We hear more and more of Bitcoin: This electronic currency can be used almost everywhere and for everything; online shopping, investing, even playing games at a BTC casino online. Even those who do not follow technological developments know what Bitcoin is. But alternative electronic currencies are still not recognized by many. However, there are many alternative currencies created using Bitcoin’s blockchain technology. Moreover, some of them use a much more advanced technology than Bitcoin.
Ethereum is at the top of these currencies. Developed in 2013 by a programmer named Vitalik Buterin, Ethereum is currently considered the rising star of the encrypted currency market. Contrary to popular belief, it is not a Russian but a Swedish initiative. However, it is mainly used in Russia and is expected to be one of the official currencies in this country. But before we give more information, let’s talk about what the blockchain technology is and the disadvantages of Bitcoin.
What Is Blockchain Technology?
Think of blockchain as an encrypted database: This database, which is installed on millions of computers at the same time, is the basis of Bitcoin. Each transfer made using BTC increases the size of this database on millions of computers at the same time. İt is a secure, decentralized, anonymous, and not an “exclusive” technology. Blockchain system can be used to power-up many financial databases.
BTC’s blockchain has some disadvantages. First of all, there are various performance problems because the code system is old. In addition, the database has a limit: When it reaches a certain size, it will no longer be possible to create new BTCs. Imagine that the US has given up on printing new dollar bills: The BTC currency will face this crisis sooner than you think.
Advantages of Ethereum
Ethereum (ETH) uses an innovative blockchain database written from scratch. Operations on blockchain do not increase the size of the database. Moreover, transactions can be done much more quickly and efficiently. Most importantly, it uses an infrastructure that allows third-party software. The blockchain used by Bitcoin does not allow any operations other than money transfers. Ethereum allows programmers to add “apps” to the database for various purposes. For example, you can:
- Create a virtual contract on Ethereum. The contract will be open to the public, but contracting parties will still be anonymous.
- You can add a trigger event (e.g., expiration date) to this contract. When this event triggers, the payment will be made automatically. In other words, you can use the system as an escrow account.
Ethereum has no upper limit, so there is no expiration date like Bitcoin. All of these processes run by an artificial intelligence called Ethereum Virtual Machine (EVM). EVM can create a blockchain that can be controlled by users, rather than a centralized system. It was impossible to get back the money you sent in Bitcoin, but if you have signed a contract in Ethereum before, this is possible. In short, using ETH is like switching from Windows XP to Windows 10.
Future of Ethereum
Ethereum’s currency is called “Ether” and abbreviated as ETH. At the moment, 1 ETH is worth 301 USD. There are 94,915,583 ETHs in circulation right now, and the size of the ETH market is estimated at $ 28,567,881,908. Some analysts think 1 ETH will be worth $ 5,300 in 2020. In the same way, it is claimed that by 2020, 1 Bitcoin will be worth 81,700 USD. If you think BTC will be more valuable, you are right, but ETH is advantageous in terms of the rate of increase. The expected increase of BTC is 2.900%, but ETH is expected to increase by 5.300%. In other words, ETH is a better option for investments with a minimum maturity of 5 years.
Of course, all this is just an estimate. Both ETH and BTC can lose value instead of winning. But this is also the rule of the investment world: if you do not take risks, you cannot make a profit. Although there are many alternative currencies in the industry, Ethereum is the leader among them and the only system that has the chance to beat BTC. If current economic indicators continue in the same way, ETH will beat Bitcoin in 5 years. In the meantime, BTC will reach its upper limit and will no longer be able to produce more. But the world of electronic currencies depends on not only economic indicators but also technological developments. In 5 years, a much more sophisticated blockchain technology can be created: in this case, both currencies will depreciate. There is no reason to shift your investments from BTC to ETH at this point, but we advise you to enter the Ethereum system even with little capital. If there is no unexpected development, the future of ETH seems very bright.
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