Who is the king of digital currency?

This article was written in Cancun, Mexico, while attending Programming Blockchain and Devcon3.

In the past four days, I have participated in two consecutive events about Bitcoin and Ethereum, Programming Blockchain and Devcon3. The huge contrast and collision between the two worlds triggered a lot of thinking in me. Who is the king of digital currency? This billion-dollar question can only be answered after personal experience.

Bitcoin is the most widely recognized digital currency and is also considered by many to be digital gold. In theory, if the currency issued by the government continues to depreciate, the price of Bitcoin will continue to rise. If it is viewed as an investment product, in addition to the epoch-making technological innovation, the well-known fixed total amount ensured by consensus and algorithms, as well as the decentralized and non-unilateral control characteristics, are all its distinctive features and advantages compared with existing investment products. Digital currency is now being viewed by more and more people as a new type of asset class, and Bitcoin has made an indelible contribution to this.

To become the king of digital currency, survival is the key. Although Bitcoin experienced many twists and turns in its early days, including loopholes, low tides, and disagreements, it still survives tenaciously to this day. This is due to historical coincidences, the blessing of God, and the strong support of a strong ecosystem. The trading, mining and wallet industries around Bitcoin have now become large-scale, and the digital currency-related industries spawned by it, including media, merchants, service platforms, etc., are also booming, and the developers behind it have always maintained a high level of activity to ensure the functionality and quality of the software. The most commendable thing is that there is no independent person in power behind such a powerful ecosystem. Even if someone spends the coins in the genesis block and proves that he/she/they have little impact on the entire ecosystem except for big news. Such a community of interests that is purely maintained by personal interests and has no center is probably the first in human history. Even with the original intention of making the world more interesting, I personally hope that Bitcoin can continue to exist.

The top 20 digital currencies by market value in 2013, 2015, and 2017. Data source: coinmarketcap.com

Because there is no center, Bitcoin has shown us what true autonomy and inefficient democracy are, and its protocol is highly immutable. If Bitcoin is viewed as a piece of software, then there is probably no other software that is slower and more complicated to update than Bitcoin. Take the segregated witness for example. From the proposal in January 2016 to its official deployment and activation in August 2017, it took a total of 20 months, and there were many twists and turns along the way. From the perspective of investors, this is a good thing, because it means that the total amount of 21 million is highly guaranteed and will not change at will. But from the perspective of technological progress, I'm afraid that may not be the case.

Ethereum is the opposite, where software and protocol updates are much more frequent and easier. Take the recent Byzantine fork for example, the reward per block was changed from 5 to 3, but it seems that few people mention it. In the future, there will be an update to the mining mechanism from proof of work to proof of stake. If a similar change in the currency issuance mechanism happened to Bitcoin, it would probably become a bigger news than the sky.

Easier updates are both good and bad. The good thing is that technology advances more frequently, and can adapt to the growing number of users and new needs more quickly (such as the introduction of zkSNARK to enhance privacy). But from another perspective, this reflects the more centralized nature of the entire ecosystem, which is contrary to the original community autonomy and decentralized spirit of blockchain. More frequent upgrades are also more likely to introduce new bugs. It is also quite worrying to keep doing this experiment on the world's second largest digital currency with a market value of nearly 30 billion US dollars. It's a mixed bag, it depends on whether the benefits outweigh the disadvantages.

The biggest feature of Ethereum is not centralization, but a thriving developer community. Before the emergence of Ethereum, developers had very limited ways to participate in the blockchain, because there was probably not much else people could do around Bitcoin except buying coins, mining, and trading. Bitcoin itself also supports smart contracts based on Turing's incomplete scripting language, but the learning threshold is very high. The emergence of Ethereum introduced a programming language specifically for writing smart contracts, making the development of smart contracts easier, which gave rise to a powerful developer ecosystem around smart contract development, including many dapps (decentralized apps) and tokens developed based on Ethereum, smart contract development, testing, security tools, a variety of different smart contract programming languages, and a variety of smart contract development libraries. According to unreliable statistics, 80% of the world's blockchain developers are smart contract developers based on Ethereum, which shows its influence.

Devcon3 conference venue

With more developers participating, it is easier to discover problems and generate demand, and the technology itself will progress faster, thus forming a virtuous cycle. Judging from market performance, people's recognition of the value of Ethereum's developer ecosystem and technological progress clearly exceeds their denial of its centralized characteristics.

We have reason to believe that Bitcoin and Ethereum will exist for a long time. Let us wait and see which of these two completely different digital currencies will eventually become the king, and whether there will be a dark horse.

Note: Programming Blockchain is a two-day Bitcoin programming boot camp initiated by Bitcoin developer Jimmy Song. Devcon is an annual Ethereum developer conference, the first of which was held in Berlin in November 2014. This year is the fourth session.