Should I trade my Bitcoin for Ethereum?
Cryptocurrencies have been around for more than a decade. However, they have only recently come into acceptance by more seasoned and institutional investors over the past couple of years. For those that are new to crypto investing, the most common coin to own is Bitcoin (BTC). While Bitcoin is the most prominent cryptocurrency out there today, there are other great ones to consider as well. One great option is to invest in Ethereum (ETH), which is the second-largest coin in terms of market cap as of April 2021. While Bitcoin has provided great returns to investors over the year, there are several reasons to consider selling it and trading it in for Ethereum.
Bitcoin May Have Reached Stabilization
One of the reasons to consider trading in Bitcoin for Ethereum is that Bitcoin could have reached stabilization. As of April 2021, the price of Bitcoin had sailed past $60,000 a couple of times but has then dipped back below that mark. This comes after years of increasing rapidly in volume. While many believe that there is room for more growth, on a percentage basis it may be limited when compared to other coins. Currently, Ethereum has a market cap that is less than a third of Bitcoin. This could show that Ethereum has more room for growth while Bitcoin may see only more stable and modest percentage gains in the years to come.
Use of Ethereum is Different
Another important factor to consider if you want to trade BTC to ETH is that Ethereum is built much differently than other forms of digital currencies. While Bitcoin acts as a digital currency, which some believe will rival international currencies in the future, Ethereum acts more like a decentralized network. Ethereum provides infrastructure that other applications can use. This includes other altcoins that can use the Ethereum network. Ultimately, this provides more demand for ETH than simply being a currency, which could increase its demand and usage more in the future as new technologies develop that will utilize the ETH infrastructure.
Variety of Ways to Use Your ETH
Due to the benefits of the existing infrastructure, ETH is quickly becoming the preferred option for those that are will accept digital currencies as a form of payment. The use of this payment can help provide quick and secure payments with a low fee structure. Some of the ways that you can use the coin today are through peer-to-peer lending, online gaming, purchasing NFTs and other collectibles, and even purchase streaming music without going through a record label. If you intend to use your cryptocurrency as a form of payment as well as an investment, this flexibility makes Ethereum a great option.
Lower Purchase and Acquisition Costs
One of the reasons that people see potential in Bitcoin is that they are hard to come by. While it can be expensive and time-consuming to mine these digital coins, which could help to create value, it could lead to interest to find other more affordable ways to acquire digital currencies. Ethereum uses a unique Proof of State system for acquiring more coins. This process requires you to post some collateral in the form of ETH to acquire more. As there is a limited supply of ETH available, the process will over time continue to reduce supply and drive up the price without the same energy usage that comes with finding Bitcoin.
Investing in cryptocurrencies continues to be a good investment strategy for those that are willing to accept risk for significant long-term returns. Those that are going to invest in this new asset class will find that there are a lot of options to consider. While Bitcoin may be the most prominent in the market today, there are several reasons to consider trading this coin in to hold Ethereum instead.