[Bit]coin flipping: Ethereum vs Bitcoin — Double the trouble?
Bitcoin remains the safest cryptocurrency out there, but Ethereum is coming from behind and has already managed to dethrone other digital currencies such as Litecoin and Ripple. Ethereum’s value has climbed 1,000 percent since the beginning of 2016.
The digital token of the Ethereum platform is gaining momentum after its price increased to $12 from $1 within a short period of time, taking the value of all ether currency (the token unit of the Ethereum platform) to more than $1 billion. Although bitcoin retains supremacy after it claimed over $6 billion in value this month, ether is now playing in the big leagues. As Joseph Bonneau, a computer science researcher at Stanford, told The New York Times recently, “bitcoin is still probably the safest bet, but Ethereum is certainly No.2.”
Ethereum has been a constant presence since the launch of the project in July 2015, but something triggered its colossal growth. Some people believe that the value of ether will continue to increase, but cryptocurrency enthusiasts fear that the growth may not be sustainable yet. After every spike, ether went down again proving that it is still unstable.
What is Ethereum?
Ethereum is a decentralized platform created by Vitalik Buterin, a 21-year-old Russian-Canadian programmer. What makes the platform the runs smart contracts —apps which run on a custom built blockchain— different from bitcoin is the former’s promise to offer a way to develop online markets and smart contracts (programmable transactions). For example, one application which is currently in development would allow farmers to put their products up for sale directly to consumers —they would also take payment straight from consumers. Some of the functioning applications that have already been built on Ethereum allow new ways to pay for sports bets, electricity and even Ponzi schemes.
According to the Ethereum project, ether is “the incentive ensuring that developers write quality applications (wasteful code costs more), and that the network remains healthy (people are compensated for their contributed resources).” Developers who intend to build apps that will use the Ethereum blockchain need this digital token, as well as users who wish to have access and interact with smart contracts on the Ethereum blockchain.
Pros and cons
The New York Times cited bitcoin advocates as saying that this cryptocurrency’s No.1 rival is likely to face more security problems than bitcoin due to the bigger software complexity. Plus, the fact that Ponzi schemes can be written directly into the Ethereum system could also draw authorities’ attention.
Although Ethereum could face some of the same legal and technical problems that have affected bitcoin, the silver lining is that some executives in corporate U.S. find it fascinating. In 2015, IBM announced that it was experimenting with this platform as a way to control real world objects in Internet of Things.
Microsoft is also trying to make it easier to use Ethereum on Azure. Marley Gray, a director of business development and strategy at Microsoft, told the American publication that the platform developed by Buterin allows users to “solve problems in many industries using a fairly elegant solution.” The downside is that several companies have already developed their own Ethereum networks, which means that the value of an ether could decrease.
Forced success or determination?
One thing that Ethereum and bitcoin have in common is that they both became widely known after attracting a loyal and dedicated network of followers who support the software. In mid-March, 5,800 computers were helping support the Ethereum network worldwide, The New York Times revealed. Although the bitcoin network had roughly 7,400 computers, these numbers could mean that the Ethereum network’s goal may be to increase the pool of followers and ultimately boost the price of this digital token.
Ethereum has nearly 30,000 followers on Twitter and more than 11,000 subscribers on its Reddit page.
Gabriela Motroc is editor of JAXenter.com and JAX Magazine. Before working at S&S Media she studied International Communication Management at The Hague University of Applied Sciences.