Bitcoin Vs Ethereum: Here’s What You Need to Know 1 2109

bitcoin vs ethereum

While Bitcoin hogged the headlines last year, Ethereum is entering the mainstream consciousness as well. Although it was established in 2015, the wider public is only recently starting to hear it used more often. But, what’s the difference between Bitcoin vs Ethereum? Here’s what you need to know:

Let’s Start with Bitcoin

In what many say was a response to the financial crisis of 2008, Bitcoin emerged as a way to allow people to control their own wealth. They were open to transact freely, without the intervention or permission of any centralized institution (at a time when trust in banks was at an all-time low).

Bitcoin’s creator is widely believed to be Satoshi Nakamoto, the author of a white paper explaining the goals and purposes of the currency. He has denied being the creator, however.

What are the main objectives of Bitcoin? To offer lower transaction fees, remove the need for currency conversion, therefore allowing for global transactions in near real time, and removing the need for any centralized governing body. You will never hold a Bitcoin in your hand. It exists in digital form only.

The debate over the legality and legitimacy of Bitcoin rages on, with some countries banning it, and others allowing it. But its galloping volatility has rendered its use as a currency impractical, to say the least.

Moreover, because of its sudden surge in value last year, many people started to see it as an alternative investment vehicle. They started buying Bitcoin in the hope of it rising further in value and then cashing out later.

So, can you pay for things with Bitcoin? In some places, yes, but the list is shorter every day, since its price is so unstable.

Now for Ethereum

Bitcoin is produced by authorized miners though a technology called the blockchain. Lately people across all industries are awakening to the possibilities of the blockchain due to its immutability (somewhat debated), decentralization, and possibilities for greater efficiency in all areas.

Using cryptography, once a Bitcoin or a transaction is carried out on blockchain, it cannot be tampered with, unlike a real dollar that can be forged.

Ethereum is now the second largest and well-known cryptocurrency running on its own software platform. It has several improvements over Bitcoin. One of which is the invention of “smart contracts,” that enable transactions to happen automatically, improving on the speed of Bitcoin transactions, and reducing the need for middlemen at many points in the supply chain. No human interaction is needed.

In fact, Ethereum is both a platform and a programming language that, like Bitcoin, runs on a blockchain.

Bitcoin Vs Ethereum – Why Should You Care?

Bitcoin vs Ethereum serve two different purposes. Ethereum is mainly traded and used as a digital currency, but it is also used inside the Ethereum platform to run applications. According to Ethereum, it can be used to “codify, decentralize, secure and trade just about anything.”

While both digital currencies use cryptography, Bitcoin and Ether use two different programming languages. Ethereum transactions can be confirmed in seconds, whereas Bitcoin transactions can take several minutes. The main difference however is their purpose.

Bitcoin was created as an alternative to fiat currency, as a store of value, or means of payment. Ether exists to facilitate peer to peer contracts and applications. Ether’s primary purpose is not to be used as a payment alternative, but to enable developers to build and run distributed apps.

Still Confused?

Think of it this way. Ethereum takes the basic design and principal of Bitcoin and improves it in some ways, without competing directly, since the two exist for different reasons. That said, with the popularity of Ether on the rise and the wider public beginning to see it as an investment vehicle as well, Ethereum is giving Bitcoin a run for its (digital) money.

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Christina is a technology and business communicator who has worked with high profile ICOs and blockchain influencers to break industry news.

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The Patent That Wants to Fix Crypto’s Volatility 0 51

The number of blockchain-related jobs posted on LinkedIn more than tripled last year, according to CryptoCoin News. And blockchain patent filings more than doubled. Companies and individuals alike are innovating, exploring the blockchain’s well of possibilities. Major fintech companies, meanwhile, are gobbling up blockchain patents like they’re going out of style. But cryptocurrencies themselves still have yet to see a mainstream embrace.

The main problem with crypto right now is the same problem people have been talking about since Satoshi Nakamoto said Let there be Bitcoin: volatility. And ever since Bitcoin’s dramatic rise and fall around the turn of last year, cryptos have become virtually synonymous with wild fluctuations.

This reputation has given Bitcoin specifically, and cryptos in general, a mixed reputation. By now we’ve all heard the songs of praises from evangelists and the sour sneers of financial titans alike. Crypto is exciting because it’s unstable; crypto is unrealistic for the same reason.

The Primary Criticism of Cryptos

According to Eric Lamison-White, founder of the investor’s crypto intel platform Pareto Network, volatility is the “primary criticism of cryptocurrencies.”

But he doesn’t think it has to be that way. What if you could stabilize your crypto accounts? Lamison-White says the risks of owning cryptos are “easily mitigated by a variety of hedging techniques that are available in all other asset classes.”

He proposes treating crypto accounts like more traditional assets. “Hedging with options, futures and swaps allow for stable value or any risk profile that an owner or even a speculator would desire.”

That’s the idea behind his patent, filed in 2014, for a structure of interconnected accounts. The system “removes volatility from owning cryptocurrencies,” Lamison-White says, transferring its fluctuations into a hedge account. Here’s how it works.

Lamison-White’s System

The system requires at least two accounts: one for your cryptos and one you’ve funded with fiat currency, let’s say $400 US dollars. These accounts connect to a network of decentralized nodes, which measure the amount of cryptocurrency you have from moment to moment. If there’s any drop in the crypto’s value, the system automatically deducts from your $400 in the other account and transfers it to compensate. When the value of your crypto goes back up, the system re-deposits back into your fiat account.

This holds the value of your crypto assets steady, while transferring its volatility to your hedge account.

What makes it unique compared to other trading systems is that crypto assets can be divided into infinitely small portions. “A futures contract on oil costs $80,000 for example, although a trader only needs to put up maybe $4,000 as a minimum,” Lamison-White says. “This is because the contract represents the price of 1,000 barrels of oil or something crazy.” He notes that even hedging stocks are usually offered in units of 100 or 1,000.

Not so with crypto, where the “infinite divisibility of the asset itself” makes hedging much more finely tuned. Because cryptos are pure math instead of physical assets, “arbitrary sized contracts can be traded just as easily with larger contracts.” One future could represent one bitcoin, for example, but you can also trade in .01 increments. With fractional futures and options, people with very small amounts of cryptocurrency can be shielded from price fluctuations in a way that had only been available to the wealthiest and investment banks for most of the last millennia.

The System at Scale

The system gets even more interesting when you make it scalable. According to Lamison-White, you could have multiple people funding and connecting to the same hedge account, each using it to stabilize their own crypto accounts. Alternatively, you could connect multiple hedge accounts to a single crypto account. Suddenly the possibilities extrapolate, like tinkertoys, developing into an interconnected network of crypto- and fiat-funded accounts, with a variety of owners controlling their assets at a variety of access points, everything regulated with the intelligence and transparency of a decentralized ledger.

Patents Like This are Attracting Corporate Giants

There’s a feeding frenzy going on for patents like these. Visa filed a patent for a B2B blockchain payment system, Mastercard developed its own blockchain patent for anonymous transactions, and Wal-Mart has come out with a few as well. But it’s Bank of America that’s gobbling up the most. With claims to at least 43 live blockchain patents, the financial giant holds more than any other person or company.

Whether they’re just trying to get a leg up on the future of tech, or positioning themselves to harangue the little guy with barrages of lawsuits for intellectual property rights, we’ll just have to wait and see.

Whether or not Lamison-White anticipated the blockchain patent arms race, he was ahead of the curve, filing for his patent in 2014. It could be the thing to finally put skeptical minds to rest about the viability of crypto assets. And with big financial institutions like Bank of America placing a premium on innovative blockchain patents, he may have spun ether into gold.

After the Death of Net Neutrality, We Need a Decentralized Internet 0 76

Net neutrality died more quietly than expected. It’s been almost two months since the FCC’s ruling to make internet access vulnerable to corporate meddling, thanks to FCC chairman and Verizon advocate Ajit Pai. And not much seems to have changed on the web browsing citizen’s end. Major ISPs Comcast, Verizon and AT&T have all indicated that they have no plans to block or throttle traffic, or to prioritize paid content. So rest easy, dear ones. The sharks have promised not to bite.

Of course, that’s really no reason to celebrate. As of June 11th, “there is nothing legally preventing companies like Comcast, Verizon, and AT&T from arbitrarily censoring entire categories of apps, sites and online services, or charging Internet users expensive new fees to access them,” notes Evan Greer, deputy director of Fight for the Future, a nonprofit advocating for digital equality.

Fight for the Future is just one organization working for a free digital world. All around, and in part thanks to the FCC’s ruling, people are switching on to the notion that open connectivity should be a right and not a privilege. And some folks are getting a crazy idea: if we can’t have net neutrality, we may just have to build another internet.

Building Our Own Internet

That’s exactly what people have been doing in Detroit. To combat the emergence of a “digital class system,” and in response to the scarcity and prohibitive costs of ISP connection, residents and volunteer members of the Equitable Internet Initiative, or EII, are building their own internet infrastructure.

Over on the Pala Reservation in Southern California, meanwhile, indigenous communities are tired of waiting for a connection. So they’re taking matters into their own hands and repurposing unused analog TV channels to broadcast their own free and neutral internet across the rez. They call it Tribal Digital Village.

Efforts like the EII and Tribal Digital Village are proving that we can take control of our connectivity and decouple it from the stratification of economic privilege.

Reinventing the Internet Altogether

Radical community efforts to build DIY networks are inspiring and powerful. But perhaps we can go even farther. The internet still works on an old model that has plenty of room for improvement. Let’s say you’re sitting in a public library, messaging your zine collaborator across the table. There’s no direct internet connection between your phones, so your message has to go up into the nebulous cloud of internet before it bounces back down to their phone. Not entirely efficient, considering they’re sitting right there.

If you had a direct connection, the signal could just travel across the table. That would be possible using a mesh network, like the one proposed by RightMesh. In their mesh network model, every device becomes a hotspot in a decentralized connective network.

Why volunteer your device as a public hotspot? Because you get tokens, of course. This is blockchain! Like the EII and Tribal Digital Village, this is a cooperative and participatory system that relies on no centralized authority (like a corporate ISP). Everyone volunteers their device as a hotspot, gets rewarded with tokens, and just like that, we have a decentralized internet.

Without the need for ISPs, we would be free from Verizon, Comcast, and AT&T. We could run open-armed through the proverbial fields of digital wildflowers. The possibilities of this go well beyond urbanite convenience. A global mesh network could bring internet connection to any part of the globe where there are phones—even phones not connected to wifi. In this system, the phones create the wifi.

An Off-the-Grid Internet

RightMesh’s stated goal is to “connect the next billion people and lift 100 million out of poverty.” They claim to be the first P2P network that requires neither infrastructure nor network connectivity to operate.

That said, they’re not alone. Blockmesh is doing something similar. Moeco’s ‘global IoT connectivity platform’ uses mesh network principles for IoT gadgets. And Open Garden allows ISP customers to ‘sell’ your underutilized connection (extra bandwidth at home, or unused data from your mobile plan) to your neighbors for tokens.

All these ideas are packed with possibility. But the point is, with the grassroots efforts of groups like the EII and Tribal Digital Village, and with blockchain innovation pushing the definition of the internet forward, we’re looking at a future where the connection is universal, accessible, fast, cheap, self-generating, decentralized and off the grid. Someday soon we might be thanking the FCC for spurring these advances.

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