Bitcoin vs Ethereum- A comparative study!

Battle of the kings!

Introduction

Never did anyone ever anticipate the dawn of something as disruptive as Cryptocurrencies in our lifetime, which not only changed how we saw our existing financial system, but also made us experience the birth of an all new “Asset class”; and when the word cryptocurrency is thrown around, two heavyweights come into mind with their own respective dominance and they are BITCOIN & ETHEREUM.

Bitcoin started a revolution of financial freedom by being the people’s money, controlled and wholly owned by the holder of the asset, whilst taking refuge in a decentralised ecosystem. Bitcoin aimed at solving the financial aspect of a crumbling inflationary monetary ecosystem currently existing.

Then came Ethereum that wanted to harness the power of blockchain technology, going beyond the realms of just being used as a P2P money transfer, but show how Dapps (decentralised apps) can revolutionise the game of Finance by being built on top of the Ethereum network.

Today Bitcoin and Ethereum are the dominant ‘king of their own ring’, while BTC is the king of crypto, ETH is the king that all altcoins look to dethrone.

Let us now deep a little deeper to understand the leaders of the CRYPTOVERSE:

Market Capitalisation:

History of the legends:

BITCOIN was developed by Satoshi Nakamoto (identity unknown) and published in January, 2009 as an open-source code for PEER-TO-PEER electronic cash transfer. His main objective was to create a monetary system that was deflationary in nature, compared to the current financial ecosystem. A fitting answer to FIAT currency.

ETHEREUM on the other hand was created by Vitalik Buterin in 2015. While Ethereum borrows many fundamentals from the Bitcoin blockchain, Vitalik Buterin wanted to allow developers to be able to create apps on top of Ethereum and challenge the limited functionality that Bitcoin offered.

The supply & price factor:

Like everything else in the World, even BITCOIN and ETHEREUM have different rules on their supply numbers, though this varies with their core fundamentals; The law of supply and demand is witnessed here.

While BITCOIN has a limited fixed supply of 21 million coins and nothing more than that can ever be mined, this makes it a deflationary asset and in-line with what the creator intended.

Impact on price of BITCOIN:

• Limited supply makes it a scarce asset overtime
• The mining structure of BITCOIN makes the lost coins impossible to recover, thus reducing the supply further while demand keeps increasing
• This coded fixed supply into the BITCOIN framework has helped BTC become a scarce asset.

Ethereum on the other hand has unlimited supply, but it has a cap of 18 million ETH that can be mined per year. Ethereum does not intend to be a deflationary asset, since it focuses more on being used as a payment by developers for their apps.

Impact on price of ETHEREUM:

• Unlike Bitcoin, Ethereum does not have a fixed total supply; thus it’s not a scarce asset and this reflect in the price difference between the two assets.
• ETHEREUM has a variety of use-cases, from the ERC-20 network usage, DeFi protocols, NFT marketplace, Metaverse virtual assets and decentralised marketplace all reside on the ETHEREUM blockchain. This real-world utility has pushed the price of ETH to new ATHs YoY and also won the confidence of investors.

How are these crypto kings created?

Both BITCOIN and ETHEREUM are ‘MINED’ by Miners. No, they are not mined in some cave or at the core of the Earth with heavy machinery, but they are mined through a complex network of computers by miners connected to the blockchain network!

‘With great complexities, comes great rewards’

Bitcoin: Currently, 6.25 BTC is mined per block and each block takes 10 minutes to mine. This reward is split between all the miners on the network who are solving the complex computational calculation on the blockchain network. The 6.25 BTC per block will get halved at the next BTC halving event, this halving happens every 4 years until there is no more BTC left to mine.

Ethereum: ETH had a 5 ETH reward per block for miners, which after the Constantinople upgrade brought the number down to 3 ETH per block. The recently concluded ‘London hardfork’ has taken Ethereum from a ‘proof-of-work’ model to a ‘proof-of-stake model’, which has further decreased miner rewards.

Let’s talk All-Time-Highs of these crypto kings!

BITCOIN

• 2009-Virtually free and freely distributed
• May 2010- $0.01
• Feb 2011- $1
• Nov 2012-$1,242
• March 2017- $1,290+
• Nov 2017-$8,100
• 17th Dec 2017- $19,783.06
• Jan 2021- $41,973
• Feb 2021- $50,000
• April 2021- $60,000+

ETHEREUM

• Aug 2015- $1.25
• Sept 2016- $13.04
• Dec 2017- $719.83
• Jan 2018- $1,066.72
• May 2021-$4,376

Analysing the Pros and Cons of the king of cryptos

The Game of Experts:

Since, both Bitcoin & Ethereum have cemented their positions as the dominant king of their fields and are undoubtedly the first choice of investors whether they be veterans or newbies in the game, lets see what are some of their takes:

Chamath Palihapitiya: “Bitcoin will surge to $200,000 as more investors realize they need an ‘uncorrelated hedge’ against untrustworthy national leaders”

Mark Cuban: “I think the applications leveraging smart contracts and extensions on ethereum will dwarf bitcoin”

Willy Woo: “I have this model. In past cycles, it hit the upper bound before the bull market ended. The upper band today is $162K. The current trajectory, $200K.”

In the end, this is just the beginning:

Bitcoin and Ethereum both have helped propel the cryptocurrency market to new heights and unlocked a world which was not perceived by anyone, apart from the revolutionary creators. This is just the start of a technology that the masses are yet to understand and onboard. Let’s witness them mooning together!

#CoinDCXpathbreaker