

• Both Bitcoin and Ethereum have unique advantages as long-term investments. Bitcoin's limited supply makes it a strong store of value, while Ethereum's advanced technology and broader applications offer significant growth potential. Investors should consider their own risk tolerance and investment goals when choosing between them.

Bitcoin vs. Ethereum: An Overview

One who wants to understand Bitcoin vs Ethereum which is better long-term investment should learn about their overall characteristics and specifics.

The first cryptocurrency to be formed, Bitcoin, is referred to as "gold 2.0" or digital gold, whereas Ethereum is called the world's decentralized computer.

Bitcoin is referred to as "digital gold" since it is easily shared and stored, and it is as rare and strong as valuable metal. Since the network is used to execute decentralized apps (DApps), or programs that are not governed by a central server, Ether is referred to as the "world's decentralized computer."

What is Bitcoin (BTC), and how does it work?

Everyone has heard about Bitcoin, but not everyone knows why it is needed and how it works. In this section we will consider the main characteristics of Bitcoin, but you can read in detail what is BTC in our article.

Bitcoin (BTC) is a digital currency that, unlike traditional currencies such as dollars or euros, is not controlled by a central bank. Bitcoin's financial system is managed through the blockchain.

The blockchain can be thought of as a digital ledger, which consists of a sequence of data blocks. Each block in this sequence contains detailed information about the transactions made on the network. To ensure the security and integrity of the data, each new block in the log is linked to the previous block by a special code known as a hash, this creates a chain of blocks - the blockchain. This chain is stored on thousands of computers that are scattered around the world. These computers work together to maintain the security and continuity of the system. Access to participate in this network is open to anyone who installs specialized open source software, thus supporting the decentralized nature of this cryptocurrency.

Bitcoins are stored in digital wallets, which are similar to regular bank apps. Each wallet has two keys:

• Public key: comparable to a bank card number, it can be shared with other people to get Bitcoins. An example of the type is "1Gf8q444zQBR2ym3hArN7ZeKFQYFEtQUxe".

• Private key: similar to a bank card pin code, provides access to Bitcoins and sending them. The key must remain private.

The minimum amount with which you can conduct transactions is called Satoshi and is equal to one hundred millionth of a Bitcoin, or 0.00000001 BTC. That is, 100000000 Satoshi = 1 BTC.

BTC Volume

As of this writing, Bitcoin has a market value of USD - $1,158.08 billion, and its price is $58,726.54. Trading volume in a single day: $27.83 billion USD.

BTC Volatility

When discussing the Ethereum vs Bitcoin price, it is crucial to note that while Bitcoin has historically been seen as an incredibly volatile asset, its volatility is currently declining and will only increase as the cryptocurrency develops. The Bitcoin volatility index is 1.79% as of this writing.

Key features of Bitcoin

Let's list the main technical features of Bitcoin and summarize their essence.

• Timestamped append-only logs. Or otherwise known as blocks: Append-only is a property of a computer data store in which new data can be added to the store, but existing data is immutable;

• Block Headers and Merkle Trees: Merkle tree is used to efficiently store transactions in a cryptocurrency blockchain (e.g. Bitcoin, Ethereum). It provides a "fingerprint" of all transactions in a block, and allows for efficient verification of transactions;

• Cryptographic hash functions: They are used to attach an old block to a new block in a chain of blocks, as well as to confirm transactions and to store information more clearly in the blockchain database;

• Consensus via Proof-of-Work: The Bitcoin network requires its participants to invest computing power (e.g., video card power - GPU) to solve randomly generated mathematical problems. This is required to protect the network from sole control and manipulation. Each transaction on the network is validated (checked for compliance) before being added to the blockchain. Each block is then validated by miners (people mining cryptocurrency) who are rewarded in Bitcoins for the computing power invested. This is why the consensus is called Proof-of-Work;

• Script language: Bitcoin Script is a programming language used by nodes in the Bitcoin network. The script language in the Bitcoin network determines who can use the funds and how. This script controls the mechanism for blocking/unblocking the ability to make a transaction;

• Bitcoin addresses: It is an identifier (or account number) starting with 1 or 3 and containing 26-35 alphanumeric Latin characters (except 0, O, I). The address can also be represented as a QR code, is anonymous and does not contain information about the owner. It can be obtained free of charge using, for example, the Bitcoin system software. Through the address it is possible to perform Bitcoin transfer/receipt transactions.

The veil of secrecy of some of the main technical features of Bitcoin has been lifted to us, which is very important when analyzing Ethereum vs Bitcoin blockchain.

Latest news on BTC

• On July 8, BlackRock bought $187 million into its Bitcoin ETF, the largest inflow since June 6. Total inflows into spot Bitcoin ETFs totaled $295 million;

• On July 9, the German government sent 9,634 BTC to exchanges.

What is Ethereum (ETH) and how does it work?

Powered by the cryptocurrency ETH, Ether is a decentralized blockchain network that lets you use and store non-fungible tokens (NFTs), conduct transactions, utilise social media, play games, and earn income through staking.

When contrasting the Bitcoin vs Ethereum future, remembering that Ethereum is viewed by many as the next great thing on the Internet is important. Web 2.0 is embodied by centralized platforms such as Apple or Google Play, while Web 3.0 is a decentralized, user-driven network like Ethereum. This "next generation web" facilitates decentralized exchanges and apps (DEXs and dApps) and decentralized financing (DeFi).

ETH Volume

As of this writing, Ethereum is trading at $3,093.02, with $14,193,123,463 in trading volume for the day.

ETH Volatility

Its volatility over the past 30 days is roughly 2.30%. This number indicates more volatility if we are talking about Bitcoin price vs Ethereum price, but every year ETH is gaining a firmer foothold in the market.

Key features of Ethereum

One of the main features of ETH when talking about the Bitcoin vs Ethereum difference can be considered that the main purpose of this blockchain network is to enable the development and launch of decentralized applications that are based on blockchain technology and use smart contracts.

The key features of Ether also include the immutability and inability to disable smart contracts, which ensures the autonomy and security of applications.

Another distinguishing feature of Ethereum compared to other popular cryptocurrencies is that it has no issuance limit. At the same time, this does not mean that ETH is issued unlimitedly: the system has a special algorithm that limits the number of "coins" in circulation.

Latest news on ETH

• Vitalik Buterin considers the advantages and disadvantages of Ethereum, "strengthening" the blockchain;

• Ethereum's value is expected to increase to $7000 by cryptoexperts.

BTC vs ETH: Price history and market cap

Comparing the Bitcoin vs Ethereum price chart, one can notice a significant difference. If we look at the development of Bitcoin price, we can see that initially the currency was more of an amusement than a profitable business. At first, one dollar could buy 1309 Bitcoins. However, in the first year, the value of Bitcoin seriously increased - as much as 50 cents per unit. Then there was a surge in 2013, when the digital currency rose in value from 90 to 1153 dollars in a few months. After that, the cryptocurrency collapsed sharply and traded between $200 and $300 until 2015. In 2017, there was another rise to almost 20 thousand dollars, then the price again collapsed several times. Now Bitcoin is experiencing another period of rapid growth. In the first months of 2024, its rate increased by 68%, and if you look from the beginning of last year - by 330%. However, in July 2024 Bitcoin is experiencing a downturn and at the time of writing its price is $58,726.54 with a capitalization of $1,135.14B.

Since its 2015 introduction, Ethereum—which was spearheaded by Vitalik Buterin—has seen considerable changes in its value. ETH started off trading for less than $1, but by the beginning of 2016, its price had risen consistently to about $8. But the first significant increase was in 2017 during the global cryptocurrency bubble; by January 2018, the price had risen to almost $1,400. Following this quick rise, there was a severe decline, and by the end of 2018, ETH had dropped to roughly $85. In 2020 and 2021, the DeFi boom and growing institutional investor interest propelled the following noteworthy phase. The price of Ethereum reached a record high of more than $4,800 in November 2021. Ether currently trades for $3,093.02, with a $371.24 billion market cap.

Key Differences between BTC vs. ETH

In this section, we will look at the differences that are not only in Ethereum price vs Bitcoin.

Privacy and Traceability Comparison

Although both BTC and ETH run on decentralized blockchain networks, they take different tacks when it comes to traceability and privacy. Users of Bitcoin, which is well-known for its pseudonymous transactions, can conduct business without disclosing their true names. Nonetheless, each transaction is permanently documented on its public ledger, which means that, with sufficient work and advanced analysis, it is feasible to track the movement of funds. Privacy is challenged by tools such as blockchain explorers, which can expose wallet balances and transaction histories.

Ether, on the other hand, offers a better level of traceability because of its smart contract feature, even if it still maintains an open ledger. Every smart contract interaction—from straightforward token transfers to intricate DeFi transactions—is documented on the blockchain. Compared to Bitcoin, this thorough recording may reveal more intricate trade patterns.

There have been attempts to improve privacy on both networks. Solutions such as CoinJoin provide more transaction privacy for Bitcoin. Ethereum is pursuing related paths, such as zk-SNARKs (Zero-Knowledge Succinct Non-Interactive Arguments of Knowledge), which seeks to improve privacy by enabling transaction verification without disclosing particulars. Even with these developments, BTC and ETH are not able to provide total anonymity since by nature, they value security and transparency over total privacy.

Scalability and Adoption Comparison

Bitcoin is a very simple transaction model and was initially intended to be a decentralized money. However, because of its small block size and ten-minute block confirmation time, it faces scaling problems. This has caused higher costs and slower transaction times when there is a lot of network congestion. Bitcoin's first-mover advantage has solidified its position as a commonly used digital currency despite these obstacles, especially when used as a store of value.

However, because Ethereum was intended to be a platform for smart contracts and decentralized apps (dApps), its scalability issues are even more critical due to the wider variety of use cases. Congestion is another problem with Ethereum's present setup, especially when popular dApps or token sales are at their busiest. But as it moves toward Ethereum 2.0, which will feature sharding and a proof-of-stake consensus mechanism, the network will become much more scalable. With these modifications, Ethereum's transaction throughput should rise significantly and costs should drop, possibly making it more scalable than Bitcoin over time.

In terms of adoption, Ethereum has been widely used for non-fungible tokens (NFTs) and the decentralized finance (DeFi) industry, demonstrating its adaptability beyond straightforward peer-to-peer transactions. Although its primary usage has been as digital gold, Bitcoin is also becoming more and more popular thanks to the Lightning Network, which attempts to speed up transactions and lower costs. In order to facilitate wider acceptance in the cryptocurrency market, both networks are still developing and tackling their particular scalability issues.

Mining and Consensus Comparison

Because Bitcoin uses a proof-of-work (PoW) consensus mechanism, network security and transaction validation are dependent on miners solving challenging mathematical puzzles. This is a very energy-intensive operation that uses a lot of electricity because specialized machinery needs to run constantly in order to mine new blocks. In the ongoing debate of Bitcoin vs Ethereum power consumption, Bitcoin's energy demands are notably higher.

With Ethereum 2.0, Ethereum, which was once also based on proof-of-work (PoW), is switching to a proof-of-stake (PoS) consensus method. By doing away with the requirement for labor-intensive computing work and substituting a system where validators are selected according to the quantity of tokens they possess and are prepared to "stake" as collateral, this change seeks to drastically cut energy consumption. The energy consumption Bitcoin vs Ethereum comparison under this new system highlights Ethereum's move towards a more sustainable and eco-friendly blockchain, positioning it as a more energy-efficient alternative to Bitcoin. Ethereum's dedication to scalability, environmental sustainability, network security, and decentralization is demonstrated by its evolution.

Transaction speed and Cost Comparison

With an average block time of roughly 15 seconds, Ethereum is intended to execute transactions far faster than Bitcoin, which has an average block time of 10 minutes. Because of this, there is a noticeable difference in transaction speed, making Ethereum a better option for applications that need quick confirmations. But there is a price for this faster speed. The debate of Ethereum fees vs Bitcoin often centers on the higher transaction fees on the Ethereum network, especially during periods of network congestion.

When it comes to transaction fees, Bitcoin usually has lower prices than Ethereum, especially since SegWit and the Lightning Network have been implemented with the intention of cutting costs and boosting efficiency. The comparison of Bitcoin vs Ethereum transaction fee shows that while Bitcoin's fees remain relatively stable and lower, Ethereum's fees can become prohibitively expensive during high demand periods, due to its auction-based fee model. Therefore, in the Bitcoin vs Ethereum transaction speed and cost analysis, Ethereum wins on speed, but Bitcoin maintains an edge with lower and more predictable transaction fees.

Token standards Comparison

The foundation of ETH ecosystem is its ERC-20 and ERC-721 token standards, which permit the development of fungible and non-fungible tokens (NFTs), respectively. Ethereum is the preferred platform for token production and smart contract development because of these standards, which make it easier to construct a variety of decentralized apps (dApps) and digital assets. However, unlike Ethereum, Bitcoin lacks intrinsic token standards. Although there are initiatives like Colored Coins and Omni Layer that facilitate the production of tokens on Bitcoin, they are not as well-developed or extensively used.

Use Cases

Mainly utilized as a decentralized digital money and value storage, Bitcoin is sometimes referred to as "digital gold." Its main goal is to make peer-to-peer transactions safe, effective, and free of middlemen. On the other hand, ETH provides a framework for creating decentralized apps (dApps) and carrying out smart contracts, going beyond basic transactions. Because of its adaptability, Ethereum may be used for a wide range of purposes, such as NFTs and DeFi initiatives, which makes it a major hub for blockchain innovation. The comparison of use cases between Bitcoin and Ethereum shows that, in terms of financial transactions and wealth preservation, BTC is preferred, whereas ETH facilitates a wider range of technology applications and community-driven projects.

BTC v.s. ETH Comparison table

Which has been the better investment?

The two most popular cryptocurrencies in 2024, Bitcoin and Ether, have caused a significant upsurge in the cryptocurrency market.

The process of investing in cryptocurrencies can be extremely complex since it can be challenging to forecast when a given currency will appreciate or depreciate. In this case, you either need to invest in short-term assets or have a thorough comprehension of the subject matter—even serious knowledge might occasionally result in an inaccurate prognosis. Only the future growth of crypto-assets can be predicted by analysts; some boldly convince us of the reverse, while others are confident in the rise of the top cryptocurrencies.

Bitcoin vs. Ethereum: Which one is right for you?

Your unique needs and financial objectives will determine which of Bitcoin and Ethereum is best for you.

Ethereum wants to use smart contracts—which are irreversible—to create decentralized applications built on blockchain technology. With this platform, users can utilize a programming language to construct applications.

Bitcoin serves an entirely different function. It is a digital currency that is decentralized and utilized for financial transactions as a store of value. Furthermore, it does away with the requirement for third-party payment systems.

The decision is always up to you, so take a closer look at the two technologies in depth and decide which one is closer to you.

Where to Buy, Sell, or Exchange Bitcoin and Ethereum Tokens?

There are a number of trustworthy platforms to take into account when attempting to purchase, sell, or trade Ethereum and Bitcoin tokens. Trading BTC and ETH is made easy with the help of user-friendly interfaces provided by major cryptocurrency exchanges like Coinbase, Binance, and Kraken. If decentralized exchanges (DEXs) are more your style, Uniswap and SushiSwap offer safe alternatives without the need for middlemen. Additionally, you may simply purchase them both on the SimpleSwap platform. Make sure the platform you select satisfies your requirements for cost, usability, and security.

The Bottom Line

Ethereum has more sophisticated technology and more use cases than Bitcoin, but Bitcoin has a smaller currency supply and is more liquid. Some analysts think that Ethereum is a superior alternative to Bitcoin, but not a replacement because it has more use cases than Bitcoin.

Both are ultimately leading ventures, and it is always up to the individual investor to make the decision.

SimpleSwap reminds you that this article is provided for informational purposes only and does not provide investment advice. All purchases and cryptocurrency investments are your own responsibility.

FAQs about Bitcoin and Ethereum

Here is the section with answers to the remaining questions.

Is Bitcoin the same as Ethereum?

No, Bitcoin and Ethereum are not the same as they are two different cryptocurrencies, each having unique characteristics and applications.

Is Bitcoin mining more profitable than Ethereum staking?

All things considered, mining Bitcoin can be more lucrative if you have access to affordable electricity and powerful mining hardware. But with Ethereum switching to a Proof-of-Stake (PoS) consensus process, staking on the platform presents a more convenient and eco-friendly option. When making a decision, it's critical to compute future earnings and take into account upfront expenses as well as recurring costs.

Should I buy Bitcoin or Ethereum?

The decision to purchase Ethereum or Bitcoin will rely on your risk tolerance and investing objectives. Investing in Ethereum and Bitcoin can diversify your portfolio and may be a wise way to manage risks and rewards.

Bitcoin vs Ethereum - which is better long-term investment?

Both have special advantages and room to expand in the long run. When selecting between the two or opting to invest in both, investors should take into account their own risk tolerance, investing objectives, and market conditions.