Being late to buy Bitcoin I was wondering will Ethereum overtake Bitcoin in the future? Should I buy Etherium and what is the difference between them?
Ethereum will probably overtake Bitcoin in the future, but nobody knows for sure. Ethereum is used to create applications on the blockchain, while Bitcoin is used for currency.
Keep reading and I’ll share why I’m more excited about Etherum than Bitcoin. I’ll also share what I like and don’t like about them both.
Why Ethereum is Better Than Bitcoin?
When it comes to investing I look at how much value something gives to society. One example of this is Amazon.com, which is delivering all kinds of goods to people at home.
They are giving tons of value and the price of their stock reflects this. To me the business of Amazon.com makes sense.
When I look at Bitcoin, sure there is value, but I’m not sure it reflects the price.
You could make the case that it gives banks competition and this is good. Also, there could be fewer fees moving the money, and you can be anonymous and unknown.
The technology behind Bitcoin blockchain is very interesting, it’s a decentralized ledger that passes information between computers.
Blockchain is more secure because it’s not just 1 computer but many connected. There is value there.
Still, blockchain isn’t completely secure, since the exchanges can still be hacked. You can read more about how exchanges can get hacked by clicking on the link HERE.
The bad news is that if you lose your password to get access to your cryptocurrency, nobody is there to help you. Decentralized means you’re on your own, and a central authority isn’t going to help.
You can read more about this story from the link HERE.
Call me crazy, but that isn’t good. What would happen to Bank of America if they lost 20% of their customer’s money?
3 years ago I almost purchased some Bitcoin and I didn’t. Part of the reason was it was “too damn” hard to get verified on an exchange.” Also, I wasn’t even sure what I was buying.
It’s still difficult for me to wrap my head around how cryptocurrencies and Bitcoin work, but I’m trying.
Another thing I don’t like about Bitcoin is it has a dark history. Who created Bitcoin? Nobody knows.
I can see why a country has it’s own currency to help with trade, but for someone to create a currency. Isn’t that “arrogant?”
It reminds me of the story, of how paper money got it’s start. It used to be where you could trade your paper money for gold at a bank, they were notes.
This helped people so they didn’t have to carry around heavy metal coins.
Then Genghis Khan’s son Kublai Khan said “screw it” you don’t need to trade paper currency for coins, it’s not a “note” paper money IS money. It worked and it shifted the culture.
Another interesting thing about Bitcoin you may not know is 1,000 people own 40% of the market. Of course, these 1,000 people want the price to rise!
As of this writing, Bitcoin is worth LOTS of money, but if you missed out on Bitcoin, like me the next best cryptocurrency might be Ethereum.
Ethereum is arguably the closes competition Bitcoin has. Like “Avis” rent a car #2 tries harder.
Also, being #2 is better because you learn from the mistakes of #1. Think of how Facebook improved upon Myspace. Also, Google improved upon Yahoo search.
Ethereum is based on similar technology that created Bitcoin. Bitcoin is based on a decentralized trading platform.
Think of it as a bunch of computers that are connected.
There isn’t 1 computer that controls everything, but hundreds around the world, and each computer is called a node.
It’s people trading with people. You could make the case that the first decentralized network was “Bittorrent” a file-sharing platform.
Bitcoin uses a touring incomplete language that is limited. It understands a small number of orders such as who sent how much money to who.
What is exciting about Ethereum is that instead of just tracking transactions it creates them.
This is where MORE value is and thus I think is a better investment.
It’s NOT just currency but is used to create applications on the blockchain. Think of it as the S&P 500 index of stocks, while Bitcoin is like gold.
The S&P 500 is more valuable because it creates something, it’s Not just a unit of storing perceived value.
On Etherium “Many” different ideas or “smart contracts” can be used on the blockchain and the first thing that comes to my mind is the voting system since in 2020 there was a loss of confidence in it.
Other ideas could be…
- Real Estate Transactions
- Loyalty points
Also, sometimes the most exciting ideas are not even discovered. I am reading a book now called “Guns, Germs, and Steel” and the author says most of the time something is created then how it’s used is secondary.
Think of the Hulu Hoop that was a mistake. A few kids started playing with it and the invention was created.
All of these ideas and smart contracts can be traded on the Ethereum blockchain and there wouldn’t be a need for a “powerful” central platform to control everything.
This is the idea. Of course, this is all in theory and you must realize that ALL cryptocurrencies are a speculative bet.
Etherium works through a coding language called solidity. It was designed so someone can create a smart contract.
For someone to create a smart contract they have to pay Ether, this is the currency of the Ethereum network.
This currency is used to maintain the network. Once a contract is created it’s difficult to change it because it’s on the blockchain, but you can update it.
Etherium Splits into 2?
Before 2016 there used to be only 1 Etherium blockchain. Then a hacker came along and stole 50 million dollars from the DOA.
The DOA stands for (Decentralized, Autonomous, Organization). The main purpose of the DOA was to invest in Daaps to be used on the Etherium blockchain.
You might be wondering how a hacker was able to steal 50 million dollars if the blockchain was supposed to be very secure?
In the simplest terms, the DOA hacker was able to run a transaction that automatically repeated itself before the system realized the balance. This was the hacker was able to take out “much” more money than he put in.
To save the rest of the money white hat hackers “the good guys” had to drain the rest of the money from the account and give it to their rightful owners.
To this day, nobody knows who stole the money also nobody knows why the thief ONLY stole 50 million, there was 150 million in the fund.
Some clues mention that the hacker was probably from Switzerland and it was probably a group. You can read more about the hack by clicking on this link HERE, it’s a very long read.
To fully stop the hack a hard fork had to be done and the blockchain would have to change. Every single computer would have to agree to an update.
Next, what happened was interesting, and that the old Etherium Classic started gaining in value because people used it and used it in transactions.
The same code that exposed the DOA to the theft, in the end, enabled the money to return. The hacker was still able to steal Etherium Classic.
The conclusion is that Etherium is probably a better investment than Etherium Classic. Still, it’s very speculative on what is going to happen to it.
Etherium can be worth TONS of money or it can be worth nothing.
The largest challenge I have with Cryptocurrency is it’s hard for me to value it. Investing in stocks or domain names are much easier.
With Domain names, I can see what similar domains have sold for. Therefore I’m more confident it’s a good investment. Still there is speculation and I can lose money.
The stocks it’s attached to a company that has earnings. You can read more about why a company cares about it’s stock price by clicking on this link HERE.
With Cryptocurrency if you feel the value it gives is greater than the amount you paid then it can be a good investment.
If you buy hoping the price will go up then it’s more of a gamble. If you do decide to purchase any cryptocurrency or stock just be willing to invest what your willing to lose.
The easiest way I have found to buy Ethereum or Bitcoin is by using the popular app Paypal.com and you can invest as low as $1.
I hope this post on will Ethereum overtake Bitcoin was helpful to you, bye for now.