(Bitcoin CRYPTO.BTC()Ethereum CRYPTO:ETHThe past year has been a rollercoaster ride for cryptocurrencies. The price of Bitcoin has risen by almost 300% over the past 12 months. Ethereum’s value has risen by more than 90% despite the huge downturns they both have experienced in the past few weeks.
It’s a good idea to “buy the dip” and invest in Bitcoin and Ethereum now that they are less expensive. What cryptocurrency can you use to get more for your investment dollars if you don’t have enough funds? Here are the facts.
Bitcoin: The case
Bitcoin is one the earliest cryptocurrencies and has the best name recognition.
Any cryptocurrency that is going to be successful will need to gain widespread acceptance among sellers. Bitcoin is already the most widely recognized cryptocurrency so it has an advantage in this area. Fundera estimates that Bitcoin is accepted by more than 15,000 businesses worldwide as a method of payment. The greater the acceptance of Bitcoin by merchants, the better the chance of it becoming a common form of payment.
Bitcoin is also known to be a deflationary cryptocurrency, which means it should only rise in value over time. This could give Bitcoin an advantage over fiat currencies, such as the U.S. Dollar, that are subject to inflation.
These are the major risks
There is a high risk of any cryptocurrency being speculative. Although thousands of businesses accept Bitcoin, most sellers aren’t yet onboard with cryptocurrency. It’s not clear at this point if Bitcoin will ever be widely accepted. It could even become unrecognized.
The energy consumption is another downside to Bitcoin. Bitcoin mining requires a lot of computing power. This is an extremely energy-intensive process. According to a University of Cambridge study, Bitcoin transactions consume more energy than Venezuela’s entire population.
Regulators and investors are already concerned about the rising energy consumption.TeslaRecently, the company announced that it would suspend Bitcoin as a payment method due to its energy consumption.
The case for Ethereum
Ethereum hosts Ether, a native cryptocurrency. Ethereum is the most prominent blockchain technology, with many projects hosted on it.
Decentralized Finance uses the Ethereum blockchain. Non-fungible tokens also use the Ethereum blockchain. Ethereum is an open-source technology which allows developers all over the globe to create new applications on blockchain. If any of those projects succeed, Ethereum and Ether will also benefit.
Developers have the ability to create smart contracts on the network. These allow users to make safe and reliable transactions without the assistance of a lawyer. Smart contracts can revolutionize many industries and give Ethereum an edge over its rivals.
Developers are currently working on an upgrade to the Ethereum blockchain in order to make it more efficient. The Ethereum 2.0 technology will be available later in the year. It is expected to consume 99.95% less electricity than current technology.
These are the major risks
Ethereum and Ether are both highly speculative cryptocurrencies. Ethereum isn’t as well-known as Bitcoin. Therefore, merchants may not accept Ether if they only accept Bitcoin.
The same goes for blockchain. There are no guarantees that it will be as revolutionary or as useful as many people believe. Ethereum’s greatest advantages are in its blockchain technology. If blockchain fails to pan out, Ethereum could be hurt.
Which should you choose?
Cryptocurrency is generally a high-risk investment. Before you decide to invest, ensure you are willing to accept high levels of volatility and risk.
Although neither one of these cryptocurrencies are necessarily safe investments, Bitcoin is more risky than Ethereum due to its longer track record and higher name recognition. Ethereum could have greater growth potential over time.
Whatever option you choose to go with, ensure you have done your research thoroughly and are comfortable taking on risk. Although cryptocurrency may not be right for everyone, it can help you get the most out of your investment.