As the first cryptocurrency, bitcoin set the pace for other digital currencies, otherwise known as altcoins, for many years. It was considered as the ultimate digital coins by both developers and investors alike.
This article takes a look at some of the factors that are responsible for this shift in opinion and preference. Here are some of the reasons why ethereum is gradually catching up on bitcoin:
Upgraded Software Mining
Ethereum is not resting on its oars. The developers are working around the clock to upgrade this digital currency to make it easier to mine. While giving his opinion on the increasing popularity of ethereum, CEO of BKCM LLC, Kelly gave the improvement on software mining as a factor responsible for why many prefer ethereum to bitcoin.
According to the CEO of the investment firm that specializes in digital currencies, ethereum is upgrading. As reported by CNBC, he said:
They [will] go from hardware mining, proof of work, to something called ‘proof of stake,’ which is similar to a software mining.
The software mining apparently comes with some benefits that make them more appealing than bitcoin at the moment.
Areas of Application
Another important factor that contributes to the growing popularity and preference is how both coins are used. Although many assume that both coins serve the same purpose, that’s far from the truth.
Bitcoin is primarily a means of exchange. It is designed as a global decentralized financial system used extensively for paying for goods and services. This limits its areas of applications significantly.
On the other hand, ethereum is designed to serve other purposes apart from its payment capability. It is the brain behind Smart Contracts. The entire concept is built on ethereum technology and powered by the platform. Many developers take advantage of the digital currency to create applications that have an impressive range of applications.
Smart Contracts are used in practically all areas of life. They are used in:
- Real Estate.
- Supply Chain Management.
In an article entitled “What are Smart Contracts? Guide for Beginners”, Cointelegraph gave a comprehensive analysis of what Smart Contracts are and the hidden potentials of this technology. This wouldn’t have been possible without ethereum, something far beyond bitcoin.
Aside from smart contracts, ethereum is also the foundation for decentralized applications (dApps). This is another technology with the potential to change the world.
In an interview with Forbes’ correspondent, Joresa Blount, Kyle Lu, the CEO and founder of Dapp.com explained the importance of decentralized applications. He said:
The principal use cases for dapps are to create trustless environments, provide censorship-resistance, lower barriers to access services, and create an open market that produces liquidity for digital assets.
Both Smart Contracts and Decentralized Applications are promising technologies with the potential to have a positive impact in the future. Thanks to ethereum.
The speed of transaction completion is another important factor in favor of ethereum. In the present age and time, people are too busy to waste time on mundane things. They are always on the lookout for opportunities to get things done at the speed of light.
While both platforms offer payment solutions, ethereum ensures a faster solution than its bitcoin. While it takes approximately 10 minutes to complete a transaction on the latter, a transaction on the former will be completed between 10 and 20 seconds. That’s on a good day.
If a CNBC report is anything to go by, it takes longer to complete a transaction. The source said:
Right now it takes an average time of 78 minutes to confirm a bitcoin transaction, according to Blockchain.com. But on Sunday the average time was as high as 1,188 minutes.
Thus, users who are time conscious are more disposed towards using ethereum than bitcoin for transactions. This gives it an added advantage over its competitor.
These coins are also separated by a huge transaction fee margin. Bitcoin charges a huge amount of transaction fee, a factor that makes it unpopular among users. CNBC quoted a journalist who reportedly paid $15 to transfer $100 from his Coinbase wallet to Ledger Nano S, a hardware wallet.
The Yahoo Finance journalist and host, Daniel Roberts, tweeted on his Twitter handle, expressing his displeasure at the huge transfer fee. While commenting on the tweet, another Twitter user claimed to pay “£22 to send £37 worth of bitcoin”.
Quoting a data by BitInfoCharts, the website confirmed the huge transaction fee:
People are currently paying $28 on average to make transactions using the digital currency, according to data by BitInforCharts.
While bitcoin levels such a huge fee on users, Ethereum founder, Vitalik Buterin promised users of a low service fee. He tweeted:
I propose we consider supporting a community norm that client/wallet devs can/should charge a 1 gwei/gas fee for txs sent through their wallet, we don’t try to circumvent such fees, and we support protocol changes to make such fees easier (eg. abstraction enabling multisends)
— Vitalik Non-giver of Ether (@VitalikButerin) March 8, 2019
It is pretty clear from this article why people prefer ethereum to bitcoin. While bitcoin focuses on banking issues and payment only, ethereum has a very wide range of applications, ranging from Decentralized Applications to Smart Contracts, and several other uses. It thus offers more value than the first digital currency, a factor that is driving its popularity and acceptance through the roof.