A Complete Analysis of Ethereum vs Bitcoin in 2021
If you’re here to discover what is Ethereum and how does it work, you can gain the peace of mind that you’re at the right place. You might have read about the main reasons why you should buy Ethereum in 2021 and you’ve decided to give it a go. You might have also read about the skyrocketing cryptocurrency market and you decided to finally invest some of your hard-earned cash into it.
To be blunt from the get-go, let me start by saying that investing in Ethereum is a very smart decision you can make in 2021. I would add that Ethereum might even be a better investment decision than Bitcoin. Keep reading to discover more about my analysis of Ethereum vs Bitcoin in 2021.
Let’s start with baby steps by looking at what actually is Ethereum cryptocurrency and how much one of these coins is worth today.
What is Ethereum cryptocurrency?
Ethereum is a modern community-run crypto technology powering the ether and thousands of decentralized apps. This technology has the potential to overtake Bitcoin in the years to come, offering a better alternative to its stabler system and unique perks. Raoul Pal, Real Vision’s CEO, believes that Ethereum has the potential to have a larger market cap than Bitcoin in the near future.
According to him, “Ethereum is the SAME as Bitcoin, at the SAME point in its adoption cycle, with the exact SAME price and its market cap is rising faster… and suggests that its adoption cycle might be more dramatic too.”
Indeed, Ethereum’s performance over Bitcoin in the last couple of years is impressive. While Bitcoin increased by 300% in 2020, Ethereum surged by over 482%. We’ll get into the differences between Bitcoin and Ethereum later. For now, let’s look at the actual worth of one Ether coin.
What is the Current Price of Ethereum?
At the time of writing this article (February 23, 2021), one Ether is worth 1,784.15 United States Dollar. Exactly one month ago, the price of one Ether coin was 1,234 USD. That’s a whopping 45% increase within just one month.
So, as you can notice, one Ethereum coin is worth pretty much now. However, the great news is that you don’t need to buy one or more coins. You can purchase a fraction of the coin. Basically, sites like Coinbase.com allow you to buy Ethereum with a minimum investment of $5. If you invest let’s say $50 in Ethereum, and the price goes up 300% within a few months, you can withdraw $150. That’s a profit of 300% right there, minus fees.
What is Ethereum Used for?
If you’re looking for uses of Ethereum, you need to first understand how this open-source blockchain actually works. Basically, this decentralized software platform allows distributed applications and smart contracts to be built with ease, being safe from cyber-attacks, fraud, control, or any other interference from third parties.
Back in 2016, Ethereum was split into two main blockchains, Ethereum and Ethereum Classic. While the Classic variant stopped growing and become a good place for creators, the 2.0 version offered better functionalities and enhanced security functions, thus becoming a haven for investors.
What is the Future of Ethereum?
This is where things become interesting. Many analysts believe that Ether has a huge advantage over Bitcoin because it brings more value to its users. Basically, when looking at what is the difference between Bitcoin and Ethereum, we’ll soon realize that Bitcoin has no intrinsic value because it does not produce anything. However, Ethereum is a huge computing network that brings value to the market, enabling anyone to build their own decentralized apps.
As more and more governments are putting restrictions or bans on cryptocurrencies, Ether would not be affected by these, because businesses and regular people will continue using this market on the blockchain to conduct their services and run tasks.
Mark Cuban, the famous US billionaire, makes his case for Ethereum, stating that this network will prove to be “a great alternative to the real eCommerce system”. People who will want to purchase certain digital products in a safe environment will have to convert their dollars into Ether and then pay. There’s nothing at the moment in this cryptocurrency ecosystem that says that people have to buy Bitcoin first in order to perform a transaction on the chain.
So, although Bitcoin has a value narrative, digital art, NFTs, yield farming, and banking services on Ethereum, will attract even more people into the crypto space over the next few years. If that’s the case, a growing number of people will have to buy Ethereum in order to use these services. Thus, the demand will grow, and the price will go up.
Basically, there are two types of people who invest in the crypto sphere. First, there are those who want to get rich quickly, so they’ll invest in Bitcoin. However, collectors and people who use digital services will want to invest in Ethereum. As more people come to discover the true value of Ethereum, the price of this cryptocurrency will skyrocket.
Some experts state that Ethereum is a huge threat to Amazon, and that it could soon get to a value of over $100k. That’s huge, considering that now one Ether coin is worth $1,700, and that the value of Amazon exceeds $1.7 trillion. Truth be told, Ethereum is not a cryptocurrency per se, but a web services platform, similarly to what AWS represents.
AWS, or Amazon Web Services, is an all-in-one cloud-based solution that makes it easy for people to start their online businesses. Starting an online business is quite a tedious process, and involves a lot of legal stuff. With AWS, eCommerce shop owners don’t have to worry anymore about all of this legal and maintenance stuff, since this platform includes everything an online business needs, from computing power and server maintenance to hosting, storage, and marketing tools.
AWS has managed to “democratize” our ability to create an online business from anywhere in the world. Because of Amazon’s AWS, over 120 companies from the S & P companies have managed to grow and ramp up their business potential. These are definitely not your regular companies, but billion-dollar corporations like Netflix, Twitch, Facebook, or LinkedIn. The trick is that AWS is owned by Amazon, so it’s a private system that can close its gates at any point.
Ethereum is similar to AWS, except that it is decentralized, and it can recreate the exact same infrastructure without needing the permissions from Amazon. This has enabled Ethereum to create these new industries that are being built on top of the platform. In the future, all of these industries and their fan base will drastically increase the market cap and therefore the price of the coin.
Should you buy Bitcoin or Ethereum?
At the moment, compared to Bitcoin, Ethereum is quite undervalued. If we’re taking a closer look at the market cap of Ethereum, we can see it’s roughly $220 billion. On the other hand, Bitcoin has $1 trillion market cap, which is roughly 5 times bigger. What’s interesting is that one of the metrics of “good money” is usability or acceptability. In other words, a user needs to be able to transact and use his virtual money and exchange it, rather than hold on to it like a collectible.
According to Blockchair, the number of Bitcoin transactions over a period of 24 hours is roughly 312,800. Normally, Ethereum should have a fifth of these transactions, if we’re taking into account the market cap. However, what’s truly spectacular is that Ethereum had nearly 1.300.600 transactions, which represents a 4X increase over Bitcoin.
There’s more activity and more velocity that’s happening on the Ethereum network than on the Bitcoin network, which means that there are more people interested in using Ethereum than in using Bitcoin. Now, if we’re looking at the speed with which transactions are performed, we notice that there are 2 transactions taking place per second in the Bitcoin network, and a whopping 21 transactions per second in the Ethereum network. That’s a tenfold increase right there.
Compared to Bitcoin, which is not actually doing anything, Ethereum is building industries on top of itself. As an example, one of the industries Ethereum pioneered is NFTs. These are non-fungible tokens that are unique and are not divisible. The reason NFTs have value is because they represent something that is rare and sought after in the digital world.
For example, an artist can create a digital or physical product, and can attribute a unique NFT to it. That means people can bid and buy that NFT to gain exclusive rights to that product. The biggest NFT sale was worth $1.5 million and it represented nine plots of virtual land in the “Axie Land” blockchain game.
On the blockchain, any piece of digital material can be verified. This means that creators can offer real value to the public and can be paid for it. There is a true market demand for any kind of digital products, and people want to spend their money.
The combined value between the market cap of the collectibles and art markets is somewhere at $72 billion, and that’s just an industry. If we’re to add all industries, we could easily get to over $50 trillion. Ethereum acts as a digital equivalent of Amazon in real life, and one could only guess how high this entire market could go.
How to Buy Ethereum Currency?
At this point, you’re probably wondering what is the best way to buy Ethereum. Well, If you want to know how to instantly buy Ethereum through Coinbase, all you need to do is click on this Coinbase link, create an account, verify it, and you’re ready to start trading on Coinbase. Signing up via the link with get you $10 in free Bitcoin.
So how long does it take to buy Ethereum on Coinbase? The entire process should not take more than 12 hours. You can then start making a profit instantly, especially if the price of this currency goes up by more than 2% within 24 hours.
You can also buy Ethereum on BlockFi, a unique platform that allows you to earn interest on your cryptocurrency. I wrote a full review for Blockfi you can read here. By signing up with BlockFi, you also can get $250 worth of Bitcoin. Last but not least, you can use Nano Ledger to store your crypto assets in a safe environment and gain the peace of mind that your funds are out of hacker’s reach. I also wrote a full review of Nano Ledger that you can read here and get 20% off.
If you’re wondering if you should buy bitcoin or Ethereum, I strongly suggest that you prioritize the latter. While investing in Bitcoin is definitely a smart decision in the long run, Ethereum will more than likely outperform Bitcoin over a longer period of time. In terms of how much Ethereum to buy, I recommend you start small, with around $100, and then see if you can make a profit after 1-2 months. In case you make $10, then you can reinvest your money to make more. I would recommend splitting your investment money in half: one half for short term profits, and one for long-term (3-4 years).
The Bottom Line
Ethereum is definitely here to stay. Learning how to use Ethereum to buy things is something we all must do, sooner or later. If you’re in for some profits, or you simply want to get a taste of the digital world and dive into the safety of blockchain, you should buy Ethereum now. The price of this currency will more than likely go up in the following months and might skyrocket in 2022 and 2023.
Even if Ethereum is second only to Bitcoin in the market cap, it comes with a much higher user engagement, plus it adds real value to the users. As more and more institutions are pouring in to invest in this blockchain market and the Ethereum 2.0 closing by, investing some of your money in Ethereum is definitely a smart thing to do.