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If you’re considering investing in cryptocurrency, you need to decide which digital asset to buy. However, with so many options available, it can be challenging. Generally, beginners buy Ethereum or Bitcoin, so we’ve explained the unique features of both to help you make an informed choice.
Bitcoin: The Pioneer
Established in 2009, Bitcoin (BTC) is the original cryptocurrency that lets people send money directly to each other without a bank. It uses blockchain technology to create a public record of all transactions, and it’s largely anonymous and unregulated.
Bitcoin's primary appeal lies in its scarcity—there will only ever be 21 million bitcoins—which creates a sense of value and security. However, it lacks the versatility of many other cryptocurrencies that support complex applications beyond payments. Despite this, BTC remains the most widely recognised and adopted digital currency, often seen as a "digital gold" and a hedge against economic uncertainty and upheaval.
Bitcoin’s dominance in the market continues to shape the overall perception of cryptocurrencies, often acting as a bellwether for the entire industry.
Ethereum: The Innovative Alternative
ETH coins were first made available for purchase in 2014, but the Ethereum blockchain only went live a year later, in 2015. Since then, it has become a major player in the crypto world as it is far more than just a digital currency.
Ethereum’s standout feature is its ability to run smart contracts, which are self-executing contracts with the terms of the agreement directly written into code. This capability enables developers to create decentralised applications (dApps) on the Ethereum network, expanding its utility significantly. This flexibility has led to widespread adoption in areas like finance, gaming, and supply chain management.
With a thriving community, immense versatility, and continuous upgrades, Ethereum’s market position is strong. In fact, in terms of market capitalisation, Ethereum generally holds the position of the second-largest cryptocurrency, just below Bitcoin. Ethereum’s shift to Ethereum 2.0, which aims to improve scalability and energy efficiency, is expected to unlock even greater potential for its ecosystem.
Buying your first Ethereum
If you want to buy Ethereum, this quick step-by-step guide will help you to get started:
- Set up a wallet: Before purchasing, you need a safe place to store your Ethereum. Choose between a trusted hot wallet like Best Wallet (connected to the internet) for ease of access or a cold wallet (offline) for added security.
- Choose a reputable exchange: Look for a platform that allows you to buy Ethereum with user-friendly features and strong security measures. Do some research to ensure the exchange has a good reputation.
- Fund your account: Most exchanges allow you to fund your account using bank transfers, credit/debit cards, or other payment methods. Make sure you understand any associated fees.
- Buy Ethereum: Once your account is funded, you can purchase Ethereum by specifying the amount you want to buy and confirming the transaction.
Factors to Consider
When investing in Ethereum, keep in mind its price volatility. Cryptocurrency markets can swing dramatically, so be prepared for fluctuations. You also need to consider Ethereum’s long-term potential. As more developers create dApps on the Ethereum network, the demand for ETH could grow, potentially increasing its value over time.
Ethereum’s transition to a more energy-efficient consensus model, known as Ethereum 2.0, may boost investor confidence and attract new interest, too. However, regulatory changes and competition from other blockchain networks could impact its growth. The network's ability to scale effectively and manage rising demand will be key to its continued success.
In the end, whether you choose Bitcoin or Ethereum, investing in cryptocurrency can be an exciting journey. By understanding the unique features of each, you’ll feel more confident in your decision. Stay informed, embrace the learning process, and enjoy a profitable adventure. Both Bitcoin and Ethereum offer distinct advantages, but which one you choose will depend on your investment goals and risk tolerance.
