Ethereum vs Binance coin is a debate over two of the largest cryptocurrencies in the world. On everyone’s minds following the huge developments and growth in blockchain technology, DeFi and NFTs, the potentials of the two coins are great and complex. However, whilst Ethereum is oft favoured thanks to its higher market cap, we ask whether that comparison is justified and what does that mean for active traders?
This guide will explore the cryptos, comparing similarities and differences in their origins, use and technology, while providing an overview of the two tokens. We have also compiled a list below of the top exchanges and brokers offering trading in Ethereum vs Binance Coin.
What Is Ethereum?
Before we get into comparing Ethereum vs Binance Coin, let’s first take a look at the two as standalone instruments. Ethereum was launched in 2015 by a team of blockchain enthusiasts. The team included the founder of ConsenSys, Joe Lubin and programmer, Vitalik Buterin. Buterin, credited with originating the Ethereum concept, continues to serve as the company’s CEO today.
Ethereum itself is not technically a cryptocurrency, it is more a software platform.
Specifically, the Ethereum blockchain is the world’s largest, decentralized public ledger. It was developed to enable users to create, share, and use applications (DApps) without interference from third parties. The software hosts a wide range of financial and entertainment applications, and many other cryptocurrencies are built and run using Ethereum smart contract technology.
Ethereum ranks second only to Bitcoin in terms of relative market value, with an estimated market cap of $500 billion. Ethereum implements a proof-of-work system to verify and record transactions. This is energy-intensive and costly, requiring participants or miners to solve complex mathematical puzzles using hash algorithms. The process verifies existing transactions and generates new coins. Ethereum and Ether are often used interchangeably, but the latter refers to the name of the software’s native coin. Ether, traded under the symbol (ETH), was initially designed to be used within the framework, but increasingly, its use extends beyond. Today, Ether is accepted as payment on sites such as Shopify, with more set to follow suit. The Ethereum blockchain’s native language is called Solidity.
What Is Binance Coin?
Binance Coin has a market cap of $56 billion, the fourth largest behind Bitcoin, Ethereum and Tether.
Binance Coin trades under the symbol BNB and was originally launched on the Ethereum network. Today, it operates on Binance’s own blockchain, the Binance smart chain (BSC).
BNB is a utility token that allows users to pay less in fees if they are used for transactions. The currency is primarily used to pay transaction and trading fees on the Binance exchange but it can also be used to make credit card payments, charity donations, loans, transfers and investments.
Initially, there were 100 million Binance Coin tokens offered in the ICO, though today the supply is lower. Each quarter, Binance “burns” one-fifth of the coins held. The most recent burn event took place on April 15 2021, the equivalent of $595, 314,380 in BNB was burnt.
Pros Of Ethereum For Traders
First in the Ethereum vs Binance Coin debate, Ether has a lot to offer traders, not least:
- Cost – Trading Ethereum is relatively low cost if you pick your exchange wisely. If you do not have a ton of capital, day trading Ethereum could be a good place to start.
- Accessibility – Ethereum trading operates 24 hours a day, 365 days a year from anywhere with an internet connection.
- It doesn’t get much more accessible than that.
- Potential – Second only to Bitcoin in terms of market value, Ethereum is often touted as the next big thing. If it can overcome environmental concerns, which it looks set to do with ETH2, the technology has huge potential to be widely adopted. The speculation and buzz that surrounds Ethereum have resulted in price volatility that presents a real opportunity for hungry day traders willing to take a risk.
- High Value & Market Cap – Ethereum has the second-largest crypto market capitalisation and is in the top five most valuable tokens.
Pros Of Binance Coin For Traders
The latter in Ethereum vs Binance Coin, BNB also presents lots of opportunities for traders looking to play the long game:
- Transaction Speed – Binance Coin is much faster and more efficient than Ethereum.
- Scarcity – Regular burns increase coin scarcity and ensure that prices remain high.
- Cost – Holding Binance Coin reduces transaction fees on the exchange. If you frequently trade on Binance, it could be a real money saver.
Ethereum Vs Binance Coin Similarities
Ethereum vs Binance Coin have many similarities:
- Use Cases – The key similarity between Ethereum vs Binance Coin is the way that they are used; the primary function of each is to facilitate transactions.
Overall, both Ethereum and Binance Coin have their own unique strengths and weaknesses, and it is up to individual investors to decide which one aligns best with their investment goals and risk tolerance.
- BNB’s tokens were created for specific purposes, different from Ethereum.
- The Ethereum blockchain uses a proof of work (PoW) consensus model, while Binance Coin uses proof of stake (PoS), which is less data-heavy and energy-intensive. However, Ethereum is set to integrate a PoS mechanism shortly.
- The Ethereum community comprises over 140 million unique addresses, including everyday traders, developers, and crypto enthusiasts, who use the network for various sectors such as gaming, gambling, and finance. In contrast, the Binance community is smaller, but the majority of BNB tokens are held in Binance-owned wallets, and it is more democratic in its structure due to a more equal distribution of wealth.
- BSC is faster and more efficient than Ethereum, with an average block time of 3 seconds compared to ETH transactions, which range between 30 seconds and 16 minutes.
Drawbacks of Ethereum Vs Binance Coin
While there is a lot of buzz and excitement surrounding cryptocurrencies, it’s not all sunshine and rainbows.
There are several drawbacks to trading Ethereum versus Binance Coin that you should be aware of:
- Environmental Impact – Blockchain technology is an extremely energy-intensive and costly process. Ethereum’s Proof of Work (PoW) consensus to validate transactions requires mining, which is very resource-intensive. Although newer coins are moving away from this, the technology still has a long way to go. The growing demand for cryptos has even led to groups stealing energy.
- Pricing – The prices of Ethereum, Binance Coin, and all other cryptocurrencies mirror the price of Bitcoin. If Bitcoin suddenly drops, Ethereum and Binance Coin follow suit. The reverse is also true. As a result, cryptocurrencies operate in a very interconnected sphere and remain highly volatile and speculative instruments.
- Security Concerns – Binance Coin has been subject to a federal investigation following claims of money laundering. Regulation is a hot topic of debate in crypto technology. Given that they’re relatively new instruments, there is still some way to go in terms of policing.
Ethereum vs Binance Coin Verdict
Overall, Ethereum and Binance Coin have some obvious similarities, but they differ in many ways, including utility, community, and the process of transaction verification. Ethereum might be considered the obvious choice, but the Binance Coin blockchain offers real potential in terms of speed and efficiency.
Both coins have their advantages and disadvantages and could be considered good investments for the right trader. Although, as with all crypto trading, risks are high, so ensure you are mitigating losses and only staking what you can afford to lose.
What is Binance Coin Vs Ethereum?
Binance Coin is the native token of the Binance cryptocurrency exchange, while Ethereum is a separate cryptocurrency. The two draw regular comparison owing to their similarities.
Should I Trade Ethereum Vs Binance Coin?
Both Ethereum vs Binance Coin have their pros and cons, with better conditions for different types of traders. Binance coin is a much quicker blockchain with lower fees and is likely suitable for those who trade on Binance a lot or believe the exchange will continue to grow. Ethereum, on the other hand, is larger, more diverse and soon to make the jump to PoS and become more eco-friendly, so other investors may prefer Ether.
Is Ethereum Vs Binance Coin Legal In The US?
Both Ethereum vs Binance Coin are legal to trade in the US.