Mainstream media outlets are beginning to advance the idea that Ethereum and Bitcoin are traditional competitors. This notion does not make much sense. Ethereum and Bitcoin are two different expressions of a similar notion, with important differences that ultimately make them fundamentally different.
While it is true both have great uses for online gambling, especially where it’s illegal, calling them competitors might be akin to calling fiat currencies competitors. While in a way they are, they are much more symbiotic in today’s political economy than competitors generally are considered to be.
Ethereum champions a different set of innovations than Bitcoin. For instance, in Ethereum’s “Virtual Computer” notion, distributed participants create entire business models on a blockchain through programmable contracts. This is much different than the payment system and digital token protocol of Bitcoin, which is undoubtedly best used today as a transfer system, although this has come under contention recently per the Block Size Debate.
In the online creation communities themselves, people scantily dismiss the other as worthless. There are qualms held by Bitcoiners of Ethereum, and of Ethereum users against Bitcoin – in some cases – and, for the most part, they view each other as potentially symbiotic technologies. Any sober thinker would consider each a radical experiment with radical risks. Ultimately, that’s all they are, nothing more. Hardly competitors.
The notion put forth by the mainstream press that Bitcoin and Ethereum are somehow competitors is akin to the notion early in Bitcoin’s existence put forth by mainstream media that Bitcoin was anonymous. It’s false and misleading. It fails to understand the entire notion of open collaboration projects, especially an underground online creation community such as is the crypto-currency space. This isn’t a traditional industry. These aren’t traditional economic actors.
Nathaniel Popper’s piece in New York Times, entitled “Ethereum, a Virtual Currency, Enables Transactions That Rival Bitcoin’s,” does not sound as divisive as the title. In the article, Popper backs off that notion. He highlights instead of the novel nature of Ethereum, while also cautioning how untested the technology is.
But Ethereum has also won fans with its promise to do much more than Bitcoin. In addition to the virtual currency, the software provides a way to create online markets and programmable transactions known as smart contracts.
Many Bitcoin advocates say Ethereum will face more security problems than Bitcoin because of the greater complexity of the software. Thus far, Ethereum has faced much less testing, and many fewer attacks, than Bitcoin. The novel design of Ethereum may also invite intense scrutiny by authorities given that potentially fraudulent contracts, like the Ponzi schemes, can be written directly into the Ethereum system.
Shortly after Popper’s article, Nasdaq released an article entitled, “Bitcoin’s Rival: Ethereum’s Rapid Rise.”
Martin Tillier essentially just describes the system in his piece in his own words, and the headline serves as merely clickbait and misrepresentative of the article. Hats off to Tillier for addressing the technology.
While Bitcoin focuses on transactions and value transfer, Ethereum wants to create economic arrangements dictated by a distributed program. Code that can’t be DDoS’d. It’s got a little bit of Bitcoin in it, but mostly it’s got a whole lot of Ether.
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