
Why Ethereum is outpacing Bitcoin - bpierre
https://venturebeat.com/2017/06/11/why-ethereum-is-outpacing-bitcoin/
======
Animats
This is an ad. _" Jack du Rose is a cofounder of Colony, an Ethereum-based
operating system for open organizations."_

Whatever that is. (It seems to be a scheme for monetizing StackOverflow
rankings.[1] Or something like that. If it even exists. The web site is all
pretty pictures with no content.)

Most altcoins crash after a while. See Coin Market Cap.[2]

[1] [https://colony.io/](https://colony.io/) [2]
[https://coinmarketcap.com/](https://coinmarketcap.com/)

~~~
whazor
Colony is a well known organisation in the Ethereum community. Giving
presentations on multiple devcons of Ethereum. Knowing that they have been
around for a while gives him the authority to share his opinion.

------
root_axis
> _As a “hard fork” looms, which looks set to split Bitcoin into two separate
> currencies that will have to fight for custody of the Bitcoin moniker_

This already happened to eth when the creators hard forked the chain in an
effort to roll back operations of an eth application that was used in a way
that the creators did not anticipate. If this didn't kill ethereum why would
it be a problem for bitcoin? Fortunately for bitcoin, there isn't a highly
influential and transparently self-interested creator lording over the
project.

> _Bitcoin transactions can take anywhere from tens of minutes to several
> hours, depending on how busy the network is._

An unsolved growth problem for the reining incumbent that remains unsolved by
ethereum. Transactions take a long time because decentralized proof of work
verification is slow. A lot of people will say "proof of stake is coming!!!"
but it's essentially vaporware and all signs point to the conclusion that it
will remain that way for the foreseeable future. Yeah, people are working on
it, like all vaporware.

> _Ethereum is actually a platform for new kinds of decentralized (often
> financial) applications (dApps) that run on a peer-to-peer network of
> computers_

Except this isn't actually happening in practice. I am yet to see any "new
kinds of decentralized applications", just toy applications that have no
practical purpose besides internet roulette

> _TL;DR: Bitcoin’s dominance is slipping because its utility is limited and
> weakening versus other more recently developed, less politicized
> cryptocurrencies._

Bitcoin's dominance is not slipping because it's utility was marginal to begin
with and eth certainly doesn't offer much in the way of compelling
improvements over bitcoin.

~~~
drcode
> it's essentially vaporware and all signs point to the conclusion that it
> will remain that way for the foreseeable future.

Here's the ethereum proof of stake code that will go live on ethereum sometime
this year:
[https://github.com/ethereum/research/blob/master/casper4/sim...](https://github.com/ethereum/research/blob/master/casper4/simple_casper.v.py)

This is the actual production code (though of course still in draft form,
under review)

> just toy applications that have no practical purpose

The UN uses an ethereum app to send aid to Syrian refugees via vouchers:
[http://www.coindesk.com/united-nations-sends-aid-
to-10000-sy...](http://www.coindesk.com/united-nations-sends-aid-
to-10000-syrian-refugees-using-ethereum-blockchain/)

~~~
root_axis
> _Here 's the ethereum proof of stake code that will go live on ethereum
> sometime this year_

Until it goes live, it's vaporware. The issue isn't "can proof of stake code
be written" the question is "will eth continue to function safely and
correctly using a proof of stake system"? We'll talk when it hits production.

> _The UN uses an ethereum app to send aid to Syrian refugees via vouchers:_

The details are not really clear from the article. How does this work? Why was
this possible with eth but not with bitcoin or dogecoin or any other
cryptotoken? How do displaced Syrian refugees accept, manage, and spend
digital currency? I am highly skeptical of this without lots of details.

~~~
drcode
> Until it goes live, it's vaporware.

That's a ridiculous definition. So nobody can advertise that they plan to add
a novel feature to a piece of software, even if the code already exists in
draft form, without being labeled a vaporware peddler?

~~~
root_axis
The standards are higher for the cryptocurrency sphere which is notorious for
extreme hyperbole, tons of hype, and poor results to match it, _especially_
when you're talking about code that is supposed to solve the single most
difficult problem of blockchain currencies.

~~~
drcode
I agree with you insofar that cryptocurrency protocols involve economic game
theoretic challenges that are impossible to fully validate without running in
full production. It's 100% fair to remain skeptical of POS until we see a
successful launch of the system... but that's different than saying something
is "vaporware".

------
dpc_pw
The whole reason why Ethereum is "outpacing" Bitcoin is easiness of taking
money from clueless "investors" that feel like they missed the boat on
becoming rich through Bitcoin. [https://medium.com/@WhalePanda/i-was-wrong-
about-ethereum-80...](https://medium.com/@WhalePanda/i-was-wrong-about-
ethereum-804c9a906d36)

It's going to be a big mess, one this bubble pops.

~~~
gfodor
People have been expecting the crypto bubble to pop for almost a decade now,
but prices continue to rise.

At some point you have to admit that this isn't tulip bulbs.

~~~
avaer
Prices continually rising is an argument for how this _is_ tulips.

The valid counterargument would be that the tulips are largely being used for
something other than trading tulips.

~~~
brianwawok
Tulips have SOME intrinsic value. If doomsday comes, the world is over.. a
toolip can be planted outside your house and it looks a little bit more
pretty. Or maybe you can eat it.

Gold has SOME intrinsic value. It is very good for certain applications, I
believe trace amounts are used in compute parts. Worst case you can make
something shiny to look at, that will be rust proof and easy to shape.

What is the intrinsic value of ETH or Bitcoin? It literally has nothing to
back it.

~~~
komaromy
For ETH, that's not really true: you can use it to pay for computation on the
Ethereum blockchain. The value you assign to that computation may not be very
significant, but it's hard to justify the notion that it's zero.

~~~
avaer
I'd argue the value of the computation is strictly less than zero, because I
could do it cheaper without using Ethereum at all.

~~~
wayn3
thats like saying that the value of gasoline is less than zero because you
could just walk the distance without polluting the environment.

computing power is inherently valuable. the value of AWS is less than zero
because you could just buy a computer and do the computation cheaper at home.
duh.

~~~
avaer
The value of the trickle of gasoline to get me to my kitchen is less than
zero. To use it I would have to waste considerable money architecting a way to
get my car indoors.

The value of AWS is greater than zero because spending my day monitoring my
server would be exponentially more costly than paying Amazon to do it at
scale.

And Ether is worth less than zero (as a computation engine) because I could
develop and run the computation in less time by opening vim, even if the Ether
was free.

------
jraines
The ICO mania definitely contributes to this, but so does the worry about a
Bitcoin split. I've read a lot about it and could not give you a coherent
answer of what is likely to happen and what would be the impact if it does or
does not happen. So people like me (probably in top 5% of knowledge among
Bitcoin holders about the technical aspects) put holdings in other coins to
wait and see.

The coins that stand to benefit most from this are the ones traded on GDAX --
Ether and Litecoin. And Ether has the most breathless hype going for it right
now. And this is the same advice I give to the non-technical people in my life
who've jumped in late and don't have a Poloniex or Bittrex account to trade
other coins (sign up for GDAX, balance things with a wait-and-see attitude
towards August 1st).

BTW - my 89 year old farmer grandpa who can't even get wired internet at his
house now has a crypto portfolio, in case you're looking for bubble
indicators. (And if you ask why my advice wasn't to avoid an investment you
don't understand -- well, I am bullish on crypto long term and they really
wanted to get in, and view it as a gamble, so . . .)

~~~
DiNovi
I assume you sold him on the investment tho

~~~
jraines
He sold himself just on whatever is said on Bloomberg etc. And he views it
about like laying $$$ on the Georgia Bulldogs to cover against Alabama, so I'm
not going to put up a fight.

------
pdog
It's pretty clear what's happening. Ethereum (ETH) is rising because people
are buying into initial coin offerings (ICOs). They aren't holding ETH, so
they don't care about the price of ETH rising in terms of Bitcoin (BTC) or
dollars. The ICOs are the significant holders of ETH. They haven't sold their
ETH because 1) the price of ETH is still rising rapidly, 2) they don't yet
need to access the funds for development, and 3) smart contracts connected to
token sales usually allocate ETH for future use. Eventually, ICOs will begin
to sell or distribute their ETH to fund the development of their projects.

~~~
JohnJamesRambo
I don't think that is true at all. Most people can't even get in on the ICOs.

~~~
mtgx
It's not about "most people," it's about "most cash."

The "whales" are buying ICOs left and right, and dumping their Bitcoin/other
altcoins. That's the main reason for ETH's rise.

Eventually some of these ICOs will prove to be scams, or will get hacked with
catastrophic results, and ETH's price will fall again. It doesn't necessarily
mean it won't rise back-up again, but by then we'll just have to see if ETH is
still a top 2 coin to get.

~~~
JohnJamesRambo
Ok show me data on what percent of the market cap is from ICOs. Bancor's
recent debacle raised 150 million and that is the largest ICO yet. Ethereum
has a 36 billion market cap as far as I know.

~~~
krrrh
It's a question of liquidity, not of "market cap".

------
opportune
Could someone that understands crypto better than me explain why Bitcoin's
fees and transactions times have become so high all of a sudden? Is it just a
matter of network congestion, or does it have as its root some underlying
mathematical factor instead?

Hoping to get a better answer here than on reddit. /r/bitcoin and /r/btc are
both biased echo chambers.

~~~
marcell
Bitcoin blockchain has a limit of 1MB of transactions in a block. This was set
in 2013, when Satoshi put it in place. He didn't give much explanation for it,
but it was probably to avoid a spam attack. He said it could be raised later:
[https://bitcointalk.org/index.php?topic=1347.msg15139#msg151...](https://bitcointalk.org/index.php?topic=1347.msg15139#msg15139)

There are arguments for and against increasing the blocksize.

For:

\- Support more transactions per second

\- Lower fees for users

Against:

\- Hardfork requires all full node operators to upgrade, or they could see
incorrect balances

\- Lower fees mean that miners make less money

Also, generally, there are some philosophical differences between the sides.
The big-block side usually wants bitcoin to be more like a payment network,
wherease the small-block side typically views it more as digital gold and
store of value.

~~~
zby
"Lower fees mean that miners make less money" \- not really. There are two
mechanisms:

    
    
      1. The congestion would mean bigger fees
      2. In bigger blocks there will be more transactions - so more fees in the block
    

The most probably cancel each other.

Actually the big miners seem to be in favour of the Bitcoin Unlimited big
blocks. What they want to stop is SegWit which is needed for scaling bitcoin
off chain with Lightning etc. There is a conspiracy theory about that - and it
actually makes sense to me - which is that SegWit would eliminate ASICBoost
(which is an optimization technique that is implemented in some ASIC miners).
But there is also another narrative that Lightning would mean banking entering
the Bitcoin community - and that is why it should be stopped.

Bitcoin can never become a good payment processor - this would require many
orders of magnitude bigger blocks (now bitcoin can process about 7
transactions per second, VISA can process 50K transactions per second). And
while storage for bigger blocks grows linearly - the other algos have probably
worse complexity.

------
Tommek
So a guy from a company selling Ethereum is telling us why it's better then
the stuff they've copied?

------
nemo44x
It's simple - Bitcoin is stagnant and full of politics and holy wars where as
ETH is implementing everything Bitcoin promised 5 years ago.

Bitcoin is facing an existential crisis August 1st (UASF) that some view as
liberation and others as extortion. As if BTC wasn't high risk enough!

Yes we haven't seen a single ICO that has resulted in anything worth anything
yet and we probably shouldn't any time soon. Yes the rise in ETH the last few
months is comical. Yes there are plenty of scams out there right now and some
we don't even know are scams yet. But it's damn exciting.

Anyone with an imagination can see this. It's the wild west and it's fun and
crazy. And there's a real opportunity here to do something different. 99.9% of
these early things are going to fail but there will be a breakthrough
eventually I believe. And when that happens...

~~~
drcode
Nicely said!

And we should add to that that the exciting parts of ethereum may never fully
exist in ethereum itself: It's totally plausible that this tech could instead
be adopted by another project before becoming wildly successful. However, this
doesn't make ethereum tech any less interesting.

------
pazimzadeh
Between this and Fred Wilson's recent comments, it's pretty neat seeing a meme
take shape right before our eyes.

I'm not saying this article is wrong, but that it offers little substance.

My pet theory is that Ethereum will transiently surpass Bitcoin in market cap
in the next weeks, triggering a 5x surge in Bitcoin's price. Ethereum will
then follow, and what happens next is anyone's guess. Why do I think that?
Uh..heuristics.

~~~
aaron-lebo
Why is Ethereum's price rising? It's because of breathless articles like this.
It's a self-fulfilling prophecy. Wonder how much this guy has invested?

If those dapps are so great, why isn't there a single one that regular people
are using today?

~~~
DiNovi
You could say that about the internet 30 years ago...

~~~
root_axis
And? You're remarking on a surface-level resemblance to the greatest
communication and economic innovation in human history. It's a disingenuous
comparison.

~~~
Jenya_
Judging by the size of financial industry, the electronic money which could be
programmed to do things with money without human help 24 hours per day is a
serious threat to many companies in finance.

~~~
root_axis
> _do things with money without human help 24 hours per day_

This was already possible before cryptocurrencies, hence how I'm able to buy
anything online at any time of day and have it delivered to me within 24
hours.

~~~
DiNovi
blockchains with smart contracts can automate away entire financial
industries; title holding company comes to mind.

~~~
root_axis
Explain how smart contracts would automate away a title holding companies.

------
webninja
A lot of articles mention the likes of Intel, Microsoft, Infosys, Samsung,
J.P. Morgan etc — are building software using Ethereum or some other
blockchain platform. But I wonder if they actually are just forking the code
off of Github and creating their own blockchain or ethereum-based Microsoft
token, or Intel token for their own internal use and this is being
misrepresented by cryptocurrency-owning journalists.

It seems to be too risky for big companies to build DApps for the authentic
Ethereum when they can't predict that the price of gas won't quadruple again.
Creating their own blockchain could mean cheaper or free gas with all of the
upsides to using ethereum and an added customization ability.

If this is true, then the price increases in ethereum have been unfounded.

~~~
wideem
Other companies use private ethereum blockchains. The worst part is that
Ethereum community called Ripple a scam coin because banks don't actually use
it for transactions but they didn't care to realize that ethereum is the same

------
Taek
> Ethereum has raced ahead with technology that not only does everything
> Bitcoin can do faster, in higher volume, and at lower cost — it does a lot
> more besides.

Statements like these frustrate me, because they paint a picture as though
Ethereum is a strict upgrade to Bitcoin, without depicting the many sacrifices
that Ethereum has made to get its advantages. The word blockchain in general
has completely changed meaning - no longer does it specify systems where there
is no trust involved, instead it specifies systems that create a high
interoperability between money and applications.

There's a huge difference in the security and decentralization model of
Bitcoin and Ethereum. Bitcoin has no central leadership, actively rejects the
pursuance of one, and works hard to build a network that simply can't be
attacked.

Ethereum on the other hand has a powerful central leadership, and moves faster
and does things that are in general far less secure. When they hit road bumps
like the DAO attack, the 'Spurious Dragon' chain split, or other major network
events, they fall back on their central leadership to resolve the issue
quickly.

That's really not decentralized, and it's completely different from the vision
that Bitcoin originally painted. It's a completely valid model, and it's a
step up from using a fully centralized platform like the Google Cloud, but
ultimately the Ethereum foundation and surrounding leadership has the ability
to push through controversial changes, something that is strictly rejected by
the Bitcoin philosophy. It's also not clear what will happen if someone like
the US Government leans into the Ethereum Foundation asking for things like
capital controls. Bitcoin doesn't have a leadership for the government to lean
into - it's going to be a lot harder to add captial controls to Bitcoin than
to Ethereum. Depending on who you are, that's either an advantage or a
disadvantage, but at the very least it's a very clear distinguisher.

For that reason, Bitcoin is far more interesting to me as a technology. It's
the first and really only, technology that allowed something like a monetary
system to stand completely independent of a leadership or a governance
structure. Ethereum hasn't achieved the same thing, that much is made obvious
by the fact alone that they don't know what the core consensus algorithm of
the network will be in 18 months (maybe it will switch to a yet-undefined
Proof-of-Stake, maybe not).

Don't get me wrong. Ethereum is doing interesting things. They've completely
changed the way people thing about money and applications, and made it
possible to apply money to everything. But it's far less secure, and it
Ethereum today simply wouldn't work without its central leadership. To me,
that makes it not much different from any other technology out there - its
giving us new and more efficient ways to do things that we have already been
doing.

But anybody who thinks that Ethereum is a strict upgrade to Bitcoin has
completely missed the point, because Ethereum does not have the core value
proposition that Bitcoin provides. Bitcoin is a complete financial system that
you can use without needing to trust anybody. Not the developers, not the
miners, not the government. Bitcoin is extremely impressive, and definitely is
a technology in a class of its own.

------
yellowapple
"In a world where people are used to online payments being confirmed
instantly, Bitcoin transactions can take anywhere from tens of minutes to
several hours, depending on how busy the network is."

Online payments (via traditional means) are by no means "confirmed instantly".
The _authorization_ happens more-or-less instantly, but that's only the first
of multiple steps in the transaction process; the actual transfer of funds
often takes at least one business day, if not more.

~~~
theptip
There's two ways of interpreting "online payments" here. Through the lens of
ACH/wire payments, your point is spot on.

However, I suspect the author meant Venmo/Paypal etc.; that's certainly how I
interpreted the sentence. I'd argue that those services are better comparisons
for P2P payments, especially in the US, where most consumers are not able or
inclined to give out their bank information to receive an ACH payment.

Compared to those incumbent online P2P payment services, Bitcoin really is
starting to lag behind in that regard.

~~~
yellowapple
"However, I suspect the author meant Venmo/Paypal etc."

And my remark is still applicable there, since they're basically just
frontends to the traditional ACH/wire payment system (at least in the case of
Paypal; I haven't used Venmo much, so I'm not as familiar with how it works).
Unless Paypal is paying the seller before receiving actual funds from the
buyer, I'm not really seeing how this would be any different of a situation.

~~~
theptip
Well, in that case I disagree with your point ;)

From a user's perspective, the transaction is confirmed when the app says
"transaction confirmed", i.e. the second you press the "send money" button. I
think that's what the OP was getting at.

As you correctly point out, the transaction could still bounce if the user has
insufficient funds, but that's not in the happy path. Most users' experience
with Venmo/Paypal is that they get a "confirmation" immediately, and then they
move on. The happy path for a BTC transaction involves minutes to hours of
time without even getting a _provisional_ ACK from the network, at any point
in which your payment could fail and require a retry, or the payor could
cancel.

(The time taken to finalize the payment is much less with BTC, but since
modern payment systems paper over that detail, I argue it is not relevant to
the user-facing concern that the OP is commenting on. Perhaps it is something
that users _should_ be more concerned about, but consider the use-case of
trying to buy a cup of coffee with BTC. Nobody is going to wait 2 hours for a
transaction to complete in that use-case.)

------
cap3
the only way to be in on ether is to hold it. That's true for individuals and
for large institutions joining the Enterprise Ethereum Alliance. Behind the
scenes, large institutions are buying up Ether and anticipating that it will
become a part of the financial system (either that or it will become a shadow
financial system, and they are therefore incentivized to be early adopters).
There's no way to short ether or bitcoin. Everyone who is in is long. dapps
don't do much right now (and there's a lot of writing about ponzi scheme
dapps), but this is very early days and the flexibility of the ethereum
platform is just starting to be fully understood. The article is right about
the limitations of the bitcoin blockchain. Some commenters here are right
about pieces like these being great advertisements for the platform and
driving more buying. 1 Ether > $1000 USD in a matter of months, if not weeks.

~~~
polskibus
Do you have a citation for large organizations buying up ether? I only came
across articles mentioning corporations forking ethereum code and testing it
out for other purposes.

~~~
headcanon
[https://entethalliance.org/members/](https://entethalliance.org/members/)

~~~
polskibus
Where does it say they are buying up ethereum?

------
F3L
I have a question regarding the morality of buying these coins: 1\. In buying
I provide liquidity and add to the perception they have value. 2\. I am aware
they are a big Ponzi scheme and vulnerable people may lose money they cannot
afford to. 3\. However altcoins may be a "too big to fail" Ponzi scheme, which
like the property market, will rise seemingly forever. 4\. I would rather be
on the inside than the outside if it does. I'm on the outside of the property
market in the UK after correctly assessing it was a pyramid, but wrongly
believing it would crash and not be propped up. 5\. Good and vulnerable people
might lose their savings because I have enabled a perception that these
markets are not pyramid schemes.

Please advise.

------
cdrark
Research the exchange Poloniex. They have played a major role in the creation
of tens of billions USD in "value" in altcoins over the past 2 months. There
is zero transparency on their operations or ownership or supposed licensing.

~~~
DiNovi
Polo Exchange is sketchy; but Ether is on many, many exchanges now

------
qeternity
Why Ethereum's _price_ is outpacing Bitcoin - FTFY

The pace of adoption leaves much to be desired. And if you think bitcoin is
hard for the layperson to understand, ethereum is a whole other can of worms.

~~~
headcanon
Ethereum's adoption has already surpassed Bitcoin's with several metrics:
number of transactions, trading volume, mining reward, and number of nodes.
ETH also has ~80% of BTC's market cap.

True, it does not have the name recognition that Bitcoin has, but its not just
a price bubble that is driving this.

This site has real time updates as to the status of the "flippening":
[http://www.flippening.watch/](http://www.flippening.watch/)

~~~
aaron-lebo
Every single one of those metrics could be driven by speculation, they don't
say anything about real-world adoption.

------
X86BSD
I don't follow the cryptocurrency world much. The last time I tried to really
look into all the coins I bought some Monero. Monero seems the most sound
technically and cryptographically.

Can someone explain to me why one alt coin like etherum gets more
attention/value than others? What is it doing that is novel, or makes it more
secure, or more anonymous than say Monero?

------
maxxxxx
Isn't that basically a currency with hyper-deflation? Shouldn't a currency be
relatively stable to be useful for payments?

~~~
aakilfernandes
Absolutely agree, and Ethereum is a great platform for building those stable
currencies. Check out Stabl and Maker for two orgs trying to make this happen.

But its also trivial to issue fiat-backed tokens on Ethereum (at least from a
technical PoV). See Digix who is doing this with Gold.

