Over the past several weeks the cryptocurrency scene has garnered a tremendous amount of attention. Most recently the rise of Ethereum has been nothing short of phenomenal! With the scaling debate in Bitcoin still presenting itself as a major hurdle, it should come as no surprise to see the exponential increase in Ethereum’s ether token:
Some regard Ethereum as superior to bitcoin and lately many have argued that Bitcoin’s reign as market cap king is coming to an abrupt end. I must agree, that Ethereum will not only surpass Bitcoin in total market capitalization but has the potential for severe disruption to our current financial industry. Will ether become a better store of value compared to bitcoin? This is the key question that people should be asking, and no I do not believe it will for several reasons which I may write about in another post.
As I prefer bitcoin over ether as money, I’m not concerned with how high the price of ether gets nor do I see it as a rival to Bitcoin at the moment. Bitcoin was designed as a secure method to transfer value where ether was designed as ‘gas’ or fuel to perform transactions on its own blockchain with the use of ‘smart contracts’. This is an exciting development in the crypto space and opens up an entire new world of technical possibilities. The only problem with ether is that it has no cap on the amount that can be created and is an inflationary token compared to Bitcoin’s 21 million cap. In my opinion, the store of value properties in Bitcoin far outweigh those of Ethereum’s but that doesn’t limit ether’s usefulness or potential provided it can prove itself other than just creating a platform for ICOs.
Competition Breeds Innovation & Superior Products
What is occurring now with regards to cryptocurrencies reminds me a lot of what happened with the adoption of personal computers back in the 1980s. Microsoft and Apple were bitter rivals and without getting into the specifics, I recommend those to watch the film ‘Pirates of Silicon Valley’. This films provides and excellent illustration of what happens when two upcoming tech giants are in a fierce battle to acquire not just market share but industry dominance. The competition was very intense when it came to developing the GUI (Graphical User Interface) that all of us still use to this day. For its time, this was a major breakthrough in tech and allowed us to interact with machines in a much more efficient manner. As we all know the story, Windows became king and created the richest man in the world, Bill Gates.
Microsoft Windows was and probably still is the most dominant desktop computer OS on the planet but that hasn’t put Apple out of business. Yes, Apple did have some serious struggles but it bounced back as it branched out into other avenues bringing us the iPod and iPhone that revolutionized our new mobile world. Apple makes terrific products and has a great marketing team, but let’s be honest, most hardware that Microsoft produces (except for maybe Xbox) is practically garbage compared to Apple or other manufacturers. The point I’m trying to make is that it really doesn’t matter which one is currently on top or which will be left on the sidelines ready for the landfill. By allowing two companies (or technology platforms) to compete is better for humanity in the long run. Each will strive to outperform the other which results in a better products for all of us. Monopolies become stagnant and hinder advancement so I welcome Ethereum or any other crypto technology to challenge Bitcoin.
Final Thoughts
Having Ethereum overtake Bitcoin’s market cap may actually be the best thing for Bitcoin at this stage in its development. Most arguments for those in favour of Ethereum and alt-coins is due to Bitcoin’s scalability issues which is resulting in slower transaction speeds and increasing miner fees. Hopefully this is a shot across the bow for the entire Bitcoin community, especially for the miners to introduce SegWit and progress pass this hurdle. Currently over 80% of the Bitcoin community is in support and behind Segregated Witness yet getting the miner support has been problematic. If this major issue isn’t resolved soon, I believe it will be difficult for Bitcoin to come back to achieve its once loved luster. This doesn’t mean Bitcoin will be dead, but it will face several challenges reclaiming its top spot barring a complete failure of Ethereum.
I compare Bitcoin to the likes of Apple and Ethereum to Microsoft. In the beginning it was Apple with the genius mind of Steve Wozniak that created the first personal computer yet when the dust settled it was Microsoft that was triumphant in the end. In ‘Pirates of Silicon Valley’ there is a scene in which an arrogant Steve Jobs brings Bill Gates into Apple’s headquarters flaunting their new GUI enabled Macintosh computer and a developer accidentally enlightens Gates that the graphical user interface was made possible in software and had nothing to do with the hardware. Oops!! They just let the cat out of the bag. At that point in time, Microsoft was struggling with GUI development and couldn’t escalate beyond a command line interface. Needless to say that changed quickly.
Pirates of Silicon Valley - Clip 1:
Only after troubled times and a resurgence of Steve Jobs with the iPod and iPhone did Apple really roar back to life and become one of the largest and wealthiest companies on the planet. It wasn’t an easy feat for Apple, but they were able to pull it off after broadening their vision into an entirely new realm outside of just personal computers. Perhaps the Bitcoin community (especially the miners) can come to their senses and realize that the stakes are high, and if they think Bitcoin will remain top dog forever, history could prove otherwise. With Ethereum now nipping at Bitcoin’s heels, maybe SegWit will be implemented as it should. We’ll just have to wait and see.
And to end on a lighter note, if Ethereum is like Microsoft, it is selling exactly what Microsoft did in this clip:
Pirates of Silicon Valley - Clip 2:
Thanks for reading.
nice info you got there bro!
Thanks for reading. Hopefully you watched the video clips. They're priceless!! :)
We might one day see Ethereum trading at several times Bitcoin (20 BTC or more) it's not implausible given it's growth and the institutions backing it.
Whenever I get asked by irl friends about cryptos, my advice is always the same, buy Ethereum and forget about it for a year, then check your wallet to see how much you've made.
Exactly! Except I'm not sure on Ethereum as a store of value but that is for another discussion. I do admit, if we don't get past the UASF-BIP148 soft fork then that could spell trouble for bitcoin.
Thanks for posting. :)
Solid blog. I fully understand what you're talking about. The current total market cap of all cryptos might seem high but blockchain is here to stay and will involve all our lives. I do see a bright future for everyone that's hold's their coins with a long term vision. Do you know this interesting site? https://www.coincheckup.com This site is really helpful in my coin research. I don't know any other sites with so much indepth analysis. See: https://www.coincheckup.com/coins/Ethereum#analysis For a complete Ethereum Detailed analysis