Bitcoin And Ethereum, Sitting In A Tree…

By July 30, 2016Bitcoin Business
Click here to view original web page at www.huffingtonpost.com

Bitcoin and Ethereum, sitting in a tree, k-i-s-s-i-n-g! As the old schoolyard rhyme goes.

The two cryptocurrencies, one launched seven years by a pseudonymous Satoshi Nakamoto, the other launched exactly one year ago, may not appear to be lovers at first glance. As I write this from San Francisco, where I’m giving a presentation to the Ethereum developers later this morning, the fog hasn’t yet burnt off, but the city is already bustling.

What an amazing city - the last time I was here to meet up with my Bitcoin and cryptocurrency friends, I was 20 pounds lighter and gaunt. I’d shut down my popular podcast on iTunes after some sponsors withdrew; the price of Bitcoin was less than a third of what it is today and Ethereum wasn’t even alive yet. A media friend had told me cryptocurrency was “as dead as Kennedy,” and that I should move on.

It wasn’t dead then. And it’s certainly not dead today.

BITCOIN AND ETHEREUM: FRENEMIES, BUT EVENTUALLY FRIENDS

Some Bitcoin users and investors have been unfriendly toward the Ethereum community, that goes without saying.

The launch of Ethereum “Classic” continues to cause problems for the Ethereum community. As the founder of prediction market Gnosis tweeted out:

The more research I do, I basically agree with this. You have a right to fork a coin or to support the pre-forked chain, any time, but if I were someone consulting for a central bank that wanted to remain in business for another 10 to 20 years as the predominant issuer of monetary tokens, I’d just constantly foment fake movements to split blockchains at every opportunity... before you know it, community morale is non-existent, fungibility and market value crater, it’s challenging to withdraw or deposit on an exchange or pay a merchant without the possibility of lost funds or confusion or replay attacks...

And when someone calls Ethereum’s recent fork a “bailout” (the fork returned $50 million of DAO funds moved by an attacker within Ethereum’s network; the majority of miners decided this was the best course of action)... When I hear a change in software code being referred to as a bailout, I know that’s my cue to leave, because I’m dealing with a person who is either dishonest — or not nuanced in their economic thinking.

A fork is not a bailout. No taxpayer funds are involved, nor diverted to helping out a bank that has made bad bets. With bailouts, a large portion of the public dislikes them, because we are required to pay taxes. So your money being diverted from supposedly public interest projects such as roads and schools and defense to make whole some greedy bankers who invested in all the wrong things... No thanks. I am with you there.

But when we begin calling voluntary software upgrades of a cryptographic system, which all users can either accept or decline, a “bailout” — again, it’s just a level of sophomoric manipulation of the facts that I don’t care to rebut any longer.

The paper dollars in the tip jar at your local coffee shop would appear to be a superior technology to contentious pre-fork chains, because the dollars are not broken, just totally dishonest in their issuance schedule and completely analog; US Dollars are unable to do anything cool with the Internet other than be carefully chauffeured around by old and slow technologies like the Automated Clearing House, and establishment bridges like PayPal.

Bitcoin is not immune to this type of “Ethereum Classic” division, either. It is open source software. But as a blockchain gets older and more disparate parties begin using it - and as a global mining community becomes somewhat institutionalized - it becomes a task as challenging as “herding cats”... thousands of cats, in different cities and countries... to effect any meaningful changes to how the network operates.

And that’s by design. With Ethereum, on the other hand, there have already been some substantial upgrades to how the network itself operates, even though its live operational blockchain turns just 1 today.

As these two crypto assets continue to evolve alongside each other on the major crypto exchanges, including GDAX, it should become clear that they are too different to become enemies. Poisonous spiders and tigers both hunt for their food, but they are not competitors. Too different, both fill their niche (and their bellies) just fine.

Ethereum and Bitcoin both use a blockchain, that’s the circulatory system for these networks, but that’s where the comparisons should end. Ethereum’s network operates in a different way, using elements such as gas limits that simply do not exist in Bitcoin.

Bitcoin’s blockchain is old. Its community (by Internet standards) is also old and reactive and “conservative” in how they view upgrades or new features. Bitcoin is so old and so diversified in its user base and mining community that it would be very, very difficult to pull off a “Bitcoin Classic” type attack on Bitcoin today.

Therefore, to an investor or institution, Bitcoin — with no ad hominem attacks possible against its unknown creator, with its 7 year track record of immutability, is less risky.

Ethereum is still a startup crypto, even though it is a promising one. Its youth allows it to try all the things Bitcoin has been talking about, but afraid to try. Because when it’s not broke, why fix it?

Bitcoin was the first successful “app” to emerge from a blockchain. It does currency tokens, better than the dollars sitting in that coffee shop’s tip jar.

What does Ethereum do better than its pre-crypto equivalent? Well that remains to be seen, for sure, but so far it appears Ethereum’s characteristics make it well suited to be a kind of decentralized global “App Store” and a crypto trust-maker. With well coded smart contracts... well coded being the big caveat here... the cryptocurrency community can really step away from old, expensive “analog” trust-makers like Kickstarter, eBay, PayPal and the paper contract you sign when you buy a house.

There’s value in cheaper, faster, more decentralized trust-makers.

Here’s an example: Want to host an auction? Just do it on the blockchain; whoever sends you the most crypto by a certain cut off time wins your listed item, all other lesser bids get automatically bounced back to their respective owners. This is just one of several already existing uses for Ethereum.

In the end, these technologies complement each other. We need immutable money tokens that are actually rare (Bitcoin) and as our relationships and app ideas become more complex, we’ll need a community of developers - and a blockchain - for that, too.

Both can have enormous value to society.

New to Bitcoin and Ethereum? Learn more and get your first coins by watching the quick tutorial below:

Full disclosure: Not financial advice, provided for educational purposes only. Not intended as a recommendation to buy or sell any cryptocurrency or asset. At time of publication, I do hold some bitcoins and ethers in my long term portfolio.

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The two cryptocurrencies, one launched seven years by a pseudonymous Satoshi Nakamoto, the other launched exactly one year ago, may not appear to be lovers at first glance. As I write this from San Francisco, where I’m giving a presentation to the Ethereum developers later this morning, the fog hasn’t yet burnt off, but the city is already bustling.

What an amazing city – the last time I was here to meet up with my Bitcoin and cryptocurrency friends, I was 20 pounds lighter and gaunt. I’d shut down my popular podcast on iTunes after some sponsors withdrew; the price of Bitcoin was less than a third of what it is today and Ethereum wasn’t even alive yet. A media friend had told me cryptocurrency was “as dead as Kennedy,” and that I should move on.

It wasn’t dead then. And it’s certainly not dead today.

BITCOIN AND ETHEREUM: FRENEMIES, BUT EVENTUALLY FRIENDS

Some Bitcoin users and investors have been unfriendly toward the Ethereum community, that goes without saying.

The launch of Ethereum “Classic” continues to cause problems for the Ethereum community. As the founder of prediction market Gnosis tweeted out:

The more research I do, I basically agree with this. You have a right to fork a coin or to support the pre-forked chain, any time, but if I were someone consulting for a central bank that wanted to remain in business for another 10 to 20 years as the predominant issuer of monetary tokens, I’d just constantly foment fake movements to split blockchains at every opportunity… before you know it, community morale is non-existent, fungibility and market value crater, it’s challenging to withdraw or deposit on an exchange or pay a merchant without the possibility of lost funds […]

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