Altcoins Guides

Altcoins

What is Internet Computer?

What is Ethereum Classic?

What is VeChain?

What is Elrond?

What is Graph Protocol?

What is Algorand?

What is OMG network?

What is Zilliqa?

What is Avalanche?

What is Terra?

What is Tron?

What is THORChain?

What is the FTX Token?

What is Axie Infinity?

 What is Kusama – a canary network for Polkadot experiments? 

What is NEAR Protocol?

What is Klaytn and how does it work?

What is Polygon?

What is a non-fungible token (NFT)?

An introduction to Tether

What is Flow – the developer-friendly blockchain?

What is Brave’s Basic Attention Token?

What is Chainlink and why does it matter in the crypto world?

What is the DAI stablecoin?

What is the USD coin?

The use of blockchain technology in digital advertising

What is HIVE blockchain?

An introduction to the IOTA protocol

Five XRP wallets you should consider using

What is NEO cryptocurrency?

Three reasons why blockchain games are on the rise

How network nodes are used in cryptocurrency

A guide to the Ripple product suite

TrueUSD: Can it be trusted?

The top five privacy cryptocurrencies

Four projects leading the way in database sharding

What is Skycoin?

Tezos for beginners

Bitcoin vs. Altcoins: The differences you should know

Stablecoins: what are the risks and benefits?

What is Dash cryptocurrency?

The beginner’s guide to stablecoins

A beginner’s guide to blockchain

The best GPUs for cryptocurrency mining

What is Cardano?

What is Stellar cryptocurrency?

What is Litecoin?

A beginner’s guide to mining new altcoins

What are the best strategies for mining cryptocurrency?

A beginner’s guide on how to mine Ethereum

What is EOS?

What is Ripple?

A beginner’s guide to data mining and cryptographic hash functions

Understanding tokenomics

How to mine for cryptocurrencies

Bitcoin Cash (BCH) for beginners

Ethereum (ETH) for beginners

Cryptocurrency terms for beginners

Should you invest in Bitcoin or Ethereum?

Why does decentralisation of cryptocurrencies matter?

What is cryptocurrency?

What is Proof of Work?

What is Hash Rate?

What is cryptocurrency mining?

What is a Mining Pool?

What is a smart contract?

A brief history of Ethereum

Explore other guides

Beginner

Should you invest in Bitcoin or Ethereum?

Both cryptocurrencies have different use cases, but could be great additions to your portfolio. Do you really have to decide between Bitcoin or Ethereum?

Let’s look at what it means to invest in Bitcoin or Ethereum. Investing in cryptocurrency is typically associated with moving value from one asset class to another, with a view of generating a return on investment (ROI) over an expected time.

If your goal is only to make more money, then you are looking to pick the project that you think will go up in value the most. If the demand outgrows the supply of people willing to sell over a given time, then you can expect your investment to be profitable. When deciding between Bitcoin or Ethereum, you need to look at their different aspects of supply and use cases (demand). Let’s begin by looking at the supply side:

Supply Comparison

Bitcoin (BTC) Ethereum (ETH)
Circulating Supply 17.3 Million BTC 102 Million ETH
Max Supply 21 Million BTC Unknown
Supply Inflation rate per year (Current Rate 2018) 3.8% (Inflation rate halves every 4 year with next one in 2020) 12.8% (future inflation rate not clear)

As you can see in the above table, there are some unknowns with the Ethereum maximum supply and inflation rate. This is because the central development team and other network participants have not yet decided.  On the other hand, the supply side of Bitcoin is crystal clear.

Choosing Bitcoin or Ethereum

Although Bitcoin and Ethereum are both cryptocurrencies they have very different platforms and use cases.

Let’s start with Bitcoin.

The base Bitcoin platform has a very simple use case – send Bitcoins between participants in a very secure, reliable and censorship-resistant way. The secure part comes from a robust blockchain of mining hardware (around $1.3 Billion value) and nodes (10,000 publicly reachable).

The reliable aspect comes from the fact that the network has been running smoothly at 99% since the time of its inception. The censorship resistance comes from the fact that if you broadcast a transaction with a sufficiently high fee attached, it is near enough impossible to stop the transaction being accepted by the network. These characteristics give it a great ‘store of value’ use case as a platform.

Ethereum, on the other hand, was focused on being a smart contracts platform. It also has mining hardware, nodes, reliability and censorship resistance but nowhere near as much as the Bitcoin network. Ethereum is built to be a smart contract platform with many projects and decentralised applications (dApps) being run on the network.

The dApp and smart contract use case is growing each day with more and more contracts being created and users transacting volume through this network. You can monitor this for yourself with websites like stateofthedapps.com.

The bottom line

In summary, it’s hard to pick what the better investment would be between Bitcoin or Ethereum if you are only doing it to make more money. There are unknowns about the supply of Ethereum, the platforms have very different use cases and the demand for each of them (Store of Value vs Smart Contract Platform) is changing each day.

Both assets have shown to be extremely volatile in price over the last few years and, for that reason, both should be considered as being in the high-risk investment category.

To find out more about investing in Bitcoin or Ethereum, read our definitive cryptocurrency guide series.

Disclaimer: The views and opinions expressed by the author should not be considered as financial advice. We do not give advice on financial products.