This is a follow-up to my previous post Why I See not Such a Bright Future for Bitcoin. I decided to write it because I wanted to reply to a few comments to which my reply would be similar.
If we are going to look at the percentage each coin has in the total market capitalization, we can see there are 3 big competitors. Bitcoin, Ethereum and Ripple. Each one has it's strong points and of course weak points.
Bitcoin
Bitcoin is the currency which created the industry. It was so successful that in 2010 you could buy 2 pizzas in 2010(like this was guy doing) with an amount of bitcoin which worth today 20-25 millions.
Pros
- Bitcoin is the only one among the 3 which deals with only transactions. It's for real a cryptocurrency and only that. No smart contracts, no other features.
- It is the coin which created this industry out of nothing, having a good reputation.
- It's widely accepted. Any merchant which accepts cryptocoins will accept bitcoin.
Cons
- Mining is inefficient. The costs of running miners if making the whole network "expensive".
- Cartelization of miners. Solo mining is impossible so only a few bit pools are controlling the blockchain.
- Transactions times
- Hard to change. Bitcoin devs hardly reach to consensus on the changes to be implemented. Many of the original devs left the project because of this.
Ethereum
Ethereum is a more than a coin, it's a platform. Ethercoin is just a smart contract defined and hardcoded in the platform. Anyone can create a new coin within the ethereum platform and the community welcomes it.
Pros
- Smart Contracts. Being perceived as just a coin like bitcoin is has certain advantages. But having smart contracts has more advantages. Ethereum is the network. Ethercoin is the primary coin. Ethercoin Classic is a coin forked from it. Many other coins are defined, but the primary coin is designed to be the base, the gas on which the smart contracts are running.
- Community. It is open(not only open source) and has a vibrant community creating apps in the ethereum platform. It's popular in the geeky world.
- Has a good reputation in large corps like Microsoft.
- Many merchants accepts it. Not as many as the ones accepting bitcoins, but a lot.
- Via smart contracts you can create recurring charges to pay for subscriptions.
Cons
- Mining. It's currently proof of work but they plan to switch to proof os stake
- Some people think it depends too much on Vitalik Buterin. When fake news about his death were published eth price went down.
Ripple
Pros
Ripple is similar to ethereum, but it's created with banks and financial institutions in mind. Therefore banks love it.
Pros
- Banks love it.
- It's using a consensus algorithm called Ripple Protocol consensus algorithm (RPCA). It's neither proof of work or proof of stake. But what is matter is that is hardware and energy efficient.
Cons
- It's closed source. In my opinion any closed-source blockchain is breaking a primary rule: to be distributed and not to have a central authority. Other project have of course dev teams, but if they go wrong forks can be created and community can follow those.
- Does not have a real community. Banks may like it, but geeks hates it.
- Banks love it, but the blockchain industry is here to disrupt the banking industry. Hard to make with a blockchain where banks has a great influence.
Now let's look a bit on the Percentage of Total Market Capitalization graphic. It's quite obviously the bitcoin relative capitalization is going down compared to it's competitors. The most notable thing we should notice it the fact that it now has less than half of capitalization. The total market is growing so most of the money are going not in bitcoin coins.
The trend is clear and without major changes soon ethereum will overtake bitcoin in terms of market capitalization. At that point many will switch from bitcoin to the new kid on the block: Ethereum. If you have any other points I missed or different ideas just leave a comment, I'd love to discuss them.
