Is Ethereum Second to Bitcoin or Unmatched?
By Christine Margret 3 minutes
The crypto buzz continues to make such a noise that even a layman has heard about Bitcoin. There is also dedicated software for trading bitcoins, such as the Bitcoin era.
Meanwhile, not everyone has heard about Ethereum, even though it’s the second biggest cryptocurrency. Technically speaking, though, Ethereum is the name of a blockchain, while its native cryptocurrency is Ether (ETH).
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The market capitalization of ETH is $226 billion vs. Bitcoin’s $532 billion. Bitcoin and Ether occupy the top two places among approximately 22,932 other cryptocurrencies that have cropped up since the emergence of Bitcoin.
Ethereum vs. Bitcoin- Which One Is Better?
Generally, the interaction between Bitcoin and Ether is rather complementary than competitive.
However, the technical differences between the two cryptocurrencies show that Ether should not necessarily be second to Bitcoin. First, it’s the transaction confirmation time.
Blocks in the Bitcoin network are added on average every 10 minutes, while on Ethereum, it takes just about 15 seconds – about 40 times faster.
Secondly, it’s transaction output. For Bitcoin, it’s seven transactions per second, while for Bitcoin, this is 30 transactions per second.
Third, in September 2022, Ethereum transitioned from the proof-of-work (PoW) concept to the proof-of-stake (PoS), which has cut Ethereum’s energy usage by 99%.
Fourth, it’s supply size. Bitcoin has a finite supply set at 21 million BTC. Ethereum, meanwhile, has an infinite supply, roughly similar to traditional fiat currency.
A question arises: amid this supply size and persistent talks about the best inflation hedge in the crypto business, which of these two cryptos is better against inflation? Well, firstly, spoiler alert: technical details will follow.
In 2021, reputable Forbes published a dedicated article, “Bitcoin Or Ethereum: Which Cryptocurrency Is The Best Hedge Against Inflation?”
It cited a study by professors at several Australian universities. The study brings two reasons why Ethereum may be regarded as a better inflation hedge than Bitcoin.
With a stable rate of token creation, destruction has risen steadily to equal the number of tokens created by September 2021.
Secondly, it’s the rise of Ethereum’s own financial infrastructure – the so-called DeFi (decentralized finance).
It has grown to more than $113.4 billion of funds accumulated in smart contracts. The Forbes article concludes with the statement that inflation in the US and elsewhere contributes to increased crypto investing.
Gold or Ethereum- What’s a Good Choice?
Some just entering the crypto business may ask: but what about gold? The short answer is: reputable Forbes confirmed its unreliable nature since the 1970s when the gold standard was abandoned.
The long answer is this: from 1980 to 1984, annual inflation in the United States, for example, averaged 6.5%, while gold prices were falling annually by 10% on average – more than the inflation rate.
With that, returns from gold not only fell short of the inflation rate, but they even underperformed real estate or commodities.
In fact, gold’s inflation-adjusted price can fluctuate drastically.
So the bottom line regarding inflation hedge is that Ethereum may be regarded as a better alternative to Bitcoin, but only within the realm of digital currencies.
Finally, Ethereum’s creation history is more transparent than Bitcoin’s, associated with the enigmatic Satoshi Nakamoto. So whenever we hear the Bitcoin buzz, this does not necessarily mean that Bitcoin is the ultimate cryptocurrency from all angles.
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