Ethereum (ETH) vs Binance Coin (BNB): Which Should You Buy?

Ethereum (ETH) vs Binance Coin (BNB): Which Should You Buy?

Ethereum and Binance are two big names in the crypto space. While Ethereum is a crypto network known for its support for smart contracts and building of decentralized applications, Binance is a company consisting of a crypto exchange, blockchains and other services.

Because of the huge difference between Binance and Ethereum therefore, we will be comparing Ethereum and Binance Coin in the guide only as crypto tokens rather than as crypto networks, because Ethereum is a network while Binance Coin isn’t.

What is Ethereum (ETH)?

Ethereum is a popular name in the crypto ecosystem. ETH or ether is the token used to power the network. It is used to pay for transaction fees, otherwise known as gas fees. ETH is also used to secure the network. 

This means that for anyone trying to use the Ethereum network, owning some ETH is a must, because you’ll have to pay for gas fees. 

Another use of ETH is in staking. Validators who help to confirm transactions on the network have to stake some ETH, specifically 32 ETH to be qualified to verify transactions for the network. 

This way, the network is kept secure. Currently, there are easier ways to stake your ETH and it doesn’t have to be up to 32. Staking enables ETH owners to earn staking rewards which can be a good way to earn passive income and help to secure the Ethereum network.

Despite Ethereum being the first proof-of-stake (PoS) network, the popularity of ETH has been on the decline because of weaknesses such as lack of scalability on the network that result in high transaction fees.

As a result, similar networks to Ethereum have emerged to compete with it by offering higher scalability and lower transaction fees. This means that the tokens for those networks have grown to be more popular among investors than ETH. 

What is Binance Coin (BNB)?

Just as ETH is the native token that powers the Ethereum ecosystem, BNB is the token that powers the Binance ecosystem. The token is used as the native token on Binance Chain, a high throughput blockchain network and Binance Smart Chain (BSC), its web3 version.

BSC supports the building and deploying of decentralized applications just like Ethereum and BNB is used on both of them for transaction fees. BNB is also used for staking since BSC is a PoS network.

Just like in Ethereum, validators help to secure the network by staking their BNB and helping to verify transactions on the network. BNB has increased in popularity fast and continues to grow because of the superiority of BSC and Binance Chain to Ethereum.

The two blockchains process transactions much faster since they are much more scalable, and so charge lower transaction fees. This has made BNB to grow in popularity as Ethereum grew less popular.

As more people continue to use BNB, its value naturally appreciates because supply and demand is what determines the price of crypto assets. 

Which Should You Buy?

The question of which of ETH and BNB to buy is a tricky one, but that depends on what you wish to use it for. If you wish to use the specific network that uses the particular token, you don’t have any choice but to buy the token, whether it is ETH or BNB.

However if you intend to buy the token as an investment asset, you’ll need to consider certain factors. Given what you know about Ethereum and BSC as well as Binance Chain, which network do you think has a better future?

Also, you need to consider the market cap of the token in question. Clearly, ETH has a higher market cap and price, which makes it more “saturated” as an investment. BNB on the other hand is a lot cheaper and with a lower market cap, so it would make a better investment.

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