Investing money is one of the most important strategies. It helps to save money and build upon it in the future. In recent times one of the most popular ways to invest money is through cryptocurrency. Cryptocurrency comes in many forms. Two of the most famous cryptocurrencies in the world are Bitcoin and Ethereum. This article will talk about the difference between Bitcoin and Ethereum and how you can buy them.
What is Bitcoin?
Bitcoin is a digital currency that was created in 2009. It drew inspiration from the ideas that were set out in a white paper by Satoshi Nakamoto. The identity of the person or persons who created Bitcoin is still unknown.
Bitcoin has lower transaction fees than the traditional online payment methods. It is operated via decentralized authority which is different from government-issued currencies. Bitcoin is not a tangible asset. Balances are recorded on a public ledger that everyone can access. An individual bitcoin is not valuable as a commodity, nor is it issued or backed by any banks or governments. Bitcoin is very famous and it has helped to develop hundreds of other cryptocurrencies. Those currencies are known as altcoins. It is commonly abbreviated as “BTC.”
BTC is built on a distributed digital record known as a blockchain. Bitcoin can be used to make purchases, but shops that accept cryptocurrency as a payment method are still very limited.
What is Ethereum?
It was launched in July 2015 by a small group of blockchain enthusiasts. Ethereum is a blockchain platform that has its currency known as Ether (ETH). It also has its programming language known as Solidity. Ethereum is a decentralized public ledger for recording and verifying transactions.
The network’s users can use, monetize, publish and create applications on the platform. dApps is the term that the insiders commonly use for decentralized applications.
The original purpose of Ether was to use it only inside the Ethereum network. But like Bitcoin, Ether is now an accepted form of payment by some service vendors and merchants. Shopify, CheapAir, and Overstock are some sites that accept Ether as a mode of payment.
Difference Between Bitcoin and Ethereum
Here are some key differences between Bitcoin and Ethereum–
- Ethereum is used by businesses around the world to develop new programs, while Bitcoin is only a currency.
- Ethereum is far more powerful when it comes to blockchain technology.
- Ethereum’s best quality is that it helps to develop smart contacts and distributed applications.
- Bitcoin excels as a peer-to-peer payment method.
- Ethereum is way faster than bitcoin when it comes to transactions.
- It takes minutes to do a transaction on Bitcoin, while it takes seconds to do transactions on Ethereum.
- Bitcoin aims to act as a medium of exchange and store of value. Ethereum uses its currency and is designed to create programmatic contacts and applications.
How to Buy Bitcoin and Ethereum
Listed below are the steps that explain how to buy Bitcoin and Ether-
1. Choose an exchange
It is generally a good idea to sign up for an exchange that allows users to withdraw their money anytime to their online wallet. Signing up for a cryptocurrency exchange allows users to sell, buy and hold cryptocurrency. There are different types of cryptocurrency exchanges.
Users who invest in bitcoin can stay anonymous so that they do not have to enter their personal information. Some of the most popular exchanges are Gemini, Kraken, Coinbase, and Binance.
2. Connect your exchange to an online payment option
The next step is to collect your documents for verification. These may include a social security number or driving license and your source of funds and employers. After the exchange is done with your verification, then you can connect to a payments option. You can directly connect your bank account, or you can connect a credit or a debit card.
3. Place an order
The next step is to buy Bitcoin or Ether or invest in other cryptocurrencies. Bitcoin is now accepted as a mode of payment by some vendors due to it being mainstream.Ether is the currency that is used inside the Ethereum network. Today, crypto exchanges provide different ways to order and invest. Kraken is the most popular of them all. It provides its users with the limit, stop-loss, market, stop-limit, take-profit, and take profit limited orders.
4. Safe storage
To store digital assets securely, cryptocurrency wallets are essential. Having crypto inside a personal wallet ensures that only users have control over the private key to the funds. It also eliminates the threat of losing assets through hacking and other internet threats. Users need to understand about Hot wallets and cold wallets before choosing a bitcoin wallet.
5. Hot wallets
Also known as online wallets, these wallets keep a user’s assets on a device connected to the internet. The device can be a computer, phone, or tablet. Unfortunately, these kinds of wallets are more vulnerable to online attacks that can put someone’s assets at risk.To reduce the risk, users should always follow internet safety protocols.
6. Cold Wallets
A cold wallet is not connected to the internet; thus, it is less vulnerable to cyberattacks. These wallets can also be called hardware wallets or offline wallets. It is one of the most secure ways to store online assets.
Final Verdict
When we talk about which one is the best for investment, it all depends on the investor’s risk tolerance. Several businesses are starting to accept Bitcoin as a mode of payment because it attracts the most attention from institutional investors.
On the other hand, Ethereum is considered to be more of a utility-based cryptocurrency. Bitcoin is more stable and mainstream out of the two. It is advisable to diversify your investment options and stay updated with the new trends. The value of the cryptocurrency can shift dramatically within months, if not days. As for which cryptocurrency is the best, that depends on the investor. If you aim to use Ethereum and its services, Ether is the best choice.
If you want something that can act as a means of payment in the near future, investing in Bitcoin is the way.
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