According to Coinmarketcap, there are currently more than 20,000 cryptocurrencies and tokens in the crypto market, but most of the cryptocurrency ecosystem is based on two assets – bitcoin (BTC) and ether (ETH).

Both cryptocurrencies are considered blue chips and are in demand among investors, both occupy high positions in the global rankings and set the overall market trend. But which one is better to invest in for beginners?

In this article, we will examine the features and key differences between the biggest cryptocurrencies on the market to help crypto trading beginners get to grips with these two giants.

This article is produced by Crypto News 24 and is for educational purposes only. We hope that the material will help you better understand and study the cryptocurrency market.

Features of Bitcoin as a cryptocurrency

Bitcoin (BTC) is the first and most popular cryptocurrency launched in 2009 by an unknown person or group of people under the pseudonym Satoshi Nakamoto. Bitcoin is based on blockchain technology and, unlike traditional currencies, has no central bank or government to control its outflow and circulation.

Most crypto enthusiasts know these lines by heart. Let's take a closer look at how this cryptocurrency differs from others and try to give a price forecast for the bitcoin dollar rate for the coming year.

How is Bitcoin different from all other currencies?

  • Pioneer of the crypto market: The Bitcoin payment network, which combines blockchain technology and cryptographic encryption, was launched in 2009. This is the first cryptocurrency in the modern sense.

  • Market Dominance: BTC's market cap is 50% of the total market cap. This is the largest cryptocurrency, the price dynamics of which determine the value of most cryptocurrencies.

  • High Decentralization: Compared to many other cryptocurrencies, BTC is more decentralized in terms of cryptocurrency distribution, mining, development, and community decision-making.

  • Absence of a Creator: Bitcoin Whitepaper author Satoshi Nakamoto disappeared from the public sphere in 2010. The crypto community has not yet been able to determine who is behind the development of bitcoin, which does not interfere with the stable operation of the network.

  • Mining: Bitcoin uses a PoW consensus algorithm that allows new cryptocurrencies to be mined through mining. Most modern cryptocurrencies have abandoned PoW in favor of PoS algorithms and variations.

How much was 1 Bitcoin when it first came out?

The first Bitcoin transaction occurred on January 12, 2009, but BTC did not gain value (and market cap) immediately. Initially, these were P2P exchange transactions where the BTC price was determined by agreement. The most famous example is Laszlo Heinitz purchasing 2 pizzas for 10,000 BTC in May 2010. So how valuable was Bitcoin when it was released?

Systematic data on the cost of BTC was published by the first cryptocurrency exchange Mt. It appeared after the launch of Gox. In 2010 Data aggregator Coinmarketcap dates the first bitcoin market data to July 20, 2010: at that time the price of one BTC was $0.07 or 7 cents and the daily trading volume was $262:

This chart still produces the strongest FOMO in market history for many cryptocurrencies, as Bitcoin's ROI was 49077250% or ~x10,000 at its peak. Now only some memcoins can repeat this trajectory.

How much is Bitcoin emission?

Bitcoin is a programmed payment system that works according to a predetermined algorithm. Among other things, this algorithm identifies:

  • Total supply of BTC;

  • Emission rates.

The first parameter was set at 21 million BTC to prevent bitcoin from inflating forever like fiat currencies. There will never be more than 21,000,000 bitcoins in the market. But it is important to distinguish here:

  • Maximum Supply: The highest amount of BTC possible. This is what we mentioned above.

  • Current Supply: The number of BTCs issued so far.

  • Circulating supply: The amount of BTC in the market, excluding dormant wallets and permanently lost assets.

New bitcoins appear as a reward for blocks created by miners. This means that before the final bitcoin is mined, it is worth considering the size of the block reward as the main factor affecting the market supply. The curve of the BTC issuance rate according to the size of the reward is as follows:

This chart still produces the strongest FOMO in market history for many cryptocurrencies, as Bitcoin's ROI was 49077250% or ~x10,000 at its peak. Now only some memcoins can repeat this trajectory.

Once the last coin is mined, emission will stop and new BTC will no longer enter the market. Miners will continue their work, but will only receive commissions for transactions.

How much will Bitcoin be worth in 2024-2025?

Most analysts expect a significant increase in bitcoin price between 2024 and 2025 due to halving. However, it is not known exactly how many dollars Bitcoin will be at that time.

The market value of BTC forms more or less stable cycles based on the halving and the decrease in the issuance of new coins. As a rule, after the halving the price of the asset rises rapidly:

Bitcoin has survived 3 halvings so far, reducing the reward from 50 BTC to 6.25 BTC per block. The next halving is expected to occur in ~April 2024 and is expected to reduce the amount to 3,125 BTC. Based on the experience of previous market cycles, after this event an increase should begin. At the same time, with each new cycle, ATH is several times higher than the peaks of the previous one:

  • ATH after 1st halving: $1200

  • ATH after the 2nd halving: $20,000

  • ATH after 3rd halving: $69,000

However, it is difficult to talk about specific numbers as a bitcoin commentator. In each cycle, additional market factors affect the growth rate and value ceiling. Much depends on the field of information, the positions of regulators, the popularity of Ethereum and other cryptocurrencies.

Features of Ethereum as a cryptocurrency

Ether is a cryptocurrency and the native token of the Ethereum blockchain platform launched by Vitalik Buterin in 2015. Ether performs various functions in the Ethereum ecosystem, including paying for gas, transferring value, and securing the network through the PoS algorithm.

ETH is inferior to BTC in terms of capitalization, but differs from Bitcoin in its purpose and role in the crypto market ecosystem.

What is Ether good at?

  • The largest ecosystem in the market: The Ethereum network is the most popular platform for blockchain developers. The Ethereum ecosystem includes hundreds of different platforms, decentralized applications, and a strong NFT segment.

  • Deflationary structure: After the transition to PoS, the supply of ETH decreases due to the burning of previously issued tokens and the decrease in emission.

  • Separate asset class: Ethereum shows a relatively high correlation with BTC and is weakly dependent on the price dynamics of altcoins, which distinguishes it from the bulk of assets in the market.

  • Utility Value: ETH is essential for any interaction on the Ethereum network, it also maintains the network through the staking mechanism and is used as the underlying asset for the DeFi ecosystem.

  • Active development and innovation: Unlike BTC, whose source code has not changed significantly since its launch, Ethereum is constantly being developed and improved to solve the current problems of the blockchain.

Which network uses Ether?

Ether is a native token of the Ethereum network and exists as an underlying cryptocurrency – ETH or an ERC-20 standard token – WETH. Additionally, wrapped ETH can be used on many popular blockchains by transferring cryptocurrencies from Ethereum via a bridge or cross-chain protocol. So, Ether is supported in one form or another by:

  • Optimism,

  • Avalanche,

  • BSC,

  • decision

  • Solana,

  • Near,

  • other networks.

While standard ETH is needed to pay for gas for transactions on the Ethereum network, bundled or mined tokens can be used on a variety of DeFi sites: for lending, providing liquidity, arbitrage, and other ways to make money.

What is Ethereum emission?

Until the transition to PoS, the issuance of ETH was carried out according to the same model as Bitcoin – new cryptocurrencies were issued as a reward for a block. However, after The Merge, this mechanism changed and now consists of two elements:

  • Emission of new tokens: These tokens are required to pay interest to validators who stake their funds.

  • Burning of existing tokens: Tokens collected in the form of transaction fees are withdrawn from circulation.

This means that simultaneously new ETHs appear in the market and existing ones are burned. With active use of the network and high fees, Ethereum burns more tokens than it issues, so the supply decreases. The asset has almost always remained deflationary since the switch to PoS:

Therefore, Ethereum does not have a fixed maximum supply like Bitcoin, and the rate at which new coins are released depends on two factors:

  • number of validators and ETH staked.

  • the total amount of fees charged for transactions.

This model aims to reduce supply while increasing demand, which should ultimately lead to an increase in ETH value.

Is it possible to mine ether?

Since Ethereum uses a PoS consensus algorithm, it is not possible to mine ETH using mining. Instead, users can run a verification node and make transactions and receive a reward in the form of a percentage of staked funds.

To become a validator you need:

  • Run a node on the Ethereum network;

  • provide 32 ETH shares as collateral;

  • keep the node running.

However, there are already ~650k active validators on the network, and even if funds are available, your turn for node activation will be 33 days later:

Alternatively, those looking to earn on Ethereum PoS can use liquid staking protocols that accrue a % on staked ETH without requiring a node to run.

What enabled Ether to transition from PoW to PoS?

  • Supply Reduction: After the implementation of the PoS algorithm, ETH became deflationary. More money is burned into the network than new ones are printed.

  • Power Consumption Minimization: The power consumption of the PoS algorithm is 99.95% lower compared to the PoW network. This reduces the project's carbon footprint and makes nodes less dependent on energy sources.

  • Development of a new ecosystem: A separate DeFi direction, LSD, was created around ETH PoS staking. Ethereum allows stakers to use DeFi tools to increase returns.

  • Another step towards Ethereum 2.0: The transition to PoS is a mandatory step for the further development of the blockchain. In particular, it is necessary for the implementation of fragmentation and zk-proofs.

What are the expectations for ETH?

ETH is the native token of the largest blockchain and most developed ecosystem on the market. The constant growth of transactions and the need to use it to pay fees, combined with the deflationary mechanism, can increase the cost. That's why it won't actually be difficult to make an Ethereum comment.

Ethereum itself continues to develop in accordance with the planned roadmap, which gives a clear idea about the future prospects of the network:

The next important events for this ecosystem are:

  • popularize the smart wallet concept;

  • implementation of protodanksharding;

  • aggregation scaling;

  • Integration of zk evidence.

The exact dates for the implementation of updates are unknown. Yet Ethereum has gone from one of dozens of competing L1 blockchains to the dominant network in the market in 8 years and has no plans to stop.

How much will Ethereum be worth in 2024-2025?

Above, we discussed the characteristics of BTC market cycles. Since ETH and BTC are interrelated, ethereum price dynamics are likely to repeat Bitcoin's trajectory with some deviations. At least that's what happened in the last BTC cycle:

Naming specific numbers or price ranges here is even more difficult than in the case of BTC, but traders can use the Ethereum-adapted fear/greed indicator to assess market sentiment.

What is the best investment for a beginner investor?

When it comes to choosing between bitcoin and ether for a novice investor, it is important to understand that both assets have their own characteristics and investment potential. So, bitcoin is different in the following ways:

  • A solid position: BTC is the most recognized and accepted cryptocurrency. It has a long history and an established position in the market, which can inspire more confidence in new traders.

  • Limited offer: as we remember, the limit was set at 21 million tokens. This could create a long-term outlook for price increases as a result of limited supply and increased demand.

  • Availability: Bitcoin is traded on many exchanges and OTC markets with high liquidity. Cryptocurrency can be easily bought or sold at any time and in any market.

In contrast, ETH can offer:

  • Benefit: ETH is not only a cryptocurrency, but also a native Ethereum token needed to run smart contracts and decentralized applications. The increasing popularity of Ethereum and its ecosystem may lead to increased demand for Ethereum.

  • Innovation: Ethereum is a pioneer in the field of smart contracts and functional multi-purpose blockchain. In essence, this is a platform for the development of new technologies and projects that can lead to mass adoption.

  • Dynamic: The Ethereum market and ecosystem continues to evolve and evolve. This increases the value of the coin in the eyes of investors and ordinary users.

One way or another, beginners should carefully study and understand the features and potential of both cryptocurrencies, as well as develop an investment strategy. Both ETH and BTC have advantages and growth potential, and the choice between them depends on the goals and current market situation.

Conclusion

ETH and BTC are interrelated assets, so crypto traders increase positions in both cryptocurrencies simultaneously, balancing prices in accordance with the current market situation and risk management strategy.