A lot of new investors are wondering if Ethereum is better than Bitcoin. The answer is yes because Ethereum provides more flexibility and complexity which allows all sorts of decentralized applications (Dapps) to be built on top of it. And no, because it lacks the robustness and security that Bitcoin has. Let’s go deeper into this.
First of all, Bitcoin and Ethereum solve different problems and therefore, have different use cases. Asking if one is better than the other is like asking if a rock is better than a glass of water. Of course; a rock is better at being a rock. That’s what it does best, rocking. And a glass of water is better at quenching thirst. The same concept applies to Bitcoin and Ethereum.
Now in this article, I will attempt to compare the two different technologies in order for you to:
- Know their difference
- Know which one is better at what they do, respectively.
Now I know a lot of you are curious if and when will Ethereum surpass Bitcoin. But I seem to have lost my crystal ball, so I can’t tell right now.
Please note that this isn’t an “invest in Bitcoin VS Ethereum” article either, as I don’t give investment advice. I just want to highlight how well (or unwell) they are doing and what the future holds.
So how is Ethereum different from Bitcoin?
Ethereum is designed by brainiac Vitalik Buterin to run complex applications that are autonomous. He believes that by fusing crypto and blockchain technology, we can create decentralized software. What’s decentralized software? Software with no central controller.
Why would we need something like that. Well, censorship for one thing. Facebook and Twitter and other giant tech companies have been strictly policing content creators too much in the last few years
A blanket ban was imposed on cryptocurrencies by Facebook and Google for a while before they came to their senses. To a large extent, they wanted to protect their users from crypto scams.
However, authentic and bonafide crypto influers as well as were prevented from advertising.
Real striving crypto businesses who were trying to make a difference became nothing but collateral damage, unable to promote themselves in the said platforms.
But the worst part for me, is the controversial Meme Ban that is being persistently pushed by the Europian Union (EU). Imagine a bunch of crones in a convention center talking about banning memes.
For all the issues their political union is facing, including Brexit, who would have thought memes would be on the top of their priority list. Such a waste of taxpayer money. If they succeed, a huge chunk of user-generated content from YouTube and other social channels and blogs will be removed. Good luck with that.
Anyway, there are many occurrences every day that show without a doubt how much we need a decentralized option for many of the platforms we are currently on.
Stuff like politics, social justice warriors, religion, dogmas, ideologies have influenced big corporations more than they should. And the internet is getting more and more restrictive instead of innovative and creative.
No group should be able to dictate what’s right or wrong and force their beliefs on others. Not at the expense of freedom and genuine human expression.
And that’s why we need Ethereum and other similar technologies, so content creators can fully express themselves in the digital world, and let users like you and me enjoy their content.
Basically, that’s the use case for Ethereum, unstoppable software. Applications that cannot be shut down by governments and other entities that seek to control others. Obviously this is very broad. There are countless applications that can be made. However, we do have to realize that not everything needs this type of code structure. Not everything needs to be decentralized.
But there are countless applications though.
Remarkable examples would be gaming, digital identity, crowdfunding, internet of things, online casinos and sportsbetting, Real Estate tokenization, other tokenization.
Now for the million-dollar question, has it succeeded in this regard? Let’s take a look at some of the applications built on top of Ethereum today.
The number one Dapp on Ethereum is currently the MakerDAO platform, a decentralized financial system that unlike Bitcoin, has a stable currency. MakerDAO’s stablecoin DAI is the best of its class to date.
Another top application is My Crypto Heroes, a web and mobile game app where you can buy, sell, and train heroes. Each hero is a Non-Fungible-Token, which makes them unique and valuable.
Personally, I don’t get what the fuss is about with this game. The graphics sort of threw me off, but it turns out that a lot of gamers are into this kind of stuff so who am I to judge.
The point here is that Ethereum is serving its purpose to a large degree. As of now, there are currently over 2,750 Dapps on Ethereum, which isn’t quite much compared to millions of softwares available on the internet, but then again it was only deployed 4 years ago.
Not bad. Although there are some latency issues as well. Many programs are not efficiently performing due to the Ethereum blockchain’s speed limitations.
Just as much as the Bitcoin community, the Ethereum foundation is working hard to overcome its bottlenecks.
Unlike Ethereum which can run various applications, Bitcoin is specifically designed for money transactions.
The Bitcoin documentation was released sometime after the 2008 financial crisis, which was largely caused by the stupidity of bankers. Basically, what happened was despite the bankers being at fault, the global economy had to pay for it.
Not just ordinary US citizens but many economies were directly or indirectly affected.
Peer-to-peer payment system
So Bitcoin was introduced by an anonymous guy/girl/group named Satoshi Nakamoto, as an alternative currency, free from the abominations of the banking cartel.
Satoshi envisioned a payment system that empowers the people by enabling them to do business or commerce without the need to go through middlemen (banks, Paypal, Western Union, thieves, etc).
This was the first use case.
Sometime in 2010, Satoshi relinquished the Bitcoin project to notable developers and disappeared forever.
As time went on, Bitcoin went through countless attacks from inside and outside the crypto space, which somehow helped it evolve and become the most robust and secure financial record in the world.
So now, we have Bitcoin’s second use case which is store of value. Now let’s assess how Bitcoin is fairing in 2020.
According to Statistica, the average daily transactions of Bitcoin in Q3 2019 was 311,396. That’s nothing compared to Visa’s nearly 300 million daily transaction volume.
Safe to say, Bitcoin is still light-years away from what Satoshi envisioned a decade ago. But maybe that’s just because adoption is slow. Which means people are just not ready yet.
And that’s fine. People should only use Bitcoin if they need to. For now, only people from states with economic crises or overly stringent monetary policies are motivated to use Bitcoin.
A good example for this would be Venezuela. Hyperinflation has devalued their currency to a fraction of its original value in a short span of time. Now their streets are littered with worthless paper.
These are the people that need Bitcoin the most. These are terrible circumstances guys, and I wouldn’t wish any of these to happen to any country. Not even to create more need for Bitcoin, so it can pump my bags.
But the reality is, one of the biggest economies, the US, is long overdue for a recession. Most economists agree. What’s more alarming is that they predict that it will happen sometime this year. I hope it doesn’t.
But if it does, we still don’t know for sure how it will affect Bitcoin. The price could skyrocket or crash. Who knows really.
Store of Value
Now let’s talk about the other use case, which is store of value. This has been the pushed by most Bitcoin proponents like Andreas Antonopoulos and Twitter CEO Jack Dorsey.
They believe that Bitcoin’s most valuable use case is as a world reserve currency, kind of like gold. Except it’s easy to transport and is divisible.
Now I’m not going to go deep as to why Bitcoin is considered a great candidate for a store value. That would require 2 full blog posts and I don’t want to bore you.
Just know that Bitcoin is scarce (only 21 million supplies), it cannot be counterfeited, it costs energy to make. For these and other reasons, people believe that Bitcoin should be the default currency of the world.
Something that you can safely exit, just in case your national currency gets messed up by your incompetent government. A haven for your savings of some sort.
Well, judging from the fact that Bitcoin lost over 95 percent of its value in less than a year, I can’t confidently say that using Bitcoin as a haven for your savings would be a good idea.
It has recovered to a little less than half it’s peak value in 2017, but still hovering around that range. As of now, Bitcoin is not a great store of value.
And quite frankly, the average bitcoiner does not treat it as such. They see it as an investment, and that includes me. Let me be honest, I’m not simply here to help this free economy movement. I want to make money.
It’s not working out very well yet but I think Bitcoin still has the highest probability of going back to moon at some point in the future. But that is a topic for another time.
Bottom-line is, Bitcoin is a work in progress and has not lived up to most of its perceived use case as of now.
Bitcoin VS Ethereum once and for all!
So going back to your question, is Ethereum better thank Bitcoin? Well a little bit. Not a whole lot better, really. Both blockchains need a lot more upgrades and thankfully they do have very promising development roadmaps, especially Ethereum.
2020 is the year for Proof of Stake Ethereum AKA ETHEREUM 2.0 AKA Serenity. I’m excited to write more about this soon.
Will Ethereum surpass Bitcoin? Only time will tell.
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