Why Bitcoin and Ethereum Are Different Investments
Which is a better investment? Bitcoin (CRYPTO: BTC) or Ethereum (CRYPTO: ETH)? The truth is that these two cryptocurrencies are fundamentally different. They perform different functions and have different risk vs. return profiles. Bitcoin and Ethereum coexist and complement each other rather than compete directly. Let's dig into what exactly differentiates the two investments and what their roles are in the broader cryptocurrency landscape.
Bitcoin is used within DeFi apps based on Ethereum: Image source: Getty Images.
One of the main reasons why Bitcoin and Ethereum do not compete directly is because they make each other better. Bitcoin can be used within financial applications on Ethereum. It can be borrowed, loaned, and supplied as liquidity in yield farms. This is made possible by an Ethereum token pegged to Bitcoin. The token is called Wrapped Bitcoin (CRYPTO: WBTC). It allows Bitcoin to be used within Ethereum despite these cryptocurrencies belonging to two separate blockchains. The Bitcoin network has no native capability of facilitating peer-to-peer loans or yield farming. So Bitcoin has to be used within a different blockchain. This is where Ethereum comes in and makes Bitcoin a more useful asset.
Source Fool.com
