According to a well-known market expert, Ethereum has the potential to outperform Bitcoin and become the main crypto asset. Vitalik Buterin’s creation hit a new all-time high of $2,614 yesterday, putting down a bright green marker as Bitcoin entered reverse gear in what looks to be a period of momentum for alt coins.
Bitcoin and Ethereum are the two most valuable cryptocurrencies in terms of total market capitalization. However, as you dig further, you’ll discover that these two notions perform quite distinct functions.
What is Bitcoin?
In January 2009, an enigmatic individual known as Satoshi Nakamoto carried out a concept he had put forth in a white paper: a peer-to-peer electronic currency system that could function safely without the intervention of a central authority.
What is Ethereum?
The Ethereum blockchain is powered by ETH, which may be used to pay for computing services on the blockchain, among other things. Ethereum is the blockchain on which Ether is constructed, and many people mistake the two. But you don’t call Ether “Ethereum,” any more than you call Bitcoin “blockchain.” Ethereum is a programming language as well as a distributed software platform. On top of the platform, developers create decentralized apps (dApps) and smart contracts. Ether, the Ethereum platform’s native currency, is utilized to fuel the platform in the same way that oil powers the world’s transportation networks.
Ethereum and Bitcoin have different goals
Bitcoin is the epitome of cryptocurrency philosophy, appealing to the libertarian spirit of eliminating government, central banks, and monetary authorities’ control of the money supply. It is the asset class’s top brand, attracting the most attention from major investors due to its market capitalization, which provides the most liquidity. For more information check this trading platform.
Bitcoin, being a decentralized currency, operates independently of the Federal Reserve or any other central bank, and has a predetermined maximum supply. Bitcoin appeals to market players who are opposed to money printing and other monetary policy measures that influence the general amount of money in the financial system for political reasons.
Furthermore, Bitcoin’s success during the last 11 years has elevated it to the status of a hot commodity, since nothing stimulates investment and trade like a raging bull market. Because of the restricted quantity of Bitcoin, there are only 21 million of them. Approximately 90% of the total supply of 18.6 million Bitcoins has already been mined.
The Scalability Challenge
The intrinsic characteristics of Ethereum mining limit block generation to 7-15 transactions per second, posing a scaling problem. In comparison, the Visa network handles around 45,000 transactions per second. The requirement for each node to handle each and every transaction that occurs on the network is a major contributor to this limitation. Unless and until this issue is fixed, transaction congestion may result in lengthy wait times for Ethereum users. To be suitable for enterprise-class applications, the Ethereum network’s transaction processing speed must be increased on a massive scale.
More potential
“At this point, Ethereum arguably has greater potential for more real-world applications, resulting in a larger ecosystem than Bitcoin,” Mr Peters remarked. “At the moment, several DeFi apps are being developed, including Uniswap, MakerDAO, and Chainlink, to mention a few, as well as support for smart contracts and NFTs.
“To be sure, part of Ethereum’s growth may be ascribed to Bitcoin and the interest it has generated in crypto assets. With considerably greater activity and rising numbers of users expected for Ethereum as a result of the amount of apps created on it, I expect the total network value to rise, and the price of Ether to rise at a faster rate.”
Comparing the two
Bitcoin accounts for around 72% of the entire market worth of all cryptocurrencies, with Ethereum accounting for 15%. At the present, this is essentially a two-horse race, while other digital currencies such as Cardano and Binance Coin are rapidly gaining ground on the market leaders.
Bitcoin was designed to accomplish one thing well: to let individuals transfer value from one another without the use of a financial or payment middleman. Bitcoin is widely regarded as a store of wealth and is frequently referred to as digital gold. There are presently 18.6 million bitcoin in circulation, and only 21 million of these digital currencies will ever be produced.
The situation with Ethereum is a little different. Unlike bitcoin, Ethereum does not have a hard cap, which means that the number of currencies in circulation grows year after year (there are presently 114.8 million in circulation); nevertheless, ETH annual inflation per year will gradually trend to zero as more coins enter circulation.
