The Difference Between Bitcoin And Ethereum: Which One Should You Invest In?
Investing money is one of the most important strategies. It helps to save money and build upon it in the future.
In recent times one of the most popular ways to invest money
is through cryptocurrency. Cryptocurrency comes in many forms. Two of the most
famous cryptocurrencies in the world are Bitcoin and Ethereum. This article
will talk about the difference between Bitcoin and Ethereum and how you can buy
them.
What is Bitcoin?
Bitcoin is a digital currency that was created in 2009. It
drew inspiration from the ideas that were set out in a white paper by Satoshi
Nakamoto. The identity of the person or persons who created Bitcoin is still
unknown.
Bitcoin has lower transaction fees than the traditional
online payment methods. It is operated via decentralized authority which is
different from government-issued currencies. Bitcoin is not a tangible asset.
Balances are recorded on a public ledger that everyone can access.
An individual bitcoin is not valuable as a commodity, nor is
it issued or backed by any banks or governments. Bitcoin is very famous and it
has helped to develop hundreds of other cryptocurrencies. Those currencies are
known as altcoins. It is commonly abbreviated as “BTC.”
BTC is built on a distributed digital record known as a
blockchain. Bitcoin can be used to make purchases, but shops that accept
cryptocurrency as a payment method are still very limited.
Also, read- Want to start dealing in
Bitcoin? 4 best apps
What is Ethereum?
It was
launched in July 2015 by a small group of blockchain enthusiasts. Ethereum is a
blockchain platform that has its currency known as Ether (ETH). It also has its
programming language known as Solidity. Ethereum is a decentralized public
ledger for recording and verifying transactions.
The
network’s users can use, monetize, publish and create applications on the
platform. dApps is the term that the insiders commonly use for decentralized
applications.
The original purpose of Ether was to use it only inside the
Ethereum network. But like Bitcoin, Ether is now an accepted form of payment by
some service vendors and merchants. Shopify, CheapAir, and Overstock are some
sites that accept Ether as a mode of payment.
Also, read- Blockchain for beginners in 2021
Difference between Bitcoin and Ethereum
Here are some key differences between Bitcoin and Ethereum–
- Ethereum is used by businesses around the world to develop new programs, while Bitcoin is only a currency.
- Ethereum is far more powerful when it comes to blockchain technology.
- Ethereum’s best quality is that it helps to develop smart contacts and distributed applications.
- Bitcoin excels as a peer-to-peer payment method.
- Ethereum is way faster than bitcoin when it comes to transactions.
- It takes minutes to do a transaction on Bitcoin, while it takes seconds to do transactions on Ethereum.
- Bitcoin aims to act as a medium of exchange and store
of value. Ethereum uses its currency and is designed to create
programmatic contacts and applications.
How to buy Bitcoin and Ethereum
Listed
below are the steps that explain how to buy Bitcoin and Ether-
Choose
an exchange
It is generally a good idea to sign up for an exchange that
allows users to withdraw their money anytime to their online wallet. Signing up
for a cryptocurrency exchange allows users to sell, buy and hold
cryptocurrency. There are different types of cryptocurrency exchanges.
Users who invest in bitcoin can stay
anonymous so that they do not have to enter their personal information. Some of
the most popular exchanges are Gemini, Kraken, Coinbase, and Binance.
Connect your exchange to an online payment
option
The next
step is to collect your documents for verification. These may include a social
security number or driving license and your source of funds and
employers.
After the
exchange is done with your verification, then you can connect to a payments
option. You can directly connect your bank account, or you can connect a credit
or a debit card.
Place an order
The next
step is to buy Bitcoin or Ether or invest in other cryptocurrencies. Bitcoin is
now accepted as a mode of payment by some vendors due to it being
mainstream.Ether is the currency that is used inside the Ethereum
network.
Today,
crypto exchanges provide different ways to order and invest. Kraken is the most
popular of them all. It provides its users with the limit, stop-loss, market,
stop-limit, take-profit, and take profit limited orders.
Safe storage
To store
digital assets securely, cryptocurrency wallets are essential. Having crypto
inside a personal wallet ensures that only users have control over the private
key to the funds.
It also
eliminates the threat of losing assets through hacking and other internet
threats.
Users need
to understand about Hot wallets and cold wallets before choosing a bitcoin
wallet.
Hot wallets-
Also known
as online wallets, these wallets keep a user’s assets on a device connected to
the internet. The device can be a computer, phone, or tablet.
Unfortunately,
these kinds of wallets are more vulnerable to online attacks that can put
someone’s assets at risk.To reduce the risk, users should always follow
internet safety protocols.
Also,
read- Data security: 2 ways to keep
your data secure.
Cold
Wallets-
A cold
wallet is not connected to the internet; thus, it is less vulnerable to
cyberattacks. These wallets can also be called hardware wallets or offline
wallets. It is one of the most secure ways to store online assets.
Final verdict
When we
talk about which one is the best for investment, it all depends on the
investor’s risk tolerance. Several businesses are starting to accept Bitcoin as
a mode of payment because it attracts the most attention from institutional
investors.
On the
other hand, Ethereum is considered to be more of a utility-based
cryptocurrency. Bitcoin is more stable and mainstream out of the two. It is
advisable to diversify your investment options and stay updated with the new
trends.
The value
of the cryptocurrency can shift dramatically within months, if not days. As for which cryptocurrency is the best, that depends on the
investor. If you aim to use Ethereum and its services, Ether is the best
choice.
If
you want something that can act as a means of payment in the near future,
investing in Bitcoin is the way.
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