Etherium is a panacea for anyone hoping to reduce contractional friction, and I believe we're at the tip of the tip of the iceberg if the tech and ether are here to stay.
Bitcoin, on the other hand, still concerns me. If/when BTC is makes its appearance in the every day lives of ordinary people, its anonymity value will have eroded significantly. Traditional currencies have not yet started to compete with BTC, but they can and they will if necessary. Try getting a mortgage, car loan, business loan with BTC as collateral as one example of where my concerns rest. Look at the grossly inverted price of BTC and gold prices (artificially assuming 1BTC = 1Oz).
Before BTC there was growing dissatisfaction with money center currencies that persists today. BTC 'took the edge off' for many in those circles and may have relieved pressure on gold prices.
I don't necessarily believe this, but I've read in economic revisionist circles that BTC would be means for certain central banks to redirect some demand and attention for precious metals away from their vaults and toward an asset class they, better than anyone, are capable of mining with their existing computing infrastructure. So, by invention or acquiescence, BTC serves money center interests, for now, but not indefinitely.
BTC remains a highly speculative and risky asset/network in my mind.
I think the killer drawback to BTC will be the implementation of its proof-of-work consensus which present these major issues:
- The throughput for BTC transactions is incredibly low and will not improve significantly in the future. In theory, its block-time is 10 minutes, in practice it can take as long as 20 minutes for a single transaction. This is in fact by design and deters attackers-- more frequent blocks make it easier for competing chains to get out of sync.
In comparison, Ethereum has 15 second block times, 3 minute verification. It fixes the security risks with an implementation based on GHOST.
- BTC mining is highly centralized and expensive. By 2020 it is estimated the amount of electricity used globally to mine BTC will be as much as Denmark consumes.
Ethereum already decentralizes mining by nullifying the advantages of using ASICs. And it will fix the energy consumption issue by switching from proof-of-work to proof-of-stake.
BTC will be seen as the first effort that introduced the blockchain to the public. But I doubt its longevity. We have witnessed this multiple times with tech. Consider:
- Personal computer (Altair, Apple, later Commodore, Tandy, Atari)
- Internet (Altavista, Yahoo)
- Social web (Myspace, Digg)
- PDAs and mobile phones (Palm, Nokia)
In each of these scenarios, a second generation technology always came along and ate the lunch of the one first out of the gate. Why? Robustness (more use cases, platforms), efficiency/cost, and more user friendly.
"Why? Robustness (more use cases, platforms), efficiency/cost, and more user friendly."
More fundamentally, the second platform benefits from the hindsight of the first platform's experiences, having the opportunity to fix any mistakes that happened to be hardcoded into the first platform's design.
Etherium is a panacea for anyone hoping to reduce contractional friction, and I believe we're at the tip of the tip of the iceberg if the tech and ether are here to stay.
Bitcoin, on the other hand, still concerns me. If/when BTC is makes its appearance in the every day lives of ordinary people, its anonymity value will have eroded significantly. Traditional currencies have not yet started to compete with BTC, but they can and they will if necessary. Try getting a mortgage, car loan, business loan with BTC as collateral as one example of where my concerns rest. Look at the grossly inverted price of BTC and gold prices (artificially assuming 1BTC = 1Oz).
Before BTC there was growing dissatisfaction with money center currencies that persists today. BTC 'took the edge off' for many in those circles and may have relieved pressure on gold prices. I don't necessarily believe this, but I've read in economic revisionist circles that BTC would be means for certain central banks to redirect some demand and attention for precious metals away from their vaults and toward an asset class they, better than anyone, are capable of mining with their existing computing infrastructure. So, by invention or acquiescence, BTC serves money center interests, for now, but not indefinitely.
BTC remains a highly speculative and risky asset/network in my mind.