Cryptocurrency comparison

Theta vs Ethereum: A Comprehensive Comparison

(Updated 21. September 2022)

There are lots of innovative and lucrative cryptocurrency projects to invest in. Today, I’m zooming in on two of my favorites and comparing Theta vs Ethereum in terms of use-case and as investments.

Here’s the short answer:

Ethereum is less risky and consequently better for investors. Theta is more volatile, and is best for swing-traders. They both have great use cases and adoption, but Ethereum is much more established and 160 times larger than Theta in terms of Market cap.

Before getting into the meat of the article, let’s begin with a short introduction of the two cryptocurrency projects:

Ethereum is an open-source, decentralized project responsible for the smooth running of several smart contracts and decentralized applications (called DApps) in a safe manner without depending on a third party. Ether (ETH) is the cryptocurrency native to the Ethereum blockchain.

“Ehhh, what?”

Basically, Ethereum is like the internet: People can build stuff like apps and protocols on Ethereum, giving the “stuff” benefits of blockchain technology like decentralization and trustlessness.

I believe Ethereum might go to $100,000. If you’re interested in Ethereum investing, you should check out this article: My personal Ethereum investing and trading strategy.

Theta is a similar blockchain project, but it’s built to disrupt video delivery/streaming networks. It’s a platform for streams, vloggers, etc. to publish content.

Theta’s innovative platform has been active in the crypto industry since 2017, and aims to be a competitor to various streaming services available today.

The key difference between Theta and traditional video platforms like YouTube is that watchers earn money on the Theta network!

The token connected to The Theta Network is called Theta Token (THETA) and is actually an ERC-20 token built on Ethereum.

Suggested reading: Theta Token vs Theta Fuel: Which One is a Better Investment?

As mentioned, Ethereum is 160 times larger than Theta in terms of market cap:

Ethereum vs Theta market cap
(source: Coinmarketcap)

Theta vs Ethereum – Use Cases and Objectives 

Theta and Ethereum differ greatly in terms of use cases and the problems they aim to solve. 

Theta’s Use Case:

The Theta blockchain rewards users who watch videos on the Theta network for sharing their left-over resources such as bandwidth and computing capabilities. As a consequence, when more people join Theta, the video streaming quality improves. In exchange, viewers receive tokens (Theta Fuel) as incentives.

Theta has huge partners, some of which are shown in the screenshot taken from their website below:

Other signs of Theta’s bright future include quotes like this:

“We’re impressed by Theta’s achievements in blockchain video & data delivery. We look forward to participating as an enterprise validator, and to providing Google Cloud infrastructure in support of Theta’s long-term mission & future growth.”

— Allen Day, Google Cloud Developer advocate

Theta’s Objectives:

  • The current scenario of online video streaming has several limitations such as third-party control over all content delivery pipelines. A decentralized project like Theta improves the situation by breaking the traditional and centralized approach. 
  • Geographical limitations make video streaming a hassle for consumers around the world. Theta network’s model is designed to be free from such restrictions and allow people from any corner of the world to partake in its global infrastructure.
  • Nowadays, different types of video content are available on different platforms; for example, Netflix, the video streaming giant does not support esports, conferencing, etc. But with Theta’s open-source project participants could access not only TV or movies but also peer-to-peer streaming, and education.
  • The best thing about Theta’s platform is that the entire open-source project is powered by the users. This is a major difference between Theta and its competitors (the leading video content delivery providers) like YouTube, Netflix, and Amazon Prime Video, etc.

Ethereum’s Use Case:

Ethereum is the base layer for other cryptocurrency projects. It is like the internet for websites or the iPhone for mobile apps.

Basically, Ethereum allows developers to build applications on top of it, giving them benefits of blockchain technology like decentralization, resistance to censorship and trustlessness.

For example, almost 60% of the entire DeFi market is built on Ethereum, and 75% of all NFT sales have been done on Ethereum.

For this reason, Ethereum will increase in value if the general crypto market increases in value. It indirectly offers exposure to the general crypto market, almost like an index fund.

Now, with ETH 2.0 underway, it will scale up and become cheap. This makes most of its competition obsolete. Over time, Etheruem will increase its domination in the blockchain space, and hold its “go-to” status for developers.

Ethereum’s Objectives:

  • The Ethereum platform is useful for developers who want to build decentralized applications to cater to a wide range of purposes such as digital currency swapping, wallets, etc. Ethereum’s main goal is to facilitate various functionalities by hosting them on its versatile and secure blockchain.
  • Through DApps, Ethereum could lead several next-generation programs that could function in a decentralized network like Distributed ledgers and Tor. These applications open a world of opportunities and are considered to be the most popular in the blockchain sector.
  • Ethereum and Bitcoin share some features that have been modified in the Ethereum blockchain prior to implementation. Ethereum also has a strategy (shared by BitTorrent) of having a decentralized OS for the sole reason of creating DApps.
  • Ethereum exists as a system that gives all of its users total control over their data while also developing and running various applications on its blockchain. Ether (ETH) exists to power these applications.

Theta vs Ethereum – Historical Performance

I’ll look at Theta and Ethereums performance in the last bull market and the current bear market. I’ll calculate how much a $1,000 investment in March 2020, the beginning of the most recent bull market, would be worth today.

Ethereum’s Historical Performance:

Ethereum surged 5,550% in the previous bull market, and it has (so far) crashed 72% in the current bear market:

Investing $1,000 in Ethereum in March 2020 would turn into $56,500 in November 2021. After the 72% crash, the $56,500 would decrease to $15,800. The total returns from March 2020 until September 2022 is 1,480%.

Theta’s Historical Performance:

Theta surged 47,750% in the previous bull market, and it has (so far) crashed 93,5% in the current bear market:

Investing $1,000 in Ethereum in March 2020 would turn into $478,500 in November 2021. After the 93,5% crash, the $478,500 would decrease to $31,100. The total returns from March 2020 until September 2022 is 3,010%.

We clearly see that Theta is more volatile than Ethereum. This makes sense, as Ethereum is much more established than Theta, and also 160 times larger.

The conclusion based on historical data is that Ethereum is the safer investment, but Theta has higher potential returns.

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Future Performance of Theta and Ethereum

Ethereum is supported by a massive and loyal community which contributes to its incessant growth. The community is also responsible for many improvements in the blockchain and can upvote or downvote proposals made by lead Ethereum developers.

The latest hard fork is another example of how Ethereum continues to proceed with a string of improvements in its ecosystem to benefit all users. Ethereum is only overshadowed by the cryptocurrency mammoth Bitcoin that drives the entire market.

When Ethereum 2.0 fully rolls out and sharding manages to scale it to hundreds of thousands of transactions per second, it will likely be game-over for a lot of other cryptocurrencies. Personally, I think that projects like Cardano, Solana, and others need to establish a reasonably large ecosystem of Dapps, developers, and users before Ethereum 2.0 takes over.

Theta, however, will likely not be negatively affected by the 2.0 upgrade to Ethereum. Theta is not a direct competitor to Ethereum and might actually benefit from the general adoption of blockchain tech that Ethereum 2.0 brings.

In addition, the market that Theta is trying to capture is growing at an accelerating pace, which in turn increases Theta’s potential.

It’s hard to make future claims about anything, but it’s even harder when it comes to cryptocurrencies…

The market and the specific coins move so fast and are highly unpredictable. The only thing to do is to understand the potential pitfalls and the potential of the different coins.

My general thoughts:

  • Ethereum is well established, and has less to prove than Theta. The only really big risks I can see with Ethereum are that the 2.0 upgrade might fail, or that it takes 10 years or something to implement. If this happens, the ecosystem of developers and DApps will migrate to another blockchain and Ethereum will die.
  • The risks for Theta are that it’s still relatively new and that anything can happen to this project. They are beginning to establish themselves, but still have a long way to go before reaching “Ethereum status”, if we can call it that.
  • However, with the risks of not being well established there also follows potential. Theta has more room to grow than Ethereum in terms of market cap and price. Both have a great outlook, but I think that you’ll be better positioned for explosive growth with Theta, if you can stomach the risks associated with it.

Conclusion: Ethereum Is Best For investors, Theta Is Best For Traders

Personally, I prefer to take lower risks and therefore favor Ethereum. I think that Ethereum is the best long-term (several years) investment of the two, due to the lower risk. However, if you’re more of a trader, or a swing trader, Theta is the best one.

In terms of use-case and objective, they’re both fascinating. Theta has more to prove and is not as established as Ethereum, but as a consequence, has more potential as well.

I have invested in both but hold way more Ethereum than Theta.

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