What is Cryptocurrency?
Cryptocurrencies were introduced to the global market in 2009 as a revolutionary new way to make payments. Devoid of any government interference, money held in this peer-to-peer system is in many ways more secure, and not impacted by fiscal policies of any particular government. Following the 2008 financial crisis, trust in the established financial institutions declined, and the impact of the WikiLeaks Scandal and allegations of spying have increased people’s desire for anonymity, something offered by these new(ish) cryptocurrencies. One of the rising stars of the cryptocurrency world currently is Ethereum, but can it challenge bitcoin, the original trailblazer? Is Ethereum better than Bitcoin?
Bitcoin
The first cryptocurrency on the market, Bitcoin was launched in 2009. Over the years more and more places have started to accept payment in Bitcoin, adding to the popularity of cryptocurrencies. This led to more entering the market, though none has managed to rival the success seen by Bitcoin. The mechanics behind Bitcoin has led to it being called digital gold, with similar restrictions on getting it and scarcity driving the price up.
From humble beginnings in 2010 when one bitcoin was worth less than US$0.01, the value of Bitcoin has shot up consistently over the years, with some fluctuations, but is now valued at over US$60,000 per Bitcoin. In early 2021, huge jumps in value have in part been driven by Tesla, and Elon Musk, investing US$1.5 billion and announcing that Bitcoin would be accepted as payment.
According to CNBC, it is estimated that bitcoin could reach the half million dollar mark by 2030, and eventually one million dollars per coin, but it will need to stabilise.
Ethereum
As of the 4th of May 2021, Ethereum has reached a record high, surpassing US$3,430. This is the first time since it was launched in 2013 that the price of Ethereum has not been linked to the price of Bitcoin; this uncoupling signalled a new era for Ethereum, setting it apart from other competitors and real rivals for Bitcoin. While previously the volatility of Bitcoin has impacted all cryptocurrencies, Ethereum has been able to show it can stand on its own two feet and has not been impacted by the fall in the value of Bitcoin.
The network Ethereum is running on is also undergoing some major works; developers say that Eth2 will make Ethereum more secure, scalable and sustainable, and upgrades will make changes to the minim process which will make minting new tokens much less labour and energy intensive.
Ethereum has also started to break down the barriers of traditional versus new, with the very traditional auction house Christie’s accepting payments in Ethereum from early 2021, as well the European Investment Bank issuing a digital-bond in Ethereum in 2021 alongside other established financial institutions Goldman Sachs, Societe Generale, and Santander.
Who will win?
There is no denying that Bitcoin is the most popular and well-known of all cryptocurrencies. However, the lesser-known cousin is coming to the fore, offering more than just a currency: Ethereum is a huge computing network that enables anyone to create their own decentralised network, and as governments puts restriction on using cryptocurrency, the diversification seen in Ethereum, means that it has a great deal more to offer than Bitcoin in the long run, but this does not mean it will ultimately win out. Currently, and for the foreseeable future, there is space for both in the market.