Cryptocurrency Competition: What’s Next in Alt Spending
The advent of the internet has changed virtually every aspect of our lives – from dating and shopping, to even money.
Cryptocurrencies such as Bitcoin (which has cemented itself as the leader) serve as a medium of exchange that converts traditional dollars into coded cash, online. They’re meant to be a safer way to pay.
The galaxy of cryptocurrencies seems to be expanding all the time. And one name, in particular, is gaining tremendous traction – Ethereum.
While Ethereum is far from Bitcoin in terms of market cap, it’s still leaps and bounds ahead of all the others.
Of course, Bitcoin has faced competition all along. As of August 2015, according to mapofcoins.com, there were more than 669 cryptocurrencies available for trade in online markets and more than 740 in total. Those numbers have only grown since then.
All of this competition is no coincidence, either. Rather, cryptocurrencies represent just one of a number of systemic, structural forces coming to overturn centralized banking.
Their success is mainly due to the waning faith in central banks, as they offer vendors as well as consumers a non-state, non-central-bank-issued currency option.
Naturally, the popularity of cryptocurrencies has led to an explosion of options, which in turn has created competition for Bitcoin.
Despite a peak in competition, Bitcoin isn’t shaking in its boots. Because the Ethereum network has proven to be something that, in the long run, may be beneficial to the Bitcoin ecosystem, itself.
What’s the Difference?
Ethereum, launched in 2014, is an open source platform for “smart contracts.” It’s built on top of block chain technology that’s designed to store transactions and data without requiring any central authority or repository.
This effectively cuts out the middle man – big banks.
Dubbed as one of the “Bitcoin 2.0” projects, Ethereum has the potential to bring blockchain technology to a mainstream audience.
Ethereum appears to be cryptocurrency’s rising star. In the last three months, its value has soared 1,000% from its January 2016 value. Just take a look at the chart below.
There are a number of factors that have led the cryptocurrency market to look for alternatives to Bitcoin.
Part of the attraction can be attributed to a cultural divide. There are two camps among the Bitcoin community with opposing views as to how its software should develop.
One camp seeks to expand the number of outstanding Bitcoins, while the other aims to protect and limit this number.
As a result, Bitcoin node growth has been slowing down in the past year or so; Ethereum nodes, being deployed on a global scale, are spreading like wildfire.
In February, alone, Ethereum was up 119%, according to Ethernones.org.
The Cutting Edge of Currency
Beyond their vastly dissimilar age and image, it may be hard to differentiate Ethereum and Bitcoin.
Both are built on a blockchain. Both promise the exchange of money and assets more quickly and cost effectively than relying on middlemen.
But Ethereum promises to do even more, providing a blockchain with a built-in fully fledged Turing-complete programming language.
This language is used to create “smart contracts.”
These contracts encode arbitrary state transition functions and allow users to create their own unique systems.
Simply put, Ethereum is like a single, shared computer run by the network of users where resources are parceled out and paid for by Ether.
The Human Factor
As the first in its league, Bitcoin maintains an air of mystery. It seemed to appear out of thin air in 2009. Bitcoin creator Satoshi Nakamoto has never been interviewed or even quoted.
Initially this piqued public interest. That curiosity, however, appears to be waning.
Ethereum, on the other hand, is more accessible and user-friendly.
We know that its creator is the 21-year-old Russian-Canadian prodigy, Vitalik Buterin. His presence is far more human and accessible.
The public, therefore, has someone to hold accountable for the funds they’re entrusting to Ethereum.
Beyond a name and a face, we know his team of seven co-founders assisted in writing and developing the software. They raised $18 million in 2014 through an Ether presale.
This, in turn, helped fund the Ethereum Foundation, which supported further development of the software.
The website, too, adds a human quality to a somewhat complex system.
It has engaging features such as colorful building blocks and animated graphics, dollar signs, and arrows connecting throughout.
Additionally, the team behind Ethereum provides an incentive for entrepreneurs to take advantage of a Kickstarter/crowdfunding platform.
This type of engagement seizes upon the interconnectedness of everyday life that people enjoy so much.
It emphasizes that new businesses on their platform won’t require a manager and a CFO. Instead, all you need is Ethereum, and they take care of the rest. No paper work. No board meetings.
With Ethereum, a user can build:
- A virtual organization where members vote on issues
- A transparent association based on shareholder voting
- Your own country with an unchangeable constitution
- A better delegative democracy
They are literally describing a fully-fledged vertically integrated, international organization! Right at their users’ fingertips!
What’s the Catch
Currently, there are a host of applications using the technology labeled as either concept, work-in-progress, demo, or live. Many are still developing, as it takes time, money, and effort to build proper platforms.
These concepts range from creating lotteries and ride sharing programs, to next generation identity systems and music sharing apps.
Ethereum, however, seems poised for a takeoff – even beyond the massive value increase it’s currently experiencing.
Bitcoin loyalists want to believe that Ethereum will face security problems because of its higher degree of complexity.
This theory lacks evidence as Ethereum has warded off far fewer cyber attacks than Bitcoin has suffered.
Such an innovative and auspicious design welcomes scrutiny.
Yet, Ethereum is already seeing the interest of corporate America – including IBM and JP Morgan.
That’s not to mention the many banks studying its model for possible application in an effort to make trading and money transfer more efficient.
In late February, Ethereum announced its latest version 1.3.5 in a press release.
In it, you can see a photo of their team. It’s hard to deny that the group looks excited and their energetic stories about being “psyched” for the release only continues to humanize the Ethereum brand.
While it may take a cryptocurrency expert to truly grasp how this new and improved model works, you don’t have to understand the technicalities to keep your eye on this emergent economy.
Not all 600-some currency alternatives will see its day in the sun, but Ethereum seems to be on the right track to a bright future.