Ethereum is Gradually Becoming the Cryptocurrency of Choice
Until recently, to those not directly involved in the world of digital currencies, the words “cryptocurrency” and “Bitcoin” were used almost interchangeably. Bitcoin was, after all, the first real digital currency, and the one that put crypto on the map. However, we see plenty of examples where the first is always remembered but does not remain on top. Betamax in the world of video, Myspace in social media, Alta Vista in search, the list goes on.
With the choice of cryptocurrencies that is now available, could Bitcoin end up following the same pattern? It is certainly a possibility, and if Bitcoin is the Myspace of crypto, there are many commentators who think Ethereum could be the equivalent of Facebook.
An explosion of cryptocurrencies
Five years ago, Coinmastercap listed seven different cryptocurrencies. There are more than 2,000, of which more than 1,500 have a market cap in excess of $100,000. Clearly, this is a market that is exploding, and it will take some time for the dust to settle. One thing that is absolutely clear, though, is that Ethereum is the cryptocurrency that is snapping at Bitcoin’s heels.
Ethereum is considered the “new kid” in comparison to Bitcoin, but having been launched in 2015, it is comparatively well-established. It was the brainchild of Russian Canadian Vitalik Buterin, who at the time it was launched had just turned 21. With his trademark jeans and t-shirt, he has captured the public imagination, and the comparisons with Facebook’s Mark Zuckerberg are inevitable.
There is, however, more to Ethereum’s long-term viability than the personality of the man behind it. Ethereum can do everything that Bitcoin can, in as much as it is traded every day on the world forex markets and is seeing increased adoption as a viable currency. As far as the latter is concerned, you need only look at the online gaming market – now you can deposit, play and withdraw money with Ethereum, using sites that were formerly focused on Bitcoin and nothing else.
However, Ethereum has the additional versatility that makes it a more compelling choice than its major rival, specifically in the area of smart contracts. In simple terms, a smart contract is a contractual agreement that relies on predefined conditions. When those conditions are met, the transaction is automatically processed. It is easiest understood by way of example.
1. Dave and Ronnie decide to bet on the 2019 Cricket World Cup. They enter into a smart agreement, whereby if England wins, Dave gets 10 ETH. If England doesn’t win, Ronnie gets 5 ETH.
2. Dave and Ronnie must then put their stake into the smart contract.
3. The Ethereum blockchain searches the internet and is easily able to establish whether or not England won. With the result confirmed, it can pay out accordingly.
The elegance of the smart contract is that there is no need for it to be run through a third party. The technology takes care of the contractual conditions, checks they are made and processes the payment. The above example is a simple illustration of how the process works, and it is easy to see how smart contracts can be used in logistics, insurance, supply chain management and a host of other areas.
Could crypto – and Ethereum – become the norm?
Adoption is still at early stages, so it might seem premature to suggest that most of us will soon be using digital wallets instead of physical ones. Yet a look at how rapidly payment mechanisms are evolving suggests it is certainly possible, and maybe even probable.
Today, Generation Z wouldn’t know what to do with a check, few of us carry cash, and even chip and pin seems old fashioned. We pay for things with a swipe of our smartphone, and to make those digital payments on a digital platform seems the obvious next step.
Ethereum has shown that it is ready for the future. Buterin has spent recent years developing his technology to ensure that the scalability problems that have always threatened Bitcoin’s long-term viability are less of an issue for Ethereum. There are still plenty of unknowns out there, but all the indications are that Ethereum’s moment at the top of the crypto tree could be approaching.