Choose the Best Cryptocurrency to Invest in

Photo of author

( — August 3, 2021) — Bitcoin and ethereum are the most popular cryptocurrencies, but they both have their pros and cons. So let’s take a look at which is the best cryptocurrency to invest in right now…

Bitcoin or ethereum: which one should you invest in?

Bitcoin and ethereum are the heavyweights of the cryptocurrency market. They are by far the most valuable currencies by market size, and have been for years – but they are very different in many ways. 

If you’re deciding which of these cryptocurrencies to invest in, you should know how they work, the benefits of each, and the risks involved. Having this knowledge under your belt will help you be a more successful cryptocurrency investor in the long run. 

Bitcoin vs ethereum price over time

If we compare bitcoin and ethereum prices, we’ll see that the price of bitcoin is much higher than ethereum in general. The reason is that the total value of the Bitcoin network is higher than Ethereum. Also, there are more ethereum tokens on the market: 18.7 million bitcoins vs almost 117 million ethereum. 

When adjusted for price, the historical bitcoin and ethereum charts look almost identical. That’s large because the price of each has so far been dominated by the growth of the cryptocurrency market as a whole. 

However, the crypto market is now starting to mature. In the future, price is likely to be driven more and more by the technology and fundamental usefulness of each network. That’s why it’s important to understand each network beyond just the price. 

Investing in bitcoin

Bitcoin is seen as the safest cryptocurrency to invest in. It has by far the largest market capitalization of any cryptocurrency, with the value starting to push $1trn since 2020. The reason is that it’s the original cryptocurrency, and it’s proven to be a safe and successful network. It’s been running smoothly since 2009, and there haven’t been any successful hacks or attacks on the Bitcoin network. 

However, bitcoin does have some drawbacks. Since it was the first cryptocurrency, its technology was developed early and has since been improved upon, while bitcoin itself hasn’t been able to keep up with the upgraded technology. It means transactions on the Bitcoin network are slow and expensive compared to those on other networks, such as Ethereum. 

Main benefits of investing 

The high value and relative reliability of bitcoin mean it is known as the “digital gold” of the cryptocurrency world. It’s the first cryptocurrency that most people buy. It’s also the safest. You’ll likely benefit from the well-known brand name ‘bitcoin’ for many years to come. 

Bitcoin is also the most widely accepted cryptocurrency. If you ever want to swap your cryptocurrency or spend it online, you’re much more likely to be able to spend bitcoin than anything else. This makes it a “liquid” investment. 

Major risks involved

Bitcoin’s main risk is that the price gets over-inflated in a bubble and then crashes down very quickly. In a bubble, bitcoin starts picking up speed, and everyone starts talking about it. This drives more people into the market, pushing the price up even more, and then pulls even more people in. 

This self-reinforcing cycle sends the price soaring well beyond what bitcoin is really worth. Eventually, this process becomes unsustainable, and the price drops drastically. Anyone who bought while the price was at the highs of the bubble loses out big time (at least temporarily). Look at the long-term bitcoin price chart, and you’ll see this happen over and over again. 

Investing in ethereum

Ethereum is one of the most popular cryptocurrencies, but it is much newer than Bitcoin. It was first released in 2015 and was the first ICO (Initial Coin Offering) platform. It was developed to greatly expand on the capabilities of the Bitcoin network. That’s why Ethereum uses different technology to Bitcoin and has other functions. 

Reasons to choose ethereum

Ethereum is an extremely popular investment because some see it as having more room to grow than Bitcoin. For example, those that bought ethereum tokens during the ICO have earned a ridiculous amount of money — over 3,000x return on their investment between 2015 and 2021. Despite this, ethereum is still much smaller than bitcoin, so it’s possible it could grow even more. 

Apart from the price, there are other good reasons to invest in ethereum over bitcoin. The Ethereum network has much greater capabilities than Bitcoin. Anyone can create things called smart contracts on Ethereum. These are basically programs that run on the network that can be used as the basis for all kinds of new online applications. 

That’s why Ethereum is at the center of the new revolution in decentralized finance, or DeFi. If you don’t know much about DeFi yet, it’s definitely time to learn! 

Risks you should consider

Ethereum, like all cryptocurrencies, has its own profile of risks, too. Ethereum is not the original cryptocurrency and doesn’t have quite the brand name that bitcoin has. It also has strong competition from other smart contract platforms all over the world. 

This makes it more at risk of collapse or stagnation than Bitcoin. If another platform with significantly better performance than Ethereum pops up, many people will jump over to it. Bitcoin’s brand name gives it more protection from this kind of threat. 

As a smart contract network, Ethereum also comes with some extra regulation risks. This means the risk that the price will drop quickly when governments announce new rules and regulations around smart contract applications. 

For example, Ethereum used to be the main network for running ICOs, which boosted the price of the ether token. However, around 2017, governments started to regulate ICOs, and this news hit the ethereum price hard. 

Which one should you choose?

Both ethereum and bitcoin are fantastic and exciting investments. The best option is not to choose between the two, but to invest at least some amount in both. Diversifying investments like this is always a great idea. 

If you do need to choose just one to start with, then select the one that you understand and relate to more.