Bitcoin vs. Ethereum - Who will be the victor?
Bitcoin has long been the king of cryptocurrencies. With its launch in 2009, it created an entirely new market for decentralized currency. Its name recognition has given it a distinct “first mover” advantage over any competing coins...till now?
Ethereum launched during 2015, about 6 years after Bitcoin. In the span of the two years since its launch, however, it has become the platform of choice for blockchain technology. While Bitcoin’s main draw is that of being a decentralized currency, Ethereum’s pull lies in its ever-increasing sea of applications.
Typically they are distinguished as separate markets, but while they do serve different primary functions, neither of the coins is entirely limited in scope to those functions alone. They compete in several ways, which begs the question - which coin will win out? Bitcoin got the head start, but will that be enough to keep it in the lead?
A comparison of the two coins shows a ridiculously higher growth rate for Ethereum, but to be fair, much of that is due to the fact that Bitcoin has, to a large extent, normalized the cryptocurrency market. That said, this past year, the cryptocurrency market spiked significantly. While Bitcoin experienced a spike of about 530% in market capitalization (total value invested), Ethereum during that same period, rose about 3750% in market capitalization. Now Ethereum’s market cap is over one-third that of Bitcoin.
Ethereum received a tidal wave of support, taking it surprisingly close to Bitcoin’s level of capitalization. As Ethereum becomes more widely used, the head start in popularity that Bitcoin received by being the first mainstream cryptocurrency, may peter out.
That leaves several areas in which Bitcoin and Ethereum will then be competing:
Stability
Bitcoin has weathered quite a few storms since its launch in 2009, it has proven to be quite resilient. Ethereum on the other hand is extremely volatile and does not have the solid support that bitcoin has gained over the years.Currency model (inflationary vs. deflationary)
Bitcoin will be capped at 21 million coins. The amount of issued currency will be cut in half roughly every 4 years. This means that it will ultimately become deflationary over time, giving people an incentive not to spend their bitcoins.
Ethereum, on the other hand, will allow 18 million Ether to be mined annually. This will result in an inflationary trend, that will ultimately encourage people to spend their Ether.Scripting
Bitcoin’s scripting was limited to processing transactions, which, being more limited in scope, provides fewer weak links. Ethereum’s programming language on the other hand, is designed to be expansive in scope and is much more open to attacks.Blockchain
Bitcoin uses a Proof of Work model in its blockchain, meaning that the coins are distributed to miners that use expensive calculations to verify transactions and create new blocks. Ethereum on the other hand is planning to switch to a Proof of Stake model, after utilizing a hybrid model for a time. Meaning that the creators of new blocks would be chosen in a deterministic way, based on the blocks’ wealth.
Do you think Bitcoin will take back its lead? Or perhaps this time next year, we’ll all be yelling “The King is Dead! Long Live the King!” I’m curious to hear other people’s thoughts. Let me know what you think in the comments. If you enjoyed this article, please upvote, follow, and resteem!
Spacecadet1
I wrote this on why I think they are the same. Personally, I like the immutable one: https://steemit.com/bitcoin/@greenman/all-cryptos-are-the-same-and-you-need-to-get-in-now-because-they-are-extremely-low-priced-for-the-invention-of-computational
I get the draw for Bitcoin, but an immutable flawed currency is more problematic than a currency that can be improved and has more value as a currency.
Deflationary currencies have a huge problem, mainly that there is an incentive not to use them. Bitcoin is a great bet in the short term, for a few years maybe, but in the long term, it loses value. It is held up as the mascot for the crypto movement, but once people have an incentive not to spend it, Bitcoin will face some serious problems.
Ethereum is helping to innovate the blockchain and expand its potential. The question is whether the market will realize the exponential benefits of a proof of stake currency that creates value in the blockchain, over a currency that is destined to lose its purpose over time.
Good thoughts thanks. The improvements you talk about will come over time. No one is buying coffee with cryptos anytime soon. It would be about time if people would hold on to their money instead of spending it so fast. Some savings I believe would prove good for the globe. Once the unsustainable system crashes savings will get a new renewed life.
More saving would definitely be a plus. Do you think that if there is an incentive not to spend bitcoins, that people would tend to hold onto them and transfer into other currencies for purchases? I feel that might decrease the utility of Bitcoin and make it more of a placeholder for value, instead of a currency.
BTC is not a currency and most likely be a decade to even look like one. It is a utility here is a short blog I wrote on it: https://steemit.com/bitcoin/@greenman/is-bitcoin-a-currency-and-is-jamie-dimon-correct-that-it-is-a-fraud-no-to-both-not-throwing-rocks-but-showing-a-few
Fair enough, at its core I would agree it is a secure database. My worry is that now that we have secure databases with more utility and more security, that Bitcoin will lose its value as a database for transactions. That newer, more well designed products will take its place.
The primary incentive to hold onto Bitcoin is investment value. Since it is immutable, it cannot innovate and change as improvements for it's platform are discovered. While it is a great investment now, doesn't that mean that it will fall behind as it becomes less useful for monetary exchange and less useful as a database?
Currently, the system just needs secured with computational trust the rest will follow and with shape shifting they all become easy payment systems as I write here: https://steemit.com/bitcoin/@greenman/all-cryptos-are-the-same-and-you-need-to-get-in-now-because-they-are-extremely-low-priced-for-the-invention-of-computational
That sounds great, but what exactly do you mean by "secured with computational trust?"
I couldn't exactly tell, when I read your article.
good
I think they really serve different functions and are not competing. Ethereum is about the apps and Bitcoin is about being a currency and/or store of value. I don't see ethereum at all being used or planning to be used as a currency. Bitcoin currently is a very bad currency but things like the lightning network aim to try to fix that. If it fails I think another coin will take over (monero/dash/zcash) as the currency and not ethereum. Just my guess though, Lord knows I've been wrong before!
Fair enough. I'm curious what the landscape of blockchain tech will look like, 5 years from now. Any competition between the currencies will serve to give us better ones, so I am excited to see what the end result might be.
Looks like your curiosity has brought you to the steemit.com platform. Where else can you engage, follow, vote, comment, and accumulate crypto from ALL over the galaxy @spacecadet1
I agree with your comment about competition between currencies/tokens. I prefer to divide my TOTAL into 1/3rds to minimize risk.
33% BTC
33% ETH
33% LTC
End Result might NOT be in my lifetime so I distribute my crypto in bits to my younger family and friends who have earned my TRUST since I believe they will be worth MUCH more later.
:D my 3cents worth, being Frank
Well , I can't argue with that logic. I've always liked the rule of thirds, so I enjoyed your articles about it. I'm all about furthering good content on Steemit.
"Furthering Good Content on Steemit"
Music to my ears... :D
Thirds Rule Strategy
https://steemit.com/thirdsrulestrategy/@cryptocrusaders/buy-sell-trade-1-3rd-33-333-google-search-thirds-rule-strategy-by-cassidyandfranks
Frank, my upvote is only worth .02 at this point, and I gave it to you. So here is my free .02:
I think that is a good split (BTC/ETH/LTC), but I think we're still early, so I've got my eye on other cryptos as well.
I bought into the recent kin distribution, but I kind of regret it. I think we're cooling off now in terms of the ICOs, thanks to China.
However, some other coins/currencies/blockchains/platforms I have my eye on for future growth include:
-Omise Go - (how can you go wrong with a symbol like OMG?)
-NEO
-Veritaseum
(among others)
I love it @taipeibeat and thats why I have to ONE up 2cents with 3cents!!!
:D
I have my eyes on others too!
And what I do is by taking a third from each of my MAIN 1\3rds to keep my measurement just like a ruler so I am NOT just guessing all over the place...
OMG and NEO I LIKE, got to also have some DASH ETC BCH as well as STEEM SBD SP
If you get a chance [GOOGLE SEARCH] are you the 1% or how to become the 1%
I agree with you. .02 for you! (which is what my upvote is currently worth!)
Thanks! I appreciate it!
.02 for you!
And for me! lol
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