Here's a hypothetical situation that I would like to pose to anyone that's interested in cryptos and answering this question. Let's say you have $500 to invest each month, but you have to choose to invest in either Bitcoin or Ethereum. You can split the investment up however you want each month, but once you invest your funds, you have to leave them there for at least three years. What investment strategy would you follow and why?
Here's my take on this.
Bitcoin
Pros
- Bitcoin was the first crypto to come into existence, therefore has higher name recognition than any of the other cryptos. This makes it reasonable to assume that it will experience an easier time generating more interest, trust and adoption from the mainstream than the other cryptos.
- Bitcoin has a massive amount of investment and infrastructure set up all around it with tons of people really wanting to make sure it succeeds in the long-term.
- Bitcoin is amazing technology created and nurtured by very intelligent people
- Bitcoin has already withstood the test of time in many ways, much more so than the other cryptos since it was created first, and has already faced many challenges and is still alive and well.
Cons
- There are problems with Bitcoin and it's not a foregone conclusion that all of these issues will be worked out in a good way. This adds an element of risk.
- One of the current issues with Bitcoin is around longer transaction times which might dissuade some businesses from adopting it, hindering its mainstream appeal.
- Since Bitcoin has been around the longest and has already jumped up massively in price, this can lead many people to believe that they've already 'missed the boat' and can lead them to look for alternative crypto investments that they can get into 'on the ground floor' which they believe might lead to higher overall returns in the long run.
Pros
- It solves a problem that Bitcoin couldn't (smart contracts).
- It can arguably be so much more than Bitcoin ever could. Some people compare Bitcoin to a website and Ethereum to the web itself.
- It's newer, the price is lower but has fairly recently skyrocketed and this could potentially appeal more to investors who felt like they missed the boat with Bitcoin.
- Many people believe that Ethereum's market cap might overtake Bitcoin's sooner rather than later.
Cons
- It's more centralized than Bitcoin and this could potentially pose some risks.
- It is still fairly unproven in that it has not yet really delivered all it promises to be and has not yet withstood the test of time.
Thoughts?