Bitcoin (BTC) and Ethereum (ETH) are the most important virtual currencies in the market. For a really long time, we have seen how they have tried to maintain their positions with different proposals and development teams behind them. But how have these two virtual currencies performed against each other in the last years?
SFOX was able to make a nice graphic that compares market capitalization, total supply, limit on block size, the average number of blocks per hour, median transaction fee, median transaction value and the average number of transactions per second.
The first table represents values on August the 7th, 2015.
ETH’s market capitalization was just 5.68% of Bitcoin’s market cap. But let’s see what happened later on May he 24th, 2018. The results are very interesting.
In the second graphic we see that ETH’s market capitalization increased substantially from 5% to 45% compared to Bitcoin’s market value. The total supply increased 17% more than the one of Bitcoin.
An interesting number is the one related to the median transaction value (MTV). Back in 2015, Ethereum’s MTV was $45 dollars (22% of Bitcoin) and in 2018 it decreased to $0.36 (0.07% compared to Bitcoin). The median transaction fee has also increased substantially more for ETH than for Bitcoin. ETH’s fees increased 6600% in just three years, while Bitcoin’s fees increased 550%.
Just to put it into perspective, Ethereum’s fees compared to Bitcoin’s fees in 2015 were 14%, but in 2018 they were 151%.
But why did that happen? Well, one of the apparent reasons is that the number of transactions increases substantially more for ETH than for BTC. Ethereum is now processing almost 4 times more transactions per second (TPS) than Bitcoin.
What About the Flippening?
Well, this is another story. Both cryptocurrencies have different use cases and work on their niches. And the intention of ETH or BTC is not to eclypse the oher currency. Indeed, the growth in one could help the other receive an impulse and grow as well.
In the same way that it happens with traditional companies, virtual currencies have different functionalities. It is not the same to compare eBay with Microsoft, because both of them have their own characteristics, markets, products and business models.
Bitcoin has been created as a store of value and as digital money. Ethereum, instead, is a development platform that uses Ether as a native currency. Programers and companies are able to use the network and create decentralized applications (dApps). With Bitcoin, enterprises and individuals can send and receive funds, or just use the currency to hedge against economic crisis.
Ethereum can be used to create ‘smart contracts.’ while Bitcoin is similar to a currency. Comparing both networks in this way, we can assume that Bitcoin and Ethereum are not rival currencies, but instead different networks created for different purposes.
For example, developers on the Ethereum network have created collectable cats (CryptoKitties) that can be exchanged for ETH. At the same time, there are different decentralized exchanges that allow users to buy and sell ERC-20 currencies based on Ethereum.
The growth registered on Ethereum’s platform can be linked to the increased growth in Initial Coin Offerings (ICOs) during 2017 and the beginning of 2018. During this years, ICOs are gathering more than $9 billion dollars, and the number of companies is not expected to keep decreasing.
It is also important to mention that Ethereum has people working on a wide variety of projects like ICOs, layer 3 protocols, etc. Bitcoin is different. The most famous cryptocurrency has people working in just one important topic: Bitcoin itself.
Another interesting point to mention about Bitcoin and Ethereum is the speed of the developments that took place on both networks. For example, Bitcoin took 7 years since it was created to surpass $55 billion dollars market capitalization. Instead, Ethereum did it at the end of 2017, just two and a half years after being created.
The same happens with the market dominance. Bitcoin was growing during more than 7 years to reach current levels, Ethereum was just 3 years to reach such an important position in the market. The same happens with the number of transactions and active addresses.
Compared to other networks like VISA, Ethereum and Bitcoin are far from reaching the number of TPS that other traditional financial providers have. Ethereum will have to do a great work in order to scale, even more than Bitcoin. Why does it happen in this way? Because Ethereum needs to handle more transactions than Bitcoin, which will be quite difficult to achieve without investing in Sharding, plasma, or Casper.
Bitcoin is completely focused in the Lightning Network (LN) which will allow the network to process an important number of transactions with low fees, and the community is waiting for that.
Both currencies can properly grow and scale without one having to harm the other. Having important community developers behind each of these networks is a positive thing for the whole ecosystem and not just for ETH or BTC.
At the moment of writing this article, Bitcoin has a market capitalization of $113 billion dollars, and Ethereum of $48 billion dollars. Both currencies have substantially increased compared to 24 hours ago.
In the future, these currencies will keep growing and showing the world what they have to offer.