Very few people expected the cryptocurrency market to become the massive industry it is today. Unfortunately, this enormous growth has made the sector slightly more challenging for new crypto investors to break into.
Thankfully, we will be comparing various crypto assets to help you figure out which will be the best investment for you. In this piece, we will specifically be comparing Wrapped Bitcoin with Ethereum.
History
Before investing in any crypto asset, knowing how a project started would be beneficial. This can help you determine whether it could be a good investment or not.
Ethereum (ETH)
The Ethereum blockchain has been around since about 2014 and was created by a list of co-founders, the principal being Vitalik Buterin. He published the whitepaper explaining the concept of the Ethereum blockchain in November 2013.
Ethereum’s co-founders include Mihai Alisie, Joseph Lubin, Jeffrey Wilcke, Anthony Di Lorio, Amir Chetrit, Charles Hoskinson, and Gavin Wood.
The Ethereum blockchain rose to prominence in 2014. Buterin brought the project to the public’s attention at a Bitcoin conference in Miami. While investors could purchase ETH tokens, the Ethereum blockchain would only go live on July 30, 2015.
This meant that token holders had to wait for nearly a year before they could move, sell, or use their ETH tokens.
Wrapped Bitcoin (WBTC)
Wrapped Bitcoin was released in 2019 and is an ERC-20 token representing Bitcoin on the Ethereum network. Unfortunately, there isn’t much history regarding Wrapped Bitcoin and other wrapped tokens, as they often mirror their non-wrapped counterparts.
What It Does, And Why It Was Created
Understanding what different crypto assets can do can be very beneficial, as it can help you determine whether they are suitable investments.
Ethereum (ETH)
The principal founder of Ethereum decided to create the platform after discovering the Bitcoin network. The idea that people could take power away from banks and governments appealed to him. Bitcoin was able to do this by acting as a decentralized payment system.
The other founders of Ethereum also liked this idea, which is why Ethereum is also a decentralized platform that acts as a payment system. That is not the only trick up Ethereum’s sleeve, though. The platform can also store data and run decentralized apps.
Ethereum does some things differently from Bitcoin. It establishes a peer-to-peer network to execute and verify application code known as smart contracts.
When the Ethereum blockchain first went live, it operated using a proof-of-work consensus mechanism like Bitcoin. However, it recently changed to a proof-of-stake consensus mechanism for several reasons. The main reason is that a proof-of-stake mechanism requires far less computing power and is more environmentally friendly.
Wrapped Bitcoin (WBTC)
WBTC tokens were created to mirror the value of Bitcoin and be interoperable with decentralized applications on the Ethereum network. This means that Wrapped Bitcoin tokens will always be valued at normal Bitcoin price.
While Bitcoin might be the biggest crypto asset in the world, it works on a different protocol from Ethereum, for example. This means that the Bitcoin blockchain cannot communicate with the Ethereum blockchain.
While this might not seem like much of an issue, it means that normal Bitcoin users cannot interact with any decentralized applications on the Ethereum blockchain.
Wrapped Bitcoin solved this issue, as it can interact with smart contracts and applications on the Ethereum blockchain. However, it is still backed by real Bitcoin reserves.
Price History
The price history of crypto assets is the most important factor to consider when investing in crypto because you can check how the price has fluctuated over time.
Ethereum (ETH)
When Ethereum’s native token, Ether (ETH), arrived on the crypto scene, one ETH token was worth only $0.31. It wouldn’t take long for the price to increase, though, as one token would be worth $31 in early 2016.
Ethereum would reach its first major milestone by 2018 when the rest of the crypto industry boomed. During this period, one ETH token was worth slightly over $1,000.
After an impressive start to 2018, the cryptocurrency industry as a whole began to decline steadily. This would see the price of an ETH token drop to the 150-dollar range at the beginning of 2017.
The price would continue to fluctuate for the next few years until 2021, when the industry would again experience a massive boom. In mid-2021, ETH tokens were selling for $4038; by December, one ETH token was worth $4701. This is also the most an ETH token has ever been valued at.
2022 has been a poor year for crypto assets overall as the industry plummeted once again. This is why one Ethereum token is worth $1,232 in December 2022.
Wrapped Bitcoin (WBTC)
While Wrapped Bitcoins are supposed to mirror the value of regular Bitcoins, there are often some slight discrepancies between their prices.
When Wrapped Bitcoin first became available in February 2019, one Wrapped Bitcoin token was worth $3478.45. This is the same price that one BTC was worth at the time, as the price discrepancy would only begin to occur later.
Like Bitcoin, Wrapped Bitcoin would experience decent growth throughout 2019, as one wrapped BTC would be worth $12,487 at its peak for the year.
2020 was a relatively stagnant year for WBTC tokens and the crypto industry as a whole. There were some slight price fluctuations but nothing significant.
2021, on the other hand, was a great year for Wrapped Bitcoin and many other crypto assets. Wrapped Bitcoin would reach its all-time peak in value at the end of 2021.
However, 2022 would see the entire crypto market plummet, and Wrapped Bitcoin would follow suit. This is why one WBTC is worth $16,835.16 in December 2022.
Market Cap
Market capitalization refers to the total value of a digital asset, so it is an important factor to consider before investing.
Ethereum (ETH)
Ethereum has a market cap of $151.463B – the second-highest market cap of any digital asset.
Wrapped Bitcoin (WBTC)
Wrapped Bitcoin has a market cap of $3.364B. Wrapped Bitcoin has the 21st highest market cap of any digital asset.
Similarities
One of the main similarities between these tokens is that they can both be used on the Ethereum blockchain to complete transactions. They can also be bought on decentralized exchanges and be staked on the Ethereum network.
Other than that, there aren’t all that many similarities between the two tokens.
Differences
While ETH tokens are cryptocurrency tokens in their own right, Wrapped Bitcoins represent Bitcoins on the Bitcoin blockchain. These Wrapped tokens are far more valuable than ETH tokens, as Bitcoin has been around for much longer.
Risks
When you are investing, you are inherently taking a risk. However, you might be wondering if different risks will apply to each project.
Ethereum (ETH)
The cryptocurrency industry is extremely volatile, so your investment could spike or plummet in value at any moment. This also applies to Ethereum, despite being the second most valuable cryptocurrency.
Ethereum is also at risk of becoming centralized and governed since it moved to the proof-of-stake consensus mechanism. This could cause its value to drop significantly.
Wrapped Bitcoin (WBTC)
Wrapped Bitcoin is just as volatile as Ethereum, but it is unlikely to become centralized or governed.
Bitcoin holders can exchange their Wrapped Bitcoin for Bitcoin at any time, so these wrapped tokens aren’t riskier than their unwrapped counterparts.
Where You Can Buy It
Ethereum (ETH)
Ethereum ETH tokens can easily be purchased from:
Wrapped Bitcoin (WBTC)
You can wrap and unwrap Bitcoins you own, or you can purchase Wrapped Bitcoin from:
How Can You Exchange ETH For WBTC?
ETH tokens can be exchanged for WBTC tokens on nearly every one of the exchanges listed above.
You will just need to make sure that the exchange you use supports both coins.
Future Plans
Ethereum
While Ethereum and the rest of the crypto industry is struggling, experts expect this to change.
It’s impossible to predict the future of cryptocurrency, but there are hopes that Ethereum will regain its peak value in the next few years.
Wrapped Bitcoin
Wrapped Bitcoin follows the same trajectory as actual Bitcoin. It hasn’t been a great year for Wrapped Bitcoin. However, analysts have predicted that Bitcoin will also return to its former glory in the years to come.
Sources
https://www.gobankingrates.com/investing/crypto/ethereum-vs-bitcoin/
https://www.benzinga.com/money/bitcoin-vs-ethereum
https://www.forbes.com/uk/advisor/investing/cryptocurrency/bitcoin-vs-ethereum/
https://www.nerdwallet.com/article/investing/bitcoin-vs-ethereum
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