Ethereum or Bitcoin: Which one is a better investment in 2023?

Oct 17, 2023, 5:55PM
5 min, 7 sec READ
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Cryptocurrencies are very popular, and many people and sectors have begun to consider and embrace them in their everyday lives.

Although digital assets are volatile, some virtual currencies appeal to investors, as they are considered relatively safe investments because they have shown their ability to recover from hard periods. Also, both virtual coins have brought massive gains to investors. This is why, even if joining the crypto world sometimes feels like a rollercoaster ride, investors can benefit if they are willing to take risks. 

But in many cases, people don’t know what to choose between the two alternatives and wonder which one is a better investment. Bitcoin and Ethereum have different characteristics, and this is why they fulfill distinct purposes. It is hard to pick one over the other, as both are good options depending on what you want to achieve with them. 

So, let’s look at the two most important cryptocurrencies and see their characteristics and differences.

What is Bitcoin?

Bitcoin was the first digital coin developed in 2009 by Satoshi Nakamoto. It was created to provide an alternative to fiat money, which is why it is a decentralized and transparent financial system that everyone can easily access. Bitcoin relies on blockchain technology, which means that the transactions can’t be altered as they are recorded on a public ledger, and because of that, they are more resistant to fraud. 

Before Bitcoin, more attempts were made to create cryptocurrencies, but none succeeded. This is why Bitcoin is the pioneer of all the other cryptocurrencies launched in the following years. 

The main advantages of Bitcoin are the following:

  • It is the crypto with the most liquidity
  • It had a massive growth over the last few years
  • It offers faster transaction speed
  • It is a safer alternative, as it uses blockchain to prevent fraud or identity theft
  • Its value is based on supply and demand and not on political interference

What is Ethereum?

Ethereum is the second leading cryptocurrency, which brought many innovations in the crypto game. Ethereum was launched in 2015, and since then, it has been a popular open-ended platform where users can develop smart contracts and dApps. Also, Ethereum has more purposes besides trading, as it can be used to buy goods and services. Ethereum’s strengths lie in its utility, bringing many opportunities in the crypto sector.

Ethereum was created to overcome the shortcomings of Bitcoin, and it succeeded with that, as Ethereum is not just a blockchain where you can trade digital coins, but the platform also supports NFTs and benefits many sectors, including travel and music. 

These are the main benefits of Ethereum:

  • The transactions are processed quickly
  • It has many users and a large community
  • It uses blockchain technology for its decentralized system
  • It enables many functionalities, like decentralized applications and smart contracts
  • It is a more sustainable and scalable option 

What are the differences between Bitcoin and Ethereum?

Bitcoin and Ethereum have significant similarities because they are both decentralized networks, and no third party or central authority controls their operations and transactions. But despite the similarities, some differences set them apart. These are the most visible discrepancies between the two of them.

Network utility

Ethereum and Bitcoin are very different regarding their network utility. Experts agree that Bitcoin has no utility besides being a value store. On the other hand, Ethereum brings limitless possibilities. For example, Ethereum enables the development of dApps and smart contracts, giving users many advantages. 

Gas fees

Regarding transaction fees, Ethereum loses out to Bitcoin. And although Ethereum enables quicker transactions than Bitcoin, unfortunately, the gas fees are quite significant. The Ethereum community is slowly taking action towards this aspect, which is why things will probably change. 

Different energy consumption

A major difference between the two cryptos is how they consume energy. Both Ethereum and Bitcoin initially used the proof-of-work (PoW) mechanism to validate transactions and secure the blockchain. However, as crypto enthusiasts wanted a change, Ethereum switched to a proof-of-stake (PoS) mechanism, reducing energy consumption. The change was praised, as it decreased energy usage by more than 99%, which was wanted for a long time. 

Which of the two cryptocurrencies is a better investment in 2023?

Bitcoin and Ethereum are both good alternatives to be considered as they have increased their value since they were first launched in the market. However, because they have unique features, it is hard to say which one is a better investment, as it differs depending on everyone’s goals and needs. Bitcoin is a great option for anyone who wants an alternative to fiat money. On the other hand, Ethereum is more than just a digital asset, so it can be a better choice for those who want more features, as this network also allows users to sell or buy goods and develop dApps.

But cryptos are volatile, so investments in any type of cryptocurrencies involve risks, whether choosing Ethereum or Bitcoin. So, anyone who wants to invest in digital assets must be prepared to navigate through the challenges of this industry. Experts recommend allocating only a small part of the digital assets in their portfolio and opting for more than one alternative, as the more diversified the portfolio, the safer it will be. 

It is good to research before making an impulsive decision and not consider cryptos only because they are popular. The fear of missing out, also known as FOMO, can lead to impulsive buying, which will not be beneficial, as investors could have considerable losses. Instead, anyone wanting to invest in cryptos must adopt a long-term view and focus on creating a strong portfolio. The most successful stories with investing in cryptos come from disciplined investors who didn’t let their emotions influence their decisions. Also, they invest as much as they can afford to lose and never more. 

Final words

Although there are many differences between Ethereum and Bitcoin, it is hard to say which one is a better investment, as both represent good alternatives depending on anyone’s needs and desires. 

Disclaimer: information contained herein is provided without considering your personal circumstances, therefore should not be construed as financial advice, investment recommendation or an offer of, or solicitation for, any transactions in cryptocurrencies.