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Analysis: BTC versus Ethereum

Ethereum (ETH), otherwise known as Ether, is a digital currency. Similar to other cryptocurrencies, Ethereum presents as an alternative to Bitcoin (BTC), Litecoin (LTC) and Dogecoin (DOGE). As a trader, your first point of call is to assess the value and relative performance of these digital currencies to the USD. As at July 22, 2017, the following exchange rates were recorded:

  • LTC – $45.67, with a market capitalization of $2,380,073,985. There are currently 52,117,457 LTC in circulation, with a maximum supply at 84 million LTC.
  • BTC – $2,785.03 with a market capitalization of $45,850,051,936. There are currently 16,463,037 BTC in circulation. The maximum supply is 21 million BTC
  • DOGE – $0.002018 with a market capitalization of $222,668,452, and a circulating supply of 110,325,847,773.
  • ETH – $223.76 with a market capitalization of $20,916,021,515, and a circulating supply of 93,473,995.

Ethereum vs. Bitcoin

In terms of overall cryptocurrency ranking, ETH comes in at number two, second only to BTC. The phenomenal growth of ETH is evident in the year to date performance of the cryptocurrency. On 1 January 2017, it was trading at $7.98. It remained range bound until March 2017 when the price more than doubled to $17.82 per unit. However, ETH gained significant exposure in the markets and the price reached $97.56 on 19 May. Since then, it peaked at $410.68 per share on June 13, and gradually tapered off to its current price of $223.96 per share. Several things are evident about digital currency trading, namely extreme volatility, high liquidity, and dramatic price appreciation. If we turn our attention to BTC for a moment, similar trends are evident. On January 1, 2017, BTC opened at $992.37 per unit. It remained relatively range bound through early April 2017, but it dramatically escalated in price towards the end of the month. By June 11, 2017, BTC was trading at $2,952.40 per unit, before retreating sharply to $1,969 per BTC on July 17. The current price is fast approaching $2,785 per BTC.

How is Ethereum different to Bitcoin?

Ethereum

Ethereum was developed in 2015, while Bitcoin was developed in 2009. Both use blockchain technology, and both are traded in digital form. The success of BTC has allowed ETH to prosper. Day traders find significant value with ETH, since it has significant fluctuations on a daily basis. These short-term price movements benefit those who trade Ethereum on a daily basis. As an investment option, you will do well to include it in your portfolio if you are inclined to believe that digital currency will appreciate over time. Consider that it got off to a great start thanks to Bitcoin’s popularity, and is moving in parallel with BTC. ETH is less attached to mainstream financial markets then BTC, and may be a viable option for traders seeking a safe-haven asset.

Unlike BTC, ETH has an annual cap of 18 million. This means it is possible for this currency to keep on being produced ad infinitum. BTC is limited to 21 million units overall. By 2140 the total supply of Bitcoin will be reached and no additional currency will be produced. It is currently being mined at a decreasing rate per year. It takes on average 600 seconds for 1 BTC to be mined and processed. However, ETH processing can be completed within 15 seconds. This makes it highly liquid, and extremely volatile. Both of these cryptocurrencies are decentralized, and this allows for the creation of a multitude of blockchain applications. Whether ETH becomes the new BTC remains to be seen. Its acceptance has been facilitated by the existence of Bitcoin. Presently, it is priced at less than 10% of the price of a Bitcoin, but it is rapidly growing to become an international trading and investment option.

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