Ethereum vs. Bitcoin - Idea vs. Technology

While Bitcoin has always been intended simply as “digital money”, Ethereum is much more than that...

by George Koynov
10 March • 2.5 min
In Analysis

Bitcoin was unleashed upon the unsuspecting world back in 2009 and its solid fundamentals haven’t really changed since then. It is the first cryptocurrency, the game-changer. That is why now, in 2018, almost a decade later, BTC still holds the biggest market cap. But ETH seems to be catching up fast.

What is Ethereum and What Are Its Advantages

Released in 2015, Ethereum is often described as Cryptocurrency 2.0. Ethereum is a digital Blockchain protocol for smart contracts, which can also be described as highly programmable digital money. While Bitcoin allows for simple person-to-person transactions, Ethereum facilitates more complex financial operations. When sending Bitcoin to someone, all you have to do is to type in the amount you want to send and click “send”. With Ethereum, on the other hand, you can do that same thing, but you can also get real fancy and set up various conditions around the payment. The payment will then be sent out only when those conditions have been met by the opposite party. This eliminates the need for any kind of third-party actors, such as banks, lawyers or e-commerce platforms. By cutting out the middleman, the transfer of funds becomes truly decentralized. This leads to lower costs for the users. The scope of financial applications that can be powered by Ethereum has enormous implications for the near future.

Ethereum is much more than just a cryptocurrency, however. ETH’s big bag of tricks allows for practical real-world applications that go beyond person-to-person or business financial transactions. Ethereum is, in fact, the largest dApps (decentralized application) platform with hundreds of new ICOs being built on it. When compared to Ethereum, Bitcoin can be viewed more like digital gold or as a store of value and its price is growing based on what people are willing to pay for it. Bitcoin is just there. Ethereum is everywhere. This is why my prediction of Ethereum overtaking Bitcoin’s market cap in the near future is not completely groundless.

Ethereum Does Everything Bitcoin Does - But Better

Ethereum does everything Bitcoin does, but better. And it also does things that Bitcoin wasn’t designed to do. It is truly the version 2.0 of crypto. Does that mean, however, that it will soon be replaced by something better? Something like the dreaded (or welcomed, depending on your investment portfolio) “Ethereum killer” protocol? After all, v2.0 always gets replaced by v3.0, and so on. That’s the way technology progresses, right? Well, not necessarily. If Ethereum’s developers continue to successfully solve ETH’s various scalability issues and keep the transfer fees (“gas”) affordable, it’s going to be really difficult for ”Ethereum killer” projects, such as Cardano, Neo or EOS, to dethrone ETH. Sometimes it’s not the best tech that wins at the end, it’s the tech that got there first and solidified its positions. Bitcoin solidified the idea of Blockchain cryptocurrency. Ethereum is now solidifying the tech of Blockchain cryptocurrency.