Bitcoin VS Ethereum: Who Will Be The Ultimate Winner?
Editor's Note: This article comes fromCrypto Valley Live (ID: cryptovalley)Editor's Note: This article comes from
Crypto Valley Live (ID: cryptovalley)
Crypto Valley Live (ID: cryptovalley)
, Author: Eric Elliot, translation: Ling Jie, reproduced by Odaily with authorization.
Disclaimer: I'm not a financial advisor, nor am I telling you where to put your money. Both BTC and ETH could drop to zero in value.
It's a lead-off headline because a lot of people ask a question that doesn't make sense.
"Which will be the winner, Bitcoin or Ethereum?" This question implies some misconceptions that do not reflect reality.
Myth 1: Bitcoin and Ethereum are both currencies and should be judged on how good they are as currencies.
Reality: Bitcoin and Ethereum are cryptographic networks and should be judged by the value each network is able to generate. (BTC and ETH are the currencies used to reward participation in their respective networks).
Reality: BTC and ETH can complement each other, and asset diversification can reduce risk.
Misconception: Bitcoin and Ethereum are both currencies and should be judged on how good they are as currencies.
The reality is that both Bitcoin and Ethereum are decentralized computing networks. They each have engineering trade-offs that make them good for some use cases and bad for others.
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The Bitcoin Network Is Not Money — It's Cybersecurity
Bitcoin is the most secure decentralized, immutable distributed ledger in computing history. It features non-Turing (Turing-incomplete) smart contracts, limiting the potential for bad actors to use it to steal assets on the network, and its security is backed by incredible hash power, which in has grown exponentially over the past decade.
Attempting to double-spend on the Bitcoin network would be incredibly costly - so expensive that it would be practically impossible to buy enough computer resources and electricity to conduct a Bitcoin 51% attack (unless a years of investment, and over $100 billion in the process)
If you do these things with painstaking efforts, then you only need to mine Bitcoin and make a legitimate profit from it, and your economic situation will be much better.
To double spend on the Bitcoin network, you need to do the following:
1 - Get a wallet with enough bitcoins
for double-spend attacks. As you'll see, you'd need to buy a lot of bitcoin (>$100 billion in value) for this attack to be feasible, and doing so would drive the price of bitcoin even higher. The more you buy, the harder it is to keep buying because you have to find more sellers willing to sell to you at their bid. In the process of buying enough bitcoins, you will likely push the price of bitcoins up by a factor of 10 or so, thereby pushing your goal (buying a lot of bitcoins) farther and farther.
2 - You need to find enough stuff to buy with bitcoins to get something of value after the fact
If the attack is successful, it proves that the Bitcoin network is not as secure as everyone thinks, so the value of your ill-gotten gains can quickly plummet. You need to buy and deliver enough other assets for this attack to be worthwhile. As of this writing, it's a little hard to find anyone willing to sell you a pizza for Bitcoin, let alone an asset worth $100 billion or more.
3- You need to purchase or control enough bitcoin mining equipment to exceed 50% of the existing network
Over the past 24 hours, the Bitcoin network has performed at 110 million terahashes per second. One terahash is 1 trillion hash values. The specific number is too large, and it is best expressed in scientific notation: 1.1x10¹⁴ hash value.
The fastest miner currently on the market (as of this writing, not yet shipped, shipping date to be determined) is the Bitmain Antminer S19 Pro (110TH/s). You'd need to buy 550,000 units at a cost of about $1.5 billion to 51% attack the Bitcoin network, but it's unlikely that manufacturers will produce enough miners fast enough for you to 51% attack.
Even if you could find enough hardware to carry out the attack, the total daily volume of bitcoin transactions is less than a fifth of the investment you would need to double pay to carry out the attack. Finding enough double spend victims to make your attack worthwhile will be hard work.
Your only option is to attack the mining pool. There are currently 3 large Bitcoin mining pools that collectively control over 51% of Bitcoin’s hash power. If you managed to gain control of these 3 mining pools, you might be able to double spend, but mining pools aren't just controllers of hash power - they're made up of hundreds of thousands of individual miners, each Miners can individually detect the double spend and quickly switch their hash power to another pool.
The fact that this process can be automated and the pool's participants dispersed quickly once an attack is detected means that you need to focus your double spending on a small enough number of transactions to allow participation in the pool Move them away before the person reacts.
If you can successfully break through these obstacles and escape the double-spending attack, then everyone will know the wallet you used for double-spending. These wallets will soon be blacklisted on every major exchange.
Breaking into the vault is only half the battle. You also need to be strong enough to get the gold in the vault. Recently, a DeFi hacker on Ethereum was detected and returned the stolen funds in order to avoid punishment. If you try to initiate a double spend on a network as large as Bitcoin, you will run into the same problem.
I know of successful double spend attacks on smaller networks. But the difference between a double spend on a small network and a double spend on the Bitcoin network is like the difference between drinking a glass of water and drinking an ocean.
Bitcoin's immutable ledger also protects data without the need for financial transactions. This operation can forever record a small piece of data on the Bitcoin distributed ledger. This data is the unique fingerprint used to identify larger blocks of data, including the transaction history of off-chain distributed ledgers, real estate deeds, or the hash value of creative works (similar to copyright, trademark or patent protection). These fingerprints can be used as evidence of ownership, independent of any country's legal system.
Using the Bitcoin network, authors can use mathematical laws to prove that they owned a document at a certain point in time, providing evidence that can substantiate their claim of ownership. This evidence is a valid proof of fact in every jurisdiction and the International Court of Justice will likely recognize it.
You can use the same method to record receipts for purchases of valuables such as real estate, cars, boats, or stocks.
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Ethereum is great at creating tokens that can represent fractional ownership shares, vested interests, controlling votes, access and permissions, sharing control of assets with people you may not trust, and more.
Decentralized Finance (DeFi).
So far, several key application directions have been born on Ethereum:
Fundraising (see 2017 ICO boom).
Decentralized Finance (DeFi).
Non-fungible tokens (NFTs), including digital collectibles of many different varieties.
But Ethereum is far less secure than Bitcoin. With this extra flexibility, hackers also have a larger attack surface to exploit. But what if you could make a transaction on Ethereum, and then periodically log the state of the transaction on the Bitcoin network for extra protection?
A large number of bitcoin network transactions do not actually send bitcoins. Instead, they use protocols like Proof of Work and Proof of Existence to secure data with hashes (data anchors). Bitcoin is currently the most secure distributed ledger in the world, and the best way I know of to protect this valuable data.
In other words, Ethereum applications can leverage the security of the Bitcoin network.
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correct question
The right question is not which currency will be the winner. That's an irrelevant question. The value of each coin comes from the value of each network, so if you really want to compare assets, compare networks.
Bitcoin is a bit like a bank vault. You can store and transfer ownership of anything in a vault (including information), but you can't do much else with it.
Ethereum is more like a data center, you can pack any type of computer into it to perform any type of calculation, but there are certain limitations. Every computer follows certain rules. You can pack a lot of different kinds of computers and compute different things. But the cost of running those computers in that data center is pretty high. For most computing needs, you're better off renting a computer from a centralized provider like Amazon or Microsoft. Ethereum is the best choice when many distrustful people need to reach a consensus on the computational state (such as financial transactions, etc.).
I've seen some tweets suggesting that one day, the ethereum network might replace the bitcoin network, and that BTC might live on with all of its great financial performance on top of the ethereum network.
In theory this is true, but since hackers can explore that data center, and there are so many interesting ways for those computers to attack each other, I don't think it's a good idea. In my opinion, the enhanced security guarantees of the Bitcoin network can provide a security guarantee that Ethereum may never match.
Likewise, by design, Ethereum is able to do things that the Bitcoin network simply cannot.
As for the asset itself, BTC vs ETH: Currencies have different properties worth considering
medium of exchange
store of value
unit of account
medium of exchange
store of value
unit of account
Medium of Exchange: Both are good mediums of exchange, but BTC has more exchange opportunities now (BTC is paid and accepted by many more people than ETH).
Store of value: Both can be good long-term stores of value. As to which is better remains to be seen. (time will determine).
Unit of account: Neither is currently stable enough to be a good unit of account (hence stablecoins).
As the security and settlement layer of the Internet of Value, this is not a problem because transactions are generally quite valuable. The average value of a BTC transaction today is around $5,700. People whose transactions are worth thousands of dollars don't mind paying a small fee. Bitcoin has a thriving fee market today. I can't think of any reason to think this market won't grow in the future.
For those who don’t need as much security, there are already low-fee and no-fee options, including sidechains and the Lightning Network. If you can find someone willing to accept payment, you can even spend BTC through an Ethereum sidechain for almost zero fees.
Satoshi Nakamoto talked about low-fee transactions on state channels back in 2011. This has always been part of the Bitcoin plan, and it has been very successful for 10 years. There's no reason to think it's any different today.
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Bitcoin vs Ethereum?
