Economic Applications of Ethereum vs Bitcoin

sanneh_si
sanneh_si
Dec 2 · 5 min read

We’ve heard the buzz around Bitcoin and their activist movement to separate the state from financial control and citizen oversight.

Cypherpunks are activists advocating strong use of cryptography and privacy-enhancing technologies as a route to social and political change.

In the case of Bitcoin, they plan to achieve this by onboarding as many people as they can onto using the cryptocurrency. This has been done by widespread recruitment of new members, be it through mining, running a node or straight up buying the cryptocurrency.

Recently it has become more of a cult following than a revolutionary movement. The community is becoming increasingly more attached to ideological beliefs with a blatant disregard for reality.
Bitcoiners expect the world to change it’s business processes and use the new cryptocurrency instead, blatantly ignoring a few important facts.

  • Bitcoin can only be used as a Medium of Exchange. A unit currency used to trade with for services and goods between people.
  • It failed as a currency, due to the limitations of Bitcoin’s architectural design and its Layer 2 scaling solutions.
  • It’s not turing complete, meaning it cannot run any automated programs which could execute some kind of business/financial logic.
  • Thought leaders change the narrative consistently to keep Bitcoin seemingly relevant. Grandiose notions of Bitcoin being a Store of Value or “Digital Gold 2.0” followed up its catastrophic failures.
  • Store of Value is a dead end as it does not offer any economic relief nor does it bring about any significant changes, because of the aforementioned limitations.
  • One thing’s for sure. It keeps Bitcoin relevant because there are political implications in a decentralized, immutable cryptocurrency. It’s a great aid to political refugees, law-evaders and anyone looking to freely transact and manage their wealth without anyone’s intervention.
  • It is a nice cypherpunk tool, but does it warrant a $240b market cap? Definitely not.

As you can see, Bitcoin isn’t as impressive as you would have thought. It’s just a glorified pirate network to send money between each other. No wonder it received so much backlash from the mainstream because of terrorists and criminals utilizing it. Who else would need such a feature?

Governments are not inherently bad

If only there was a way to keep us appraised of the government’s activities. If only there was a way to enable citizens to have some oversight into what’s going on.

Ethereum allows for a transparent network of operations. Let’s say there’s a government grant for the construction of a new road. The initial balance is $50,000. Right now, the business details are non-transparent. We don’t really know how much the construction is going to cost and how much of that money is spent on unrelated things.

With an Ethereum application, a government body could make the grants public and make the business details transparent. The cost of the construction deal could be seen and the transaction of funds from one party to another. Any leftover money could be returned or put in another grant for the future. Money sitting in the account could be accruing interest over the period.

Economic Efficiency

Apart from hypothetical scenarios, some of them are a reality right now. Imagine high amounts of money sitting in a bank account, doing nothing.
Capital can be utilized more efficiently by loaning it out and collecting interest for any amount of time. With Ethereum you can loan out your capital to earn interest and take out fresh capital against that loan. Effectively your money is working for you, but you’re still able to use your money. Scale this from personal to business operations and you can see how a more capital efficient methodology arises.

MakerDAO is the first to create a truly transparent and verifiable digital currency that takes Multi-Collateral-Deposits as collateral. It is always covered, value cannot be printed for free, there is always something of value backing every unit of the $Dai ($1 equivalent) currency. Because it is built on top of Ethereum its nature is composable and programmable.

**Ethereum does allow for fractional reserves and financial abstraction, but it is still based on facts and can be mathematically proven. Defaults would not crash an entire system, you can only go as far as to reach default, never over the limit.

Account it.

The most beautiful and powerful thing is the power of accountability. A financially transparent system is the socio-political system we’ve been dreaming of. No more fictional numbers obscured in abstraction and dubious techniques like fractional reserves and quantitative easing. Politicians paying themselves huge bonuses? Now you can see exactly how much. Accountability is a simple tool that lets you see exactly what’s going on with every unit of currency.

Photo by History in HD on Unsplash

People are accountable to society AND society is accountable to the world.
QE, printing up money, going into $230trillion debt is a crime against nature that will have its consequences in due time.

Mattereum is a social movement to digitize every single item and create a more efficient ecosystem of resources.

There are no more excuses, we have the power to take control of our lives and establish a true, objectively democratic system where freedom is liberal and liberty cannot be compromised. We answer to the system, we answer to the records. And we base our law around it!

Ethereum is the true revolutionary system that has spawned from Bitcoin. Bitcoin and its community have subsided into greed and a battle for power, the progress towards their ideals(or lack of it) shows this. Ethereum as a much younger community has made significant progress, which is measured in developments and the size of the community. Ethereum’s community has continuously displayed a wish to change the world for the better, despite the ambitiousness of such an endeavor. Good thing is, we’re not alone and everyone can chip in. We don’t need to change the world, we just need to upgrade it.

▶️Ethereum is a tool. Start your journey at https://ethhub.io
📈Track the price at https://ethereumprice.org
📱Earn Interest with Argent’s Crypto Wallet
🐦Follow me on Twitter: https://twitter.com/sanneh_si
👉Keep Reading: 5 Things You Can Do on Ethereum Right Now

sanneh_si

Written by

sanneh_si

A writer from Slovenia, cryptocurrency investor, web developer, and a big picture thinker. Can be found on Twitter, tidying up: https://twitter.com/sanneh_si

Coinmonks

Coinmonks

Coinmonks is a non-profit Crypto educational publication. Follow us on Twitter @coinmonks Our other project — https://coincodecap.com

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