Sometimes it’s hard to let go…
and even harder to compare the two.
Different Coins, Different Levels of Operation
Bitcoin has been at the forefront of the blockchain revolution, and serves as the go to coin for first time cryptocurrency investors. It’s this brand recognition that holds its reputation together as the best option when looking into crypto investing. It is because Bitcoin as a brand is so recognizable by the general public, that more and more buzz is reaching mainstream media. The only problem is that cryptocurrency is almost a foreign market to investors and the general public. The only solution is to somehow sway all of the negative associations people have with cryptocurrencies - the media has painted cryptocurrency as a whole as something that is very risky. In a way, it is.
Although there have been a few major dips in market cap recently, CBS reported yesterday that BTC dropped 19%, Bitcoin’s market cap is still the highest its ever been. My argument doesn’t revolve around the minor crashes in the market - as the flagship of all cryptocurrencies, Bitcoin almost always sets the market trends. Instead, my focus is solely on the functions of each coin, both Bitcoin and Ethereum, and to try to compare the two in how they work in the practicality of the marketplace.
For starters, Bitcoin’s primary purpose has been a medium of exchange and a store of value, where Ethereum as a coin can and has been used to complete financial transactions, Ethereum as a platform can do so much more. This is why comparing the two is almost apples and oranges. On one level, they can complete the same tasks, but on another, Ethereum can add more value to the marketplace.
So Why Ethereum?
Ethereum can and has been used for the same purposes as bitcoin, as a medium of exchange, but provides other opportunities as well. It was first developed in 2013 by Vitalik Buterin and went live in 2015 after a massive success in their crowdfunding campaign. Ethereum is based on something known as smart contracts. This Blockgeeks article explains it perfectly,
Smart contracts help you exchange money, property, shares, or anything of value in a transparent, conflict-free way, while avoiding the services of a middleman.
The best way to describe smart contracts is to compare the technology to a vending machine. Ordinarily, you would go to a lawyer or a notary, pay them, and wait while you get the document. With smart contracts, you simply drop a bitcoin into the vending machine (i.e. ledger), and your escrow, driver’s license, or whatever drops into your account. More so, smart contracts not only define the rules and penalties around an agreement in the same way that a traditional contract does, but also automatically enforce those obligations.
Ethereum paves the way for an ever changing economy by removing the physical middleman as well as the digital one. According to this article,
Its blockchain is built with a turing-complete scripting language that can simultaneously run such smart contracts across all nodes and achieve verifiable consensus without the need for a trusted third party such as a court, judge or legal system. According to its website, Ethereum can be used to “codify, decentralize, secure and trade just about anything.”
What this means is that it has the ability to make secure interactions on the blockchain faster, because they don’t require any confirmation from an outside source. The EVM, or “Ethereum Virtual Machine” is the tool that is used to run and manage all of these smart contracts. The EVM serves a dual purpose.
It creates, manages, and enforces the terms of smart contracts.
It allows for the creation of DAPPs, or Decentralized Applications, that can be used to benefit the Ethereum blockchain, either in
micro-payments platforms, reputation functions, online gambling apps, schedulers and P2P marketplaces.
This means that Ethereum has the potential to outpace Bitcoin once the marketplace starts booming. Right now, we are at the very beginning of a new age economy, one run online, rather than on paper. Because of this paradigm shift, more and more investors are looking towards cryptocurrencies in general, adding more and more value to the marketplace, buying into Bitcoin, as well as many other popular ALT coins, such as Ethereum and Litecoin.
Which is exactly why I think that Ethereum will surpass Bitcoin in total market cap. From what it looks like right now, Bitcoin is due for a softfork on August 1st, which is kind of a scary thing to think about. After the softfork, Bitcoin’s market cap could shrink, and ignorant investors could lose their money. This could potentially be a nightmare for Bitcoin, which is why developers are still in talks about alternative solutions after the softfork, but could also be a dream come true for alt coins.
Ethereum is at the 2nd spot in highest market value. Could they push ahead on August 1st?
In the long term, I can easily see Bitcoin as remaining the primary coin to use in blockchain transactions. But I can also see a possibility where developers under the EVT create a platform that almost ALL users would go through to complete those transactions.
Final Thoughts
My goal for this post isn’t to start a war between Ethereum and Bitcoin, I recognize that we have diehard “fans” (NERDS! *cough cough) on either side. My goal is to start a dialogue about where you think these two coins are headed... so I pass the question off to you:
Do you think Ethereum will outpace Bitcoin in the Long Term?
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