Ethereum Will Beat Bitcoin in 2019
Like I mentioned last week, I believe there’s a cryptocurrency that will dethrone Bitcoin (BTC) in 2019 and emerge as the market’s #1 token...
It’s Ethereum (ETH).
This week, I will explain Ethereum’s qualities and why they’ll prove to overshadow Bitcoin in the future.
Ethereum eclipses Bitcoin in functionality.
First, Ethereum uses a fully automated escrow while Bitcoin doesn’t.
Second, Ethereum can tokenize anything and put it on the blockchain. Bitcoin cannot. I’ve heard of people tokenizing cars, homes, and even shares of stock like Disney or Apple.
Third, Ethereum’s community is more active and involved than Bitcoin’s. In the digital currency space, community and developer activity is crucial in identifying an appealing crypto.
Fourth, Ethereum is much more than a cryptocurrency. While Bitcoin is only a digital currency, Ethereum is that as well as a blockchain platform and operating system.
Fifth, Ethereum, not Bitcoin, is being used by retail titan Amazon for its own blockchain database, Amazon QLDB.
Overall, Ethereum’s got much more going on than Bitcoin.
Proof of Stake vs. Proof of Work
Another aspect that makes Ethereum favored over Bitcoin in the long run is its goal to switch to a proof-of-stake system.
Proof of stake (POS) involves validating transactions on the blockchain to ensure cyberattacks and fake or multiple requests aren’t logged.
In a proof-of-stake system, the transactions are validated by a creator who has been chosen by the block.
See, Bitcoin and Ethereum both run on a proof-of-work system, which has the same goal as proof of stake but works differently.
In a proof-of-work (POW) system, users must mine to validate transactions and create new digital currencies.
Miners have to verify that the transactions are legitimate by solving math computations known as the POW problem.
The first miner to solve the problem declares it on the block and is rewarded a digital currency.
Mining can be competitive, as the difficulty can be increased, which raises the amount of POW problems to be solved and the currencies available for reward.
The benefit of using a POS system over a POW is that a bunch of energy and money is saved, as there’s no need to mine for transaction validation.
That cuts back a bunch of machine usage. Back in 2015, one BTC transaction used the same daily amount of energy as 1.57 American households.
Also, in a POS system, the digital currency is created at the start, and its numbers don’t change. That’s why there’s no block rewards in a POS system, whereas with POW, the digital currency is created and issued as rewards when miners solve the POW problem.
Overall, POW is outdated and inefficient compared to a POS system.
What makes Ethereum and Bitcoin different is their usage of proof of work. While Bitcoin will never stop using the proof-of-work system, Ethereum is planning a hard fork to split the token in two, and the new version will use proof of stake.
Ethereum is trying to grow and update with the times, while Bitcoin isn’t.
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Ethereum Is Smart
I’d argue that the most defining quality of Ethereum over Bitcoin is its blockchain’s compatibility with smart contracts.
For those who are unaware, smart contracts are transaction agreements between the buyer and seller. These agreements are included on the blockchain and will self-execute the transaction once they’re met.
For example, let’s say you want to buy tokens from a friend. The friend says he’ll sell you his tokens if you wash his car. Once it’s recorded on the blockchain that you’ve completed the task of washing the car, the smart contract will execute the transaction, and the tokens are yours.
Smart contracts are useful because they establish terms before the transaction and will then execute once the terms have been met, regardless of whether someone is on the blockchain to complete the action.
Smart contracts are also debtor-friendly. On Ethereum’s blockchain, you can take out a loan, whereas you can’t with Bitcoin. When this is done, creditors don’t own the loan — the smart contract does. So should you fail to pay, you won’t go into collections and have creditors harass you.
Rather, the smart contract will simply take what you established as collateral during the initial agreement.
Bitcoin does not use smart contracts and would need user input to execute transactions. Ethereum’s use of smart contracts gives it more freedom to be used in innovative ways.
I think Ethereum has much more to offer than Bitcoin.
It does more than Bitcoin, it’s more automated than Bitcoin, and it’s actively seeking ways to improve and innovate compared to Bitcoin.
In short, I think Ethereum is running on the thought of user-friendliness, growth, and innovation, while Bitcoin is only focused on greed and making more money.
Now, I don’t think Bitcoin is just sitting around and doing nothing. It’s certainly improving, but not in the innovative direction Ethereum is clearly headed toward.
Also, I think BTC is only at the top because it’s the market’s first well-known and lucrative digital currency. Bitcoin is the leader and the front-runner on crypto exchanges. The good part about that is when it’s doing well, other tokens do as well.
Alternatively, when it’s going down, so does everything else.
To be quite frank, Bitcoin’s more like a prototype for digital currency. It’s the first of its kind, but its uses are quite limited.
I believe it’s only a matter of time before everyone else catches up and notices that Ethereum has so much more to offer.
Only time will tell, but I’d be quite shocked to still see BTC at #1 and Ethereum still trailing behind by the end of 2019.
John Butler, Jr.
John Butler is Token Authority’s contributing editor. He first learned of Bitcoin in 2010 when it was still unknown. Since then, he has seen cryptocurrency and blockchain technology swell in popularity across the globe, making innovators and investors plenty rich. Every week, he brings Token Authority readers compelling information for crypto investing.