Ethereum takes second place in the cryptocurrency hierarchy. Ethereum is under bitcoin by market cap and monetary value. Although in terms of blockchain technology, Ethereum is considered far more advanced because it has more diverse functions than just a ledger to record transactions.
Ethereum is widely recognized as a functional blockchain. Not only is it a database that records transactions between users, but it also has several other features, such as creating smart contracts and creating decentralized applications (dApps).
The first idea came from Vitalik Buterin, co-founder of Bitcoin Magazine. He released a report on his proposal to implement new functionality in the blockchain. The idea then attracted the interest of many people and received technical and financial support. Until finally, Ethereum was actually created and fundraised via ICO in June 2014.
The Ethereum blockchain has a native coin named Ether (ETH). The coin is the main transaction tool that can be used across blockchains with the most basic functions as a fee to pay gas fees in every transaction process, creation of smart-contracts and also dApps.
Advantages of Ethereum over Bitcoin
In many opinion, Ethereum is said to be able to replace bitcoin as the top cryptocurrency in the future. They have a high value of Ethereum and consider it more than bitcoin.
Ethereum itself is considered better than Bitcoin based on 5 things, including:
1. Ethereum can process transactions faster
Since it was first developed, the Ethereum blockchain has offered a faster verification process than the Bitcoin blockchain. In comparison, if Bitcoin takes 10 minutes to verify, then it’s the same as 10 seconds on Ethereum.
What’s more Ethereum 2.0 is in progress. This is an upgrade of the Ethereum blockchain that focuses on upgrading in several ways, one of which is processing speed. So that in the future, the speed of Ethereum in completing the transaction process will be much faster than the previous version of the Ethereum blockchain and will not even match when compared to the Bitcoin blockchain.
2. Using an environmentally friendly Proof of Stake consensus mechanism
In addition to the increase in speed for processing transactions, Ethereum has also changed the consensus mechanism used from Proof of work (PoW) to a Proof of Stake (PoS) mechanism. Proof of Stake is considered better because it is environmentally friendly.
Previously, when Proof of Work (PoW) was still in use, network nodes and miners verified blocks by decrypting the cryptographic code in the blockchain using high-specification computer devices. These activities not only cost a lot of money for the purchase of equipment and maintenance, but also consume a lot of electricity.
Based on data from the Cambridge Center of Alternative Finance (CCAF), electricity consumption for Bitcoin mining activities consumes around 110 terrawatt hours per year or around 0.55% of global electricity production. Meanwhile, the majority of power plants currently still use fossil fuels, such as coal and the like. So that the increase in electricity consumption is the same as the increase in the use of these fuels which has an impact on increasing carbon and waste.
Meanwhile, the proof of Stake (PoS) mechanism is different. There is no mining activity in this mechanism, so it doesn’t need a lot of electricity to run computer equipment. Instead of mining, the PoS mechanism requires that potential validators show proof of ownership of a certain number of crypto coins before participating in the validation process.
3. Has a smart-contract creation feature
Smart-contract is a feature for making agreements with other parties and will be stored in the blockchain and can run automatically when predetermined conditions are met. This feature is one of the main differences between the Ethereum blockchain and the bitcoin blockchain.
The use of Smart-contracts is not limited to economic or business agreements. But even as the core logic in the development of a dApp.
4. Allows the development of dApps
Apart from smart-contracts, Ethereum also allows the development of dApps on top of its network. dApps are decentralized and open-source software built on Blockchain. This is possible because the Ethereum blockchain has a virtual machine or Ethreum Virtual Machine (EVM), which works like a computer and has its own programming language.
To date, there have been many dApps projects developed on top of Ethereum. Some of them are Uniswap (a cross-blockchain crypto exchange platform), Foundation (Art trading platform) and many more.
5. Ethereum has a more solid developer community
The Ethereum blockchain is currently in the process of being upgraded to Ethereum 2.0. This is the first major step in the development of cryptocurrency blockchain technology. What’s more, Ethereum is a decentralized and open-source network, where the process of developing or implementing ideas in general can only happen when everyone in the developer community agrees.
The Ethereum blockchain upgrade is proof that the Ethereum developer community is truly alive and active in supporting the progress of Ethereum. Compared to other cryptocurrencies, and even bitcoin which is the leading cryptocurrency, Ethereum still has a more solid developer community.
Conclusion
So, with these reasons, Ethereum is considered to overtake Bitcoin and dominate the cryptocurrency market in the future. Because if an assessment is made on blockchain technology which is a fundamental factor of the cryptocurrency itself, surely Ethereum has superior fundamentals and should have a higher value.
But, even so, some people who are fanatical about bitcoin still believe that bitcoin will be on top. Both in terms of market capitalization and monetary value. Bitcoin as the first crypto currency is highly valued because it is the pioneer of the decentralized financial system that has developed so far. In short, if bitcoin didn’t exist, there wouldn’t be Ethereum and other cryptocurrencies either.
