What is Ethereum?
Just like Bitcoin, no one controls or owns Ethereum. It is a platform that lets anyone build and use decentralized applications that run on blockchain technology.
What makes it different from Bitcoin?
Ethereum was designed to be adaptable and flexible. It is easy to create new applications on the Ethereum platform, and with the Homestead release, it is now safe for anyone to use those applications.
With the Bank of England producing reports about digital currencies and big banks such as Bank of America and JP Morgan testing the waters in the field of blockchain technology, it is not a question of if, but when this type of currency/payments will take over.
Everyone is familiar with the huge success of Bitcoin and with the failure of several other next-Bitcoin-wannabes. However, the rising star is the Ethereum (ETH).
So what is this Ethereum?
It is a quite recent digital (or crypto) currency that started trading in August 2015. According to its creators, it represents a “decentralised platform that runs smart contracts: applications that run exactly as programmed without any possibility of downtime, censorship, fraud or third party interference.”
In other words, instead of having financial institutions providing B2C services and centralising the information, all the ledgers for the Ethereum transactions are publicly available and stored on every node/element of the chain (as with the blockchain technology). It is more of a P2P service where a user can see and store all the transactions ever made. It is also independent of any bank, and no governmental authority can regulate it.
Here are some arguments on why Ethereum is the new Bitcoin:
Upgrade – Bitcoin was created as an alternative monetary system, based on the blockchain technology. Ethereum relies on blockchain 2.0. Besides sounding cooler, this means more security, transparency and reliability.
Popularity – with a market cap of $715m, considerably smaller than Bitcoin’s $12.4bn, Ethereum, even if young, already reached the position as the second most traded currency after Bitcoin. It is worth mentioning though that some complications with the DAO led to “forking” the Ethereum into ETH and ETC (Ethereum Classic). ETC is the third most traded cryptocurrency.
Stability – Ethereum had an organic growth, without massive spikes, and it seems to be stable, if not even predictable.
Comfortable – the relatively low value of Ethereum (1 ETH=$400) makes it easier to trade than the small sub-divisions of a Bitcoin (1 BTC=$4500). Imagine going to a shop buying products worth $130. Imagine being asked for some 3 ETH as opposed to 0.115 BTC. Mental calculation is so much easier: it will not give anyone a headache, and it will probably not trick anyone into spending more.
Functionality – Companies already started raising funds through Ethereum. A great example is the Golem Project, a so-called “Uber for computers” which raised the equivalent of $8.6m in ETH in only half an hour. While there is a large number of businesses backed through Bitcoin or vendors accepting this currency, the rapid rise and spread of Ethereum should definitely put it on your radar.
Is ethereum the next bitcoin in your opinion?