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How is bitcoin different from ethereum?

Contrary to what most people think, I don’t think bitcoin and ethereum are actually competitors. At most, they share only one thing, and that is, they are both built with blockchain technology. But that’s it. Everything else from there is completely different. Saying that they are the same and that they compete, in my mind is like saying Exxon Mobil is the same as Netflix or that somehow they compete just because they are both companies. It just doesn’t work like that.

Companies come in all sorts of different shapes and sizes, and they target different audiences, and they operate in different markets. For example, Airbnb is going after the hotel market, Uber is disrupting taxis, Amazon is going after retail, and bitcoin is disrupting money.

In my opinion, the properties of bitcoin such as its limited supply, its supply and demand economics, and its massive decentralization make it the absolute king of all payment systems and other forms of money that exist on the planet today, such as fiat currencies like the US dollar and Euro), precious metals like gold and silver, or even other payment-based cryptocurrencies like litecoin, dash or ripple.

So if bitcoin is disrupting payments, then what is ethereum disrupting? At its simplest form, ethereum is disrupting legal contracts – the things that we use today to buy in to people, organizations, courts, and even government-based institutions together. That’s because ethereum was built with a different set of properties, most notably that it’s a programmable blockchain. This essentially means that you or I can actually write smart contracts and build stuff on top of ethereum. This includes literally anything from putting up your last will and testament onto ethereum to building a decentralized Twitter, or even collecting these cute and rare little cats called the crypto kitties.

Ethereum’s programmable ability, combined with its massive community and talented developers in being the first in the smart contracts market, make it the king of programmable blockchain, such as NEO, EOS and TRON.

It’s this difference in properties that set bitcoin and ethereum apart. Bitcoin is best in class in payments and being a store of value, while ethereum is best in class at being programmable, extendable and its capacity to build things on top of it.

A wise man once said, “Think of bitcoin like a tiger and ethereum like a shark.”

Sure, if you were to take a tiger and bring it into water, the shark is going to easily win the battle. But if you were to take that shark and drag it up onto the land, the tiger would easily win that battle. But when you sit back and allow both the tiger and shark to live in their natural habitat, you realize they actually never come in contact with each other and they both win.

Similarly, bitcoin and ethereum are both are likely to continue dominating their respective markets in 2020, and win big in the long term.  So if you’re looking to invest in crypto in 2020, the question shouldn’t be which one you should buy, but rather how much of each you should buy. At the end of the day, you will have a budget that has to be deviated amongst all your investments.

Which one to invest in 2020?

In my opinion, the answer to this question all comes down to your personal risk tolerance. Personally, I believe bitcoin is a safer bet because it’s simpler. You can’t build things on top of it. While that initially feels like a limitation, it actually makes it simpler and limited in scope, letting it have a much smaller attack service than ethereum does. This means bitcoin is less receptive to bugs, attacks, hacks or other events that can wipe off the network overnight.

While bitcoin has been in the market for over 10 years and is battle-tested, ethereum has only been in the market for about 4 years. Since ethereum allows you to build things on top of it, it’s a lot slower, it’s getting clogged up a lot faster, and it’s surface area is a lot larger that makes it more susceptible to bugs and other kinds of attacks.

Ethereum has a long way to go in terms of solving its scalability issues, and there are probably going to be a lot of growing pains along the way as it becomes this global world computer that it aimed to be. Because of that, there is a lot more risk baked into ethereum. But I also believe that the potential upside on ethereum is a lot higher because of the possibilities of what you can build on top of it are theoretically endless. So ethereum, in my opinion, is at higher risk but possibly comes with a higher reward.

Image from Blockshow

Takeaway from Blockshow Asia 2019

Generally speaking, in the crypto world, there has always been equal promise as there has been skepticism. However eager a crypto investor is, their investment would depend on a level of security before any offer is articulated. This is why a growing number of crypto enthusiasts like to attend events like Blockshow, in the urge of meeting the founders of tech startups and other crypto investors in person.

At Blockshow Asia 2019, there was a lot of discussion on the price predictions of bitcoin and ethereum, along with conversations on the future and scalability of blockchain, and the current status of the overall decentralized web.

According to Tone Vays, an independent content creator who’s been involved in the cryptocurrency ecosystem since 2013, nothing except for bitcoin matters in the crypto space. He stated that the free market will eventually show how irrelevant all those other projects are; and at the end of the day, there will be one blockchain that matters, just like we have one internet that matters.

He explained his stance with the following analogy.

“Suppose someone would give you $1 million worth of bitcoin, or $5 million worth of any other cryptocurrency of your choice but you can’t touch it for 10 years. Would you take $1M in bitcoin or $5M in anything else?”

He also stated, “Stable coins are only important for people who want to trade in an unregulated way. So your stable coin is only as stable as the government let it be stable. I think everybody will just be using bitcoin. I would rather trade in the traditional market because I know my funds are actually safe.”