Bitcoin is under threat — Ethereum is rising rapidly

Author: ManjiMasha

One day I suddenly started thinking about the situation of Bitcoin a year ago and a year and a half ago. Since then, I have talked about many aspects of Bitcoin, but I have overlooked one thing: other currencies have imitated Bitcoin and Bitcoin has many competitors. In the form of currency, what they call "coins" seems to make sense. Litecoin, Degocoin or various other currencies have also achieved varying degrees of success, but in terms of scale and scope, no currency has surpassed Bitcoin until now. Now with the rapid rise of Ethereum, everything has changed.

Ethereum was announced in 2013 with a white paper, but it was not established until the release of the genesis block at the end of July last year. This is similar to the establishment of Bitcoin.

The system's record keepers - miners - are rewarded with a number of coins (in this case, ether) based on proof of work. Unlike Bitcoin, however, there is an absolute limit on the amount of currency that can be issued, so Ethereum is limited in size and has no preset upper limit, resulting in a lower natural deflation rate for ether than Bitcoin.

The reason why Ethereum has been popularized so quickly is due to the popularity of cryptocurrency in the world and the uniqueness of the products it provides. Ethereum has absorbed Bitcoin's distributed ledger system - the concept of blockchain - a very important step.

There are many similarities between the two. As mentioned above, both rely on a distributed ledger system where unrelated computers work together to win Bitcoins. Bitcoin has a fixed exchange rate, fixed supply, and inflation, at least for early adopters. It challenges the traditional idea that money must be controlled by the government, and the value of a unit of currency will gradually depreciate.

But the focus now is not on the currency’s ether, but on its operating system.

Ethereum adds "smart contracts" to the concept of blockchain, and the general ledger automatically maintains the contracts.

In simple terms, it's like sports betting: two people stand on each side and bet on which of two things will happen. They must trust the other party to pay if they lose; or hand over the stocks they hold to a third party, who is responsible for keeping the stocks until the result is known. Both parties must trust the third party.

Ethereum acts as a third party, but there is no need for trust (which is why blockchain is also called an "unreliable ledger system"). When the user presses the button to confirm the information, the contract automatically takes effect, the bets within the contract also automatically take effect, and future compensation is also determined.

Of course, Ethereum’s smart contracts are not just for sports events. In fact, it started on Wall Street. It is often said that the stock market is a huge gambling house, which is similar to trade. There are parties A and B, and when the contract comes into effect, one party must pay.

Ethereum does not require a third party and automatically completes the transaction process, so it is not surprising that traditional third parties, and sometimes even banks and financial institutions that directly participate in transactions, are paying close attention to Ethereum.

But Ethereum is not just for banks. Microsoft (MSFT) has begun to introduce Ethereum in its cloud system to simplify operations; Azure and IBM have announced the introduction of the Ethereum system in "Internet events", and many companies are exploring the possibility of smart contracts under the blockchain.

Many companies are looking for ways to bring smart contracts to the blockchain, and Ethereum has already done it, so it is developing just like the rapid rise of Bitcoin. It will take some time for Ethereum to achieve the scale of Bitcoin, but its threat cannot be ignored.