Ethereum And IOTA: What Are the Differences and Similarities?

Ethereum And IOTA

In a bid to enter the crypto investment ecosystem, many newbies are looking where to buy VeChain, IOTA, ETH, and other cryptocurrencies. But even experienced crypto investors find it difficult to decide which cryptocurrency they should invest in. 

This post takes you through an important comparison between Ethereum and IOTA that will assist you in choosing the best between the two virtual currencies. The important factors covered here define what crypto is suitable for you and can provide the kind of ROI you are expecting.

Overview of ETH

Ether (ETH) is the native coin of the Ethereum decentralized blockchain. It was created by Vitalik Buterin in July 2015. The main intent behind Ethereum was to create a platform that would not only have a cryptocurrency but also allow people to create decentralized applications. 

As of May 2022, Ethereum has a market capitalization of over $230 billion, accounting for 15% of the entire crypto market. The value of ETH soared from roughly $730 in late 2020 to $4,000 in May 2021 before hitting an all-time high of $4,800 in November.

It is explained by the increase in demand for NFT in 2020, as users need to have an ETH-funded wallet before purchasing an NFT.

However, at the beginning of 2022, Ethereum’s value fell below $2,000. Bearish views in the cryptocurrency industry have started to appear, and some think that they may benefit from the temporarily low prices. 

Overview of IOTA

IOTA is a decentralized ledger that uses a technology known as Tangle. The latter is designed in such a manner that it does not need miners to validate blocks. It makes conducting transactions on the ecosystem free of charge.

The ledger’s token, MIOTA, experienced a significant increase and reached the value of $5.69, its all-time high, in December 2017. It resulted in the rise in IOTA market capitalization to $12 billion.

On March 13, 2020, MIOTA hit its all-time low of $0.07962 per token. This occurred amid high tension between the IOTA Foundation board, resulting in co-founder Sergey Ivancheglo’s departure from the project and many days of network outages.

As of May 2022, the IOTA token has a market capitalization of over $900 million. The token’s value is roughly $0.33. Presently, the circulating supply of IOTA is 2,78 billion MIOTA, which equals the supply limit of the token.

ETH vs IOTA: Comparison

It is essential to compare these two cryptos against several indicators before trading ETH to IOTA or vice versa:

  • Mining. Ethereum employs the proof-of-work protocol using miners for validating transactions on the network. The miners then get rewarded with a certain amount of the Ethereum token. On the other hand, IOTA does not need the interference of miners to validate transactions. Its consensus process is integrated into a sender’s protocol meaning that traders validate transactions themselves.
  • Inflation. The entire supply limit of IOTA has been reached, which implies that the coin is at the risk of experiencing deflation, i.e., a reduction in its value because of low customer spending. Ethereum does not have a specific supply limit, so the coin can is more prone to inflation processes or a rise in its prices because of higher demand. 
  • Efficiency. IOTA is free of mining, so it does not consume much energy for network maintenance. On the contrary, Ethereum requires a lot of energy resulting in annual power consumption of 79.69 TWh.
  • Transaction fee. Users of IOTA are not required to pay any fees. In its turn, Ethereum has gas fees, which vary from region to region and fluctuate daily.
  • Processing speed. IOTA has a fast transaction speed, capable of processing 500 to 800 transactions per second. On the other hand, Ether can process 20 transactions in a second.

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Summary

Ethereum and IOTA are both good virtual currencies with a high potential to perform well in the future. IOTA is a good choice if you are interested in a virtual currency that offers no transaction fee with a faster transaction speed. For example, you may benefit from using it for small, everyday payments. However, Ethereum offers more security and scalability than IOTA. It is also optimal crypto for investors that intend to benefit from holding it long-term. 

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