Bitcoin has been all the buzz in the crypto world this past year — and rightfully so. Its price had rapidly climbed to begin 2021, but is now down big the past few days. The asset has still seen considerable growth in the past several months.
We’re still at the beginning of the cryptocurrencies and digital asset transition. Even with all of bitcoin’s success, ethereum can end up being much bigger.
What is Ethereum
As explained by Ethereum.org,
Ethereum is the community-run technology powering the cryptocurrency, ether (ETH) and thousands of decentralized applications.
Ethereum is a technology. It also powers applications that everyone can use and no one can take down. You can also use it to send cryptocurrency to anyone.
Ethereum and bitcoin are similar in that they are both digital money without banks or payment providers. The difference is that ethereum built on bitcoin’s innovation of a blockchain and is a programmable blockchain.
Since ethereum is programmable, it can be used for different digital assets, including bitcoin. This also means Ethereum is for more than payments. It’s a marketplace of financial services, games and apps that can’t steal your data.
Some features of ethereum are that it is open-sourced and decentralized.
Some believe ethereum will be the backbone of the new internet. It has tremendous potential as our world turns more and more digital. It has the ability to become a structure for a decentralized, next-generation internet.
Ethereum provides a programming language running on a blockchain that developers can use to create applications. There is endless potential in what develops can create.
Almost any centralized service can be decentralized. And ethereum can bring its core principles of trust, transparency, security, and efficiency into that service, business, or industry.
One industry in particular ethereum may impact is finance. Ethereum’s technology can help decentralize finance, recreating traditional financial products, such as loans, without middlemen like the bank.
Bitcoin vs Ethereum
While bitcoin is a cryptocurrency, ethereum can be used in a variety of ways. Ether is the cryptocurrency of the ethereum network and is the second-largest cryptocurrency by market cap, behind only bitcoin.
Bitcoin was created in 2009, in the wake of the financial crisis, as an online currency without any central authority.
While both the bitcoin and ethereum networks are led by distributed ledgers, there are many differences. The two have different goals.
Bitcoin was created as an alternative currency, to be a medium of exchange and store of value. Ethereum was created to facilitate immutable, programmatic contracts and applications via its own currency. The primary purpose of ethereum is not to be an alternative monetary system, but to facilitate and monetize smart contracts and create decentralized applications.
We’re still early in all of this — ethereum was only created a few years ago. It is only growing and therefore hard to understand the uses and potential for something that may be more crucial to the future, and not the present.
No one knew the potential of the internet and how it would change our lives back in the early 90s. Ethereum may not change our lives that much, but it has the possibility to be a disruptor to how things are done.
There are risks associated and it is very volatile, but in twenty years I don't want to be regretting not investing in something that changed the world.
This article is for informational purposes only. It should not be considered Financial or Legal Advice. Consult a financial professional before making any major financial decisions. The author owns Bitcoin and Ethereum. It’s important to note that cryptocurrency is an extremely volatile asset.