According to a weekly report by digital asset fund CoinShares, Ethereum achieved its highest market share last week. It peaked at nearly 27% in all investment products with institutions adding over 63% inflows into Ether products. This number corresponds to $46.8 million in total. The report also notes that May was the first month that the volume of investment from institutional investors into Ether surpassed that of Bitcoin.
And the question arises, why do investors choose Ethereum over Bitcoin?
Why are investors choosing Ethereum over Bitcoin?
Ether (ETH), the native cryptocurrency of the Ethereum network, is arguably the second most popular digital token after bitcoin (BTC). In terms of market capitalization, Ether comes in second with a total market cap of $278,684,525,124. In terms of market dominance, Ether is also second with a market dominance rate of 18%.
Ether and Bitcoin are very similar when looking at the common properties of the coins. For example, they are all digital currencies traded through online exchanges and stored in various crypto wallets. Both are decentralized tokens which means they are not issued or managed by a central bank or other authority and both use a distributed ledger technology known as blockchain.
With all the mentioned similarities, the main difference between the top 2 cryptocurrencies lies in their use cases.
Bitcoin has been considered a store of value because of its limited supply. Bitcoin has a maximum supply of 21 million units and investors consider it “Digital Gold,” but aside from supporting cross-border payments, there aren’t many use cases for Bitcoin. In fact, there are many cryptocurrencies that support cross-border payments more efficiently than Bitcoin.
Ethereum’s network, on the other hand, opens up possibilities beyond cross-border payments. Ethereum allows the deployment of smart contracts and decentralized applications (DApps) to be built and run without any downtime, fraud, control or interference from third parties. Ethereum comes complete with a programming language that runs on the blockchain, allowing developers to build and run distributed applications. The native cryptocurrency Ether is used mainly for two purposes; it is traded as a digital currency on exchanges like other cryptocurrencies and it is used on the Ethereum network to run applications.
Given the myriad possibilities beyond anonymous cross-border payments, investors are beginning to realize that Ethereum is worth holding for the longer term.
The advantage of Ethereum makes investors choose Ethereum over Bitcoin
Bitcoin is hardly an alternative to money
While bitcoin was created as an alternative to national currencies and thus aspires to be a medium of exchange and store of value, Ethereum was designed as a platform to facilitate Programmable, immutable contracts and applications through its currency. With the current restraint on Bitcoin by regulators around the world, it is difficult to see Bitcoin as an alternative to national currencies.
Although El Salvador, home to 6.5 million people, just approved Bitcoin as a legal tender, making the tiny Latin American country the first to do so, it is very It is unlikely that other countries will follow suit.
Bitcoin price matures soon
The pandemic caused stock prices to drop to a record last year, but the price of Bitcoin continues to rise. Share prices of some companies start to go down in 2020 due to closures and threatened supply chains.
Several business leaders and investors started buying cryptocurrencies; since reports show that the market value of the global cryptocurrency market started to increase from March 2020. Since Bitcoin is the most famous and largest cryptocurrency in the world, most people bought invested in it. About a year later, since the Bitcoin price has matured, reaching a market cap of over a trillion dollars, investors are looking for the next best thing, which is Ethereum.
Ethereum is more eco-friendly
Ethereum is moving from the Proof of Work (PoW) consensus mechanism to the more eco-friendly Proof of Stake (PoS). The recent actions of Tesla boss Elon Musk, who has stopped using Bitcoin as a means of payment for Tesla cars due to environmental concerns, have made Bitcoin less attractive to investors. private organization. This is because PoW consumes a lot of energy and the non-renewable type of energy consumed is harmful to the environment.
Ethereum is cheaper than Bitcoin
One of the main reasons investors choose Ethereum over Bitcoin is because it is cheaper. As cryptocurrency trading is on the rise, investors look for cryptocurrencies they can trust. Therefore, most buyers are attracted to Ethereum.
Ethereum is providing a number of utilities for investors. To invest, buyers look for something that guarantees their returns, and right now Ethereum is growing.
Ethereum’s transaction processing speed is faster than Bitcoin
In the end, in terms of transaction processing speed, Ethereum beats Bitcoin. Ethereum-based transactions are confirmed within seconds of execution while Bitcoin-based transactions take minutes to confirm.
It’s no surprise that investors are finally seeing the light when it comes to real-life use cases of cryptocurrencies. For companies, an investor will invest in a company that is doing well and has growth potential.
When Vitalik Buterin designed Ethereum, he focused on removing all the limitations of Bitcoin. Ethereum is designed to work with everything from social networks to entire corporations. As blockchain is growing all over the world, Ethereum is chosen over other cryptocurrencies because more applications can be developed on it.
The proof-of-stake algorithm used by Ethereum can facilitate lower transaction costs, less electricity consumption, and more. Ethereum also allows investors to earn interest on its transactions.
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