Even if they are two completely different projects with very distinctive characteristics, people have always put Bitcoin and Ethereum up against each other for being the two largest cryptocurrencies by market cap and popularity. They have always been the top choices for traders and investors and continue to be the leaders of the cryptocurrency market. Countless articles have been written comparing Bitcoin to Ethereum, analyzing the key differences and similarities between them, and trying to figure out which project has the biggest potential.
The truth is choosing one over the other is never easy because they both have their pros and cons. Besides, different investors have different strategies and needs, so a coin that is highly appealing to one investor might not be as alluring to the other. One can argue that the price determines the potential and strength of a crypto project. If so, Bitcoin wins by a landslide, since the Bitcoin price has reached $ 22,120, while the current Ethereum price is $ 1,549.
However, price is not the only factor influencing the worth and attractiveness of an investment venue. There are many other variables at play here and by the looks of it, Ethereum has a lot going for it. Some experts believe that Ethereum has what it takes to outshine Bitcoin in the future and become a much more tempting investment option than the all-time leader of the crypto sphere. So, if you’re a trader or investor, or if you’re thinking about becoming one at some point, it’s worth taking the time to listen to the arguments they bring in support of this hypothesis.
Bitcoin halving looms near
Unlike conventional currencies, whose supply is controlled by central banks, Bitcoin was designed by its creator, the mysterious Satoshi Nakamoto, with a predefined limit on the number of coins that could be mined. The limit was set at 21 million Bitcoin and it was written into Bitcoin’s source code, so it cannot be changed. After reaching the limit, no new coins will be added to the Bitcoin supply, which will increase scarcity and demand over time, and drive BTC prices up.
To control the rate at which new coins are created further, Bitcoin also employs a halving mechanism. This means that once every four years the reward for mining Bitcoin is cut in half. The first halving event happened in 2012, cutting the block rewards to 25 BTC. The second one took place in 2016 and reduced the block reward to 12.5 BTC. Finally, the most recent halving occurred in May 2020, reducing the reward to 6.25 BTC. It is estimated that the next halving event will happen somewhere between May and July 2024, when the number of Bitcoins mined per block will drop to 3.125.
While halving serves a clear purpose, it spells both good and bad news. The good news is that the Bitcoin price tends to plummet approximately one year and a half before the halving and then appreciate in the months leading to the event. This pattern repeated itself with each halving, so if past performance can serve as an indicator of future performance, there are strong reasons to believe things will be no different this time. So, we can expect the Bitcoin price to go upwards in the months to come and hopefully reach a new all-time high next year.
On the other hand, the approaching halving will lower miners’ revenues and make the mining process a lot less profitable. Even if the Bitcoin price will rise as some pundits predict, it’s still going to be a lot more difficult for miners to make the same profit as they once did. In this context, Bitcoin followers might be tempted to leave mining behind and switch to a new model of earning crypto, and Ethereum offers just that, as it uses a proof-of-stake mechanism that completely eliminates mining from the equation.
Ethereum in the post-Merge era
Digital currencies have received heavy criticism in recent years due to the negative impact they have on the environment. Most crypto projects, Bitcoin included, rely on mining as a way of creating new coins. The problem with mining is that it consumes massive amounts of energy as it uses high-power computers to solve cryptographic equations and verify transactions. According to the Cambridge Center for Alternative Finance (CCAF), Bitcoin uses energy at an annual rate of 110 Terawatt hours, an amount comparable to that of Norway.
This is where Ethereum outperforms Bitcoin and many of the altcoins in the market. In September 2022, Ethereum switched from the energy-intensive proof-of-work (PoW) consensus mechanism to a proof-of-stake (PoS) model, replacing miners with stakes. By doing that, Ethereum managed to reduce its energy consumption by 99%, becoming one of the most sustainable crypto projects available. With sustainability becoming an increasingly important factor in the business and investment world, Ethereum is much better positioned than its peers to attract investors in the years to come.
Future growth projections
Ethereum also holds the upper hand in terms of growth outlook. While Bitcoin remains the most sought-after crypto in the market, its use cases are limited, serving only as a means of payment or a long-term investment vehicle. By contrast, Ethereum is a lot more versatile as it goes beyond costs and investments. Ethereum has been designed as a programmable blockchain platform, allowing developers to create a myriad of decentralized applications on top of it.
In addition, Ethereum’s constant upgrades aim at improving the network’s performance, efficiency, and functionality, with new innovative features leading to the expansion of its ecosystem. As a result, Ethereum continues to gain ground in the cryptocurrency industry and investors are not oblivious to its immense growth potential.
While both Bitcoin and Ethereum have unique advantages and disadvantages, the latter seems to hold more promise than the king of crypto, so chances are a growing number of investors will be adding it to their portfolios in the future.