When deciding on a cryptocurrency to invest in, it’s essential to analyze your options thoroughly and compare their metrics and level of risk. In this article, we will compare the coin that started it all, Bitcoin, with Lido Staked ETH.
History
Why do these digital currencies exist, and who made them? We will answer these questions, and more, in the next section.
Bitcoin (BTC)
The whitepaper for Bitcoin was created in 2008, during the global financial crisis or “Great Recession.” It was then released to the public in 2009 by a developer or group known as Satoshi Nakomoto. While the developer’s identity remains hidden, many have claimed to be behind Bitcoin, but these are only rumors.
Lido Staked Ether (STETH)
Staking ETH was introduced in 2020 in response to Ethereum’s change to a proof-of-stake consensus mechanism (during the Ethereum merge with The Beacon Chain, the original PoS mechanism). This is a cryptocurrency mechanism where participants, known as validators, lock up their stake of crypto coins in a smart contract.
Following this, they must validate new transactions to get a reward. If they do this improperly, they may lose some or all of their stake.
Lido launched its staking service with the Lido protocol on December 19, 2020.
What Are They, And Why Were They Created?
What purpose do BTC and STETH tokens serve? We’ll examine this in the following paragraphs.
Bitcoin (BTC)
Bitcoin is decentralized finance made to be independent form of exchange outside the jurisdiction of financial authorities, and it has largely proved successful in its purpose.
Despite this, some supporters-turned-critics would argue that it no longer fulfills this original due to centralization in the form of investor control. A small number of investors indeed own large percentages of Bitcoin.
That said, Bitcoin has been successful in some ways, having inspired the introduction of other cryptocurrencies, known as altcoins – any crypto coin that is not Bitcoin.
Lido Staked Ether (STETH)
STETH represents the amount of Ether that’s been staked; it’s what network participants stake into the network as an incentive to act in the best interest of the blockchain. Users will be able to “unstake” their crypto once the Ethereum Shanghai upgrade is rolled out.
Lido finance is a staking solution for PoS cryptocurrencies with the Lido protocol.
Price History
Most cryptocurrencies today have very long and volatile pricing histories – Bitcoin and Lido Staked Ether are not exceptions to this rule.
Bitcoin (BTC)
Between 2013 and 2016, Bitcoin’s price rose very slowly, stagnating at some points but increasing by a couple of hundred dollars. However, 2017 would show Bitcoin’s most significant spike, when its value increased by thousands of dollars to around $19,000.
The next three years would be full of small peaks and some troughs, ultimately culminating in a significant rise at the end of the year because of 2021’s bull market. By mid-April 2021, Bitcoin was valued at over $63,000.
After this peak, a significant dip followed, which saw Bitcoin’s value drop almost 50% before rising to nearly $70,000. The cryptocurrency’s value has crept lower slowly, reaching its value today at just over $20,000.
Lido Staked Ether (STETH)
Lido Staked ETH has been active on the market since late 2020, valued, at first, at just under $600. Throughout the start of 2021, it’d rise and fall, leading to a peak in May 2021 of over $4,000.
It’d dip again and remain relatively volatile before rising to under $4,000 in September and over $4,700 in November. The crypto coin had a lot of ups and downs following this and gradually lowered in price until its price today of $1,546.27.
Market Cap
The market cap of a cryptocurrency is the total value of every mined coin. Let’s look at what this might be for Bitcoin and Lido Staked Ether.
Bitcoin (BTC)
Bitcoin’s market cap is $397,045,950,650 at the time of writing this, making it the number 1 ranked cryptocurrency globally.
Lido Staked Ether (STETH)
Lido Staked Ether’s market is $5,433,419,538, putting it at rank 203 of the world cryptocurrencies.
Daily Transactions
Along with the market cap, the daily transactions of a cryptocurrency are an excellent metric to consider when contemplating buying it.
Bitcoin (BTC)
Bitcoin has a 24-hour volume of $54,192,253,248, down 15% from the last 24 hours.
Lido Staked Ether (STETH)
Lido Staked Ether has a 24-hour volume of $3,014,893, down almost 100% from the past 24 hours.
Block Size
The block size is the amount of data held in a block; a smaller block size may cause longer wait times for transaction approvals.
Bitcoin (BTC)
In the past, Bitcoin was capped at 1 MB. Although it’s now up to a theoretical 4 MB, it’ll typically be 2MB. This block size has remained small, although never explicitly stated by Satoshi Nakamoto, to keep attackers from overloading the network with Bitcoin blocks full of bogus transactions.
Lido Staked Ether (STETH)
Ethereum has a block size limit of 1 MB; however, in the past, they were typically around 80 KB.
Similarities
Bitcoin and Ethereum share several similarities, these include:
- They both used a proof-of-work consensus (although Ethereum has moved to proof-of-stake).
- Bitcoin and Ethereum are decentralized and aren’t controlled by any central authority.
- Both Bitcoin and Ethereum use highly secure crypto technology.
Differences
Bitcoin and Ethereum, and particularly Staked Ethereum, have many critical crypto ecosystem differences; these include the following:
- While Bitcoin’s sole purpose was to be a platform for decentralized transactions, Ethereum was created to facilitate smart contracts (programs that run when specific conditions are met) with ETH, the underlying asset.
- Unlike Bitcoin, Ethereum doesn’t have any supply limit. Bitcoin’s supply limit, or the maximum amount of Bitcoins that can be mined, is 21 million.
- Ethereum, although it is popular for its wide-ranging uses, is less frequently accepted as payment. On the other hand, Bitcoin is accepted by many stores, including Microsoft.
- Ethereum transactions are faster than Bitcoin transactions. In addition, the blockchains use different encryption algorithms, with Bitcoin using SHA-256 and Ethereum using Ethash.
- After staking E using the Lido protocol, it cannot be accessed, whereas Bitcoin can be freely traded.
Risks
Investing money into any cryptocurrency comes with risks precisely because of how volatile they can be. Let’s explore the risks of Bitcoin and Lido Staked Ether specifically.
Bitcoin (BTC)
Bitcoin, like other cryptocurrencies, is at risk of being under government scrutiny and experiencing regulation. Consider how China has already banned all cryptocurrency. The future of Bitcoin relies on what the US Government decides to do with Bitcoin and other cryptocurrencies.
Lido Staked Ether (STETH)
Staking with Lido does come with a risk that it might have a smart contract vulnerability. In addition, because of withdrawal restrictions, users always have a chance of getting an exchange price lower than the inherent value.
Where To Buy
Where can you buy BTC and STETH tokens? Let’s explore your different options in the following paragraphs.
Bitcoin (BTC)
Investors can buy Bitcoin from several places, including, interestingly, Walmart. You’d also be able to get it at Bitcoin ATMs. However, you’ll typically purchase Bitcoin at crypto exchanges such as Coinbase or Kraken.
Lido Staked Ether (STETH)
Like Bitcoin, STETH can be bought on various crypto exchanges, including Uniswap-V2 and Hotbit.
Exchanging Bitcoin For Lido Staked Ether
How much can you get for exchanging Bitcoin for Lido Staked ETH? With Bitcoin at about $ 20,000 and Lido Staked Ethereum at $ 1547.27, you could get about 13 STETH coins for the price of one Bitcoin (although this will vary daily). You can do the exchange on platforms such as Atomic Wallet.
Future Plans
What does the future look like for Bitcoin and Lido Staked ETH? That’s what we’re going to answer now.
Bitcoin (BTC)
As the community of Bitcoin continues to develop and support the blockchain, many are unsure about the cryptocurrency’s future. Well, many experts suspect that Bitcoin will become a heavily adopted currency, and retailers across the globe will accept it as a form of payment.
And this isn’t without foundation; even Tesla accepted Bitcoin for a short time (although it only will again when Bitcoin mining is powered by more than 50% renewable energy). Microsoft, Whole Foods, and even Starbucks accept Bitcoin as payment.
Lido Staked Ether (STETH)
It’s hard to say what the future holds for proof-of-stake Ethereum and the Lido protocol. One consideration is that Ethereum deviates from one of the core objectives of cryptocurrencies – depoliticized money. Exchanges are highly regulated and are the main stakers.
As we’ve said, however, it’s too soon to say what’ll happen in the future for staking ETH.
Sources:
https://www.forbes.com/advisor/investing/cryptocurrency/proof-of-stake/
https://www.investopedia.com/staked-ether-5496378
https://coinmarketcap.com/currencies/bitcoin/
https://bitcoinmagazine.com/guides/what-is-the-bitcoin-block-size-limit
https://blog.bitmex.com/ethereums-new-1mb-blocksize-limit/
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