The funny thing about technology is that you never quite know where it leads. I’m sure that Satoshi Nakamoto (the mysterious founder of Bitcoin) had no idea what his creation would spawn, much less that it would one day be threatened by another cryptocurrency: Ethereum.
That’s what makes the Bitcoin vs Ethereum debate so fascinating. There are millions of dollars at stake; millions to be made; millions to be lost…and the story is unfolding in real time.
You can be sure that some people will come out of this richer than they ever imagined, but they need to sort the wheat from the chaff. Part of that process, however, is to consider what the endgame is for Ethereum vs Bitcoin. Here are the two sides of the argument.
1. Ebony and Ivory
Some people believe that Bitcoin and Ethereum will live together in perfect harmony, operating in the middle of a vibrant market for altcoins. It would look a lot like the market for fiat currencies, and there would be enough room for both cryptocurrencies to thrive, because consumers would rotate between them.
For instance, a rise in the British pound doesn’t eviscerate the Canadian dollar. It affects the exchange rate, to be sure, but we’re not worried it’ll wipe out the Canadian dollar and leave everyone in Canada reliant on the Pound Sterling. That would obviously never happen. Some people believe Ethereum and Bitcoin will strike a similar balance, but that Bitcoin would achieve a status similar to the U.S dollar. It would become the reserve currency of this hypothetical world.
One must live, the other must die. If that notion is intuitive, it’s because we’ve seen it play out on the stock market. Look at Facebook Inc (NASDAQ:FB) and Twitter Inc (NYSE:TWTR). Both entered the market around the same time. One more than tripled its share price, while the other lost more than half of its market cap. Or take Google and online search. Or Amazon and e-commerce. Stock markets are plastered with these examples, so it’s no wonder that we imagine that cryptocurrency markets will exhibit similar behavior. In this example, Ethereum is more likely to emerge the victor. It is simply more versatile than Bitcoin, more generalized, and more practical.
So will Ethereum pass Bitcoin? Which is likely to come out on top in the Bitcoin vs. Ethereum debate? It depends on which side of this argument you fall on.
If you agree with Number 1, then Bitcoin (along with a collection of emerging altcoins) is your best bet. But if you think Bitcoin vs Ethereum is a winner-takes-all scenario, then Ethereum is the one. Below are a few examples of how Ethereum would dominate.
3 Tailwinds for ETH Price
When I said that Ethereum was more versatile than Bitcoin, I was referring to its “smart contracts.” These contracts take the technology Bitcoin uses for money, and apply it to everything else. In this way, more creative and useful features are added to the blockchain.
It is already starting to happen.
1. Historic $152.3 Million Initial Coin Offering
One of Ethereum’s features is an initial coin offering, or “ICO.” These ICOs circumvent the traditional venture capital model, bringing retail investors in direct contact with startups. They are getting quite serious. A company called Bancor raised a record-setting $152.3 million from 10,885 buyers. (Source: “$150 Million: Tim Draper-Backed Bancor Completes Largest-Ever ICO,” CoinDesk, June 12, 2017.)
2. The Russian Central Bank Is Testing a “Masterchain”
You know things are getting serious when central banks are involved. Russia’s CB got involved with Ethereum several months ago, looking to create its own branch of the distributed ledger. Right now it is just an experiment, but if it goes forward, the winner-takes-all crowd may have won the big argument. (Source: “Russian Central Bank Group Prepares ‘Masterchain’ Ethereum Fork for Testing,” CoinDesk, June 13, 2017.)
3. A Study Found 200 Applications for Ethereum in the Energy Sector
About 10 energy companies joined an initiative that was trying to figure out what blockchain technology could do for their business. Some people were skeptical. However, the end result was 200 recommendations for blockchain integration. Guess which cryptocurrency they turned to for help? Ethereum, of course. (Source: “Energy Sector Turns to Ethereum to Test Blockchain,” CoinDesk, May 30, 2017.)
In my opinion, these examples describe the future of blockchain more accurately than some crypto-utopian currency market. I lean heavily towards the winner-takes-all side of the argument, which, in turn, puts me squarely in the Ethereum camp.