Beyond Bitcoin: Ethereum Is the Next Big Cryptocurrency

Beyond Bitcoin: Ethereum Is the Next Big Cryptocurrency



In 2017 alone, the price of Bitcoin rose from under $1,000 in January to over $10,000 in early December, giving the largest cryptocurrency a market cap of over $167 billion. Bitcoin's massive success has led to a wave of new cryptocurrencies competing for investors' dollars.

Bitcoin is an invisible (no physical backing) digital currency that can be sent from one internet user to another. It works on blockchain technology. Blockchain works by recording financial transactions on a shared, encrypted digital ledger in a peer-to-peer network.

Instead of relying on large financial institutions or centralized servers to process payments, blockchain runs on thousands of computers or "nodes" around the world. Advanced encryption technology keeps your financial information safe and largely anonymous, making data leakage nearly impossible.

Blockchain has been touted as a world-changing technology that will permanently disrupt highly centralized (and tax-based) financial systems.

Investors eager to get in on the ground floor of this potentially revolutionary technology are investing money not only in Bitcoin, but also in more than 1,000 competing cryptocurrencies, known as "altcoins" (alternatives to Bitcoin). Skeptics compare it to the dot-com bubble. Bitcoin was first launched in 2009 by an anonymous programmer under the pseudonym Satoshi Nakamoto.

Critics initially dismissed Bitcoin as a futuristic dream or, worse, a boon for black market criminals, but now its underlying technology is being hailed as the future of finance. Andrew Miller is an assistant professor of electrical and computer engineering and associate director of the Cryptocurrency and Contracts Initiative at the University of Illinois at Urbana-Champaign. He believes that "bubble talk" is inappropriate.

More importantly, investor speculation drives rapid innovation, creating hundreds of "really cool experiments" in the form of new cryptocurrencies, each with unique characteristics.

"Anyone who invests in technology understands that there are a lot of failures," says Miller. "Cryptocurrency speculation appears to provide funding for critical infrastructure development."

 

Introducing Ethereum

Infrastructure? I thought we were talking about cryptocurrency. You cannot own a cryptocurrency without a blockchain, and the impact of a decentralized blockchain infrastructure can be much greater than that of individual cryptocurrencies. This is why many blockchain enthusiasts love the Bitcoin alternative called Ethereum. Ethereum is not just a cryptocurrency.

A platform for building applications that run on the blockchain. Like Bitcoin, Ethereum has its own programming language, but it is much more powerful and versatile than Bitcoin. And unlike Bitcoin, Ethereum does not aim to replace traditional currencies, but rather to conduct secure transactions on the blockchain.

Ethereum has its own cryptocurrency called Ethereum, but it is only useful on the Ethereum platform. For example, you wouldn't use Ether to buy Xbox games like you would with Bitcoin. Vipul Goyal teaches graduate courses on blockchain and cryptocurrencies at Carnegie Mellon University (CMU).

In his opinion, the proliferation of new cryptocurrencies will soon stabilize and only a few dozen will be in circulation. He also believes that Bitcoin's top position may not be sustainable.

"My personal prediction is that Ethereum will eventually become the largest cryptocurrency," says Goyal. This is because the Ethereum programming language and platform makes it easy for startups and developers to create decentralized applications (Dapps) that empower individuals and businesses in new ways.

One of the biggest, says Goyal, is the idea of ​​"smart contracts." Instead of paying lawyers to write and execute contracts, you can program transactions into the blockchain. Smart contracts are enforced and penalties are imposed for violations.

Before joining CMU, Goyal worked at Microsoft India, where he said the company moved real estate contracts, such as office buildings, to the blockchain to avoid costly legal disputes. Ethereum also facilitates the use of what Miller of the University of Illinois calls "programmable money." He uses the example of a student bank account that has certain parental controls programmed into it. For fees, students can receive up to $100 per week, but anything above that requires parental permission for a unique encryption key. Miller sees programmable money as one of the fastest-growing ideas in banking.

 Related: Top 4 Amazing Features of Bitcoin ATMs


Other Cryptocurrencies

Besides Ethereum, other popular altcoins promise greater security and anonymity than Bitcoin. According to Miller, early media rumors about Bitcoin's unbreakable privacy are "only half true," and the original version of the blockchain leaves users vulnerable to hackers.

High-end cryptocurrencies such as Zcash (Miller Advisor), Monero, and Dash use much more advanced encryption that completely hides the user's identity and transaction value. There are still many obstacles that could delay or prevent the widespread adoption of cryptocurrencies. Due to the speed of transactions, it can be difficult to figure out how to buy Dogecoin or other cryptocurrencies.

Bitcoin transactions must be verified by half of all active nodes on the network, which Goyal says takes an average of 30 minutes.

Ethereum can only process 13 transactions per second, which is 250 times slower to serve its 10 million user base. "I don't think we'll get to the point where we're paying for food with cryptocurrencies without real technological innovation," says Goyal.

Another possible key is government regulation. One of the advantages of cryptocurrencies is that they operate outside of highly regulated financial systems and government control. However, some companies are preparing to offer Bitcoin futures contracts, which would encourage mainstream investors and encourage federal regulation by the Commodity Futures Trading Commission.

Learn How Bitcoin Work

Post a Comment

0 Comments
* Please Don't Spam Here. All the Comments are Reviewed by Admin.