Why Is Ethereum Better Than Bitcoin?
By sanneh on ALTCOIN MAGAZINE
Every time someone makes such a bold claim, he better be ready to back it up with concrete evidence.
This post will instead push my personal experience and viewpoints from following and participating in the Cryptocurrency ecosystem for over two years, both as an investor and a researcher.
You can expect insights into the Ethereum platform and its implications in regard to it’s economic and evolutionary propositions. Although Ethereum is made out of Bitcoin’s core protocol, its main addition of the highly acclaimed “Smart Contracts” is what makes it stand out.
ICO
Ethereum is breaking new ground every year. First, it gave us the ability to crowdfund projects via its Initial Coin Offering functionality. The details are quite sophisticated and yet simple, it’s why users and companies alike used it to such an extent that allowed for an exponential increase in the number of projects in the crypto market and subsequently a rise in the price of Ether (ETH).
DeFi
Have you heard of this term yet? It’s the next big thing. (De)centralized (Fi)nance or more eloquently put “Open Finance” is the latest phenomena on the Ethereum platform. Nobody would have predicted it would turn out this way, but DeFi has despite its just recent inception took off in spectacular fashion.
Smart Contracts are at play, users can lend or borrow money using their Ethereum wallet. When I say borrow money, I’m talking about cryptocurrencies. Stablecoins are cryptocurrency tokens backed up by real US Dollars. There are a few stablecoins available, among them USDT (Tether), USDC(USD Coin by Coinbase and Circle) and DAI(An Ether backed, US Dollar equivalent token running on smart contracts). Their point is to reduce the volatility of Bitcoin and Ether, so users can make transactions and do business with a more stable form of value.
Back to the point, Open Finance, allows users to manage their cryptocurrency holdings and take CDP ( Collateralized Debt Positions ) loans or borrow money and earn interest. Average annual percentage rates(APR) can get as high as 16%. You can deal in ETH, USDC, and DAI for now. The value of the total DeFi marketplace can be seen at http://defipulse.com. It is currently at $532,000,000+. The 3 top services with the highest volume are Makerdao.com (the “makers” of DAI), Dharma.io and Compound.finance.
The proposition of this is that I can take a loan against my ETH holdings in the comfort of my home and chair in a matter of minutes. Or I can put my money to work and earn an interest rate that scoffs at traditional instruments; all that with unparalleled safety and sovereignty offered to us by Ethereum’s Smart Contracts.
Ether Is Money (For Now)
Whoah, what happened to Bitcoin? It’s hard to be so critical towards it, we owe it so much and we wouldn’t be here without it. But let’s be real, Ethereum is everything Bitcoin always wanted to be. In order for Bitcoin to work, people need to use it as a medium of exchange when trading with each other. It’s a terrible proposition since people need to get out of their way to incorporate it into their daily lives and business processes. And they’re not doing it. This is still because of the same old hammered down reasons; the transactions are slow and costly, it is volatile, it has bad user experience, “we already have the dollar”, etc.
Ethereum goes against the grain, instead of trying to fit into society, it’s creating an ecosystem of its own — and that’s the right way to move forward and drive adoption. Users will flock to crypto and it will serve them, finally, they will begin to use it on a large scale. Ethereum is fostering an economy of its own. It’s not replacing the Dollar, ETH has intrinsic value.
Ethereum Community
If Ethereum is a competitor to Bitcoin ( Ethereum is 2nd to Bitcoin in market cap), then you can imagine how it is for Ethereum right now, with dozens of competitors trying for that spot. But what spot does Ethereum hold exactly?
Ethereum is becoming distinguished and recognized as (to quote John Wolpert @jwolpert twitter): “ the ‘magic bus’ that makes separate systems safe without silos.”
Enterprises are onboarding Ethereum due to its size, decentralization, and developers. These are all factors that contribute to a network’s safety and reputation: something that is of the utmost importance when dealing with sums of money in the billions, and business processes that warrant implicit trust without a centralized authority.
MetaMask, a popular Chrome extension that serves as a wallet and connects to Ethereum “dapps”, has recently reported it serves 264,000 users on a monthly basis.
Decentralized Exchanges are said to be on the rise next. There are many of Decentralized Exchanges available already. Their main advantage is that they run entirely on smart contracts and have no single point of failure, like centralized exchange exit scams, not accounting for user funds and getting hacked for large amounts of money:
- MapleChange $5m hack
- QuadrigaCX owner dies: $190m loss
- Bitfinex Tether scandal
- Cryptopia $16m hack + full shutdown
- Binance $40m hack
- BitMEX $250m Bitcoin liquidation
- HitBTC funds allegedly drained
- Cobinhood applies for closure
An Ecosystem Of Projects That Are Built On Ethereum
And of course, let’s not forget about all those projects funded by ICOs who have their own coins. Tokens issued on Ethereum are called ERC-20 and they are trading at their own price. They work with Ethereum to secure and deliver their services. The total market cap of Ethereum’s ERC-20 tokens was reported at 60% of Ethereum’s market cap in April 2018. So not only does Ethereum drive its own adoption by being a decentralized platform for a broad range of applications, there are Ethereum based projects working independently as well, whose success warrants the propagation of Ethereum’s good name.
So, What Does It All Mean?
Ethereuem’s Ether based on all these facts is posed to create a new economy of its own. This means, that it can be viewed as a distinguished member among the traditional FIAT currencies, like the EUR, USD, JPY, etc. It means that people will value ETH and will want to buy it, sometimes sheerly because they’ll have to. The services Ethereum currently offers are not available anywhere else in the world. What’s more, Ethereum’s first two breakthroughs were dealing with finance, first crowdfunding and now a credit system. Taking and issuing loans is a well known economic boosting practice. As long as there are new loans issued on the Ethereum network, if the collateral staked in these loans is majorly ETH, then it must appreciate in value due to economic expansion.
Prices and money aside, the most enthusiastic and early adopters — “evangelists” of the blockchain technology, will be happy to see it gaining mainstream adoption, regardless of who’s leading the charge. Blockchain technologies, like Ethereum and Bitcoin, in the end, bring us new forms of value which can improve our society and civilization. Our lives will be better because of it. Everyone will benefit from it. And that’s why the future is bright for cryptocurrencies.
Read my other articles here:
“Finding and recognizing valuable low priced projects in the cryptosphere.”
https://medium.com/@sanneh.si/who-will-be-the-amazons-of-crypto-3624282e1edc
The future of our Data. Can we put a leash on our data, what data is valuable and do you want to monetize it?
For trading cryptocurrencies use Binance.
