Bitcoin vs Ethereum: Who will be the ultimate winner?

Statement: I am not a financial advisor, nor do I tell you where to put money. Both the value of BTC and ETH may fall to zero.

This is a captivating headline because many people ask a meaningless question.

“Which of Bitcoin or Ethereum will be the winner?” This question implies some misunderstandings that do not reflect reality.

Misunderstanding 1: Bitcoin and Ethereum are both currencies, and they should be judged based on their quality as currencies.

Reality: Bitcoin and Ethereum are crypto networks and should be judged based on the value that each network can generate. (BTC and ETH are the currencies used to reward participation in their respective networks).

Misconception 2: BTC vs ETH is a zero-sum game.

Reality: BTC and ETH can complement each other, and asset diversification can reduce risk.

Misunderstanding: Bitcoin and Ethereum are both currencies, and they should be judged based on their quality as currencies.

The reality is that both Bitcoin and Ethereum are decentralized computing networks. They each make engineering trade-offs, which makes them advantageous for some use cases and insufficient for others.

The Bitcoin network is not money-it is cybersecurity

Bitcoin is the most secure decentralized and unchangeable distributed ledger in the history of computing. It is characterized by a Turing-incomplete smart contract, which limits the possibility that bad actors can use it to steal assets on the network. Its security is supported by incredible hashing power, which is It has grown exponentially in the past decade.

Attempting to carry out double-spending on the Bitcoin network will be incredibly costly-so expensive that it is practically impossible to buy enough computer resources and power to carry out a 51% Bitcoin attack (unless Years of investment, and more than US $ 100 billion in this process)

If you have done all these things with all your might, then you only need to mine Bitcoin and get legal profits from it. 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

In order to carry out a double-flower attack. As you will see, you need to purchase a large amount of bitcoin (> 100 billion USD in value) to make this attack feasible, and doing so will increase the price of bitcoin further. The more you buy, the harder it is to continue buying, because you have to find more sellers willing to sell you at a bid. In the process of buying enough bitcoin, you are likely to push the price of bitcoin about 10 times higher, thus pushing your goal further and further (buying a large amount of bitcoin).

2-You need to find enough things to buy with bitcoin in order to get something valuable afterwards

If the attack is successful, it proves that the Bitcoin network is not as safe as everyone thinks, so the value of the ill-gotten wealth you get will quickly plummet. You need to buy and deliver enough other assets to make this attack valuable. As of this writing, it is a bit difficult to find someone willing to sell you a pizza with Bitcoin, let alone assets worth more than $ 100 billion.

3- You need to buy or control enough bitcoin mining equipment to exceed 50% of the existing network

In the past 24 hours, the performance of the Bitcoin network has been 110 million terahash per second. A terahash is 1 trillion hashes. The specific value is too large, it is best to use scientific notation: 1.1×10¹⁴ hash value.

At present, the fastest mining machine on the market (as of this writing, there is no shipment yet, the shipment date is to be determined) is Bitmain Antminer S19 Pro (110TH / sec) You need to buy 550,000 units at a cost of about $ 1.5 billion to launch a 51% attack on the Bitcoin network, but manufacturers are unlikely to produce enough miners at a fast enough rate to allow you to launch a 51% attack.

Even if you can find enough hardware to launch the attack, the total daily transaction volume of bitcoin transactions is less than one-fifth of the investment you need to pay for this attack. Finding enough victims of Shuanghua to make your attack worthwhile will be a difficult task.

Your only option is to attack the mining pool. There are currently three large Bitcoin mining pools, which together control more than 51% of the hash power of Bitcoin. If you manage to gain control of these three mining pools, you may be able to double spend, but the mining pool is not just a controller of hashing power-they are composed of hundreds of thousands of individual miners, each Miners can individually detect double spending and quickly switch their hash power to another mining pool.

In fact, this process can be automated, and once an attack is detected, the participants in the mining pool can be quickly dispersed, which means that you need to focus your double spend on enough transactions to participate in the mining pool Before the reaction comes, transfer them away.

If you can successfully break through these obstacles and evade the double-flower attack, then everyone will know the wallet you used for double-flower. These wallets will soon be blacklisted on every major exchange.

Breaking into the vault is only half the battle. You also need to have enough abilities to get the gold in the vault. Recently, a DeFi hacker on Ethereum was detected because of his identity. In order to avoid punishment, the stolen funds were returned. If you try to initiate a double spend on a network as large as Bitcoin, you will encounter the same problem.

I know that a double spend attack has been successfully performed on a smaller network. However, the difference between Shuanghua on the small network and Shuanghua on the Bitcoin network is like the difference between drinking a glass of water and drinking a sea of water.

All of these security are there to protect money, but to protect the latte you buy, these measures seem to be overkill. The Bitcoin network is particularly good at protecting transactions worth more than $ 10,000. In other words, it is very suitable for the settlement of large amounts of small transactions.

Bitcoin’s constant ledger can also protect data without the need for financial transactions. This operation can always record the next small piece of data on the Bitcoin distributed ledger. These data are the only fingerprints used to identify larger data blocks, including the transaction history of off-chain distributed ledgers, real estate contracts, or hash values of creative works (similar to copyright, trademark or patent protection). These fingerprints can be used as evidence of ownership and do not depend on the legal system of any country.

Using the Bitcoin network, authors can use mathematical laws to prove that they own a document at a certain point in time, providing evidence that can prove their claim of ownership. This evidence is a valid proof of fact in every jurisdiction, and the International Court of Justice is likely to recognize this.

You can use the same method to record receipts for the purchase of valuables, such as real estate, cars, boats, or stocks.

Ethereum network is not money-it is programmable value

Ethereum is good at creating tokens. Tokens can represent some share of ownership, vested interests, controlling votes, access and permissions, sharing control of assets with people you may not trust, and so on.

So far, several key application directions have been born on Ethereum:

Fundraising (see the 2017 ICO boom).
Decentralized Finance (DeFi).
Non-replaceable tokens (NFTs), including many different varieties of Crypto collectibles.

Ethereum may replace the stock system, reshape the insurance industry and break your dependence on bank accounts, savings accounts and loans. Since Bitcoin chose security over flexibility, Bitcoin cannot do these things without establishing a separate, more flexible network (for example, Blockstack and friend) next to the Bitcoin network.

But Ethereum is far less secure than Bitcoin. With these additional flexibility, hackers also have a larger attack surface to take advantage of. But what if you can trade on Ethereum and then periodically record the transaction status on the Bitcoin network for additional protection?

A large number of Bitcoin network transactions do not actually send Bitcoin. Instead, they use protocols like Proof of work and Proof of Existence, and use hashes (data anchors) to protect the data. Bitcoin is currently the safest distributed ledger in the world, and the best way I know to protect this valuable data.

In other words, the Ethereum application can take advantage of the security of the Bitcoin network.

Correct question

The correct question is not which currency will be the winner. That is an irrelevant question. The value of each currency comes from the value of each network, so if you really want to compare assets, you must compare networks.

Bitcoin is a bit like a bank vault . You can store and transfer ownership (including information) of anything in the vault, but you cannot use it to do many other things.

Ethereum is more like a data center. You can pack any type of computer into it for any type of calculation , but there are certain restrictions. Each computer must follow certain rules. You can use many different kinds of computers to pack and calculate different things. But the cost of running these computers in that data center is quite high. For most computing needs, you’d better rent a computer from a centralized supplier like Amazon or Microsoft. When many people who do not trust each other need to reach a consensus on the calculation status (such as financial transactions, etc.), Ethereum is the best choice.

I have seen some tweets suggesting that one day, the Ethereum network may replace the Bitcoin network, and BTC may continue to exist and have all its outstanding financial performance on the Ethereum network.

In theory, this is correct, but since hackers can explore that data center, and there are many interesting ways for these computers to attack each other, so I think this is not a good idea. In my opinion, the enhanced security guarantees of the Bitcoin network can provide security guarantees that Ethereum may never match.

Similarly, by design, Ethereum can do things that the Bitcoin network simply cannot.

Bitcoin exchanges flexibility for security, while Ethereum exchanges security for flexibility.

Both are valuable and worthwhile, and based on their respective returns, the trade-offs between the two are worthwhile.

Both are good complementary networks. You can use Bitcoin to protect tokenized assets traded on Ethereum. If you can use Ethereum’s DeFi protocol to borrow BTC, then BTC will be more useful to holders.

As for the asset itself, BTC vs ETH: currencies have different attributes that are worth considering

Medium of exchange
Value store
Accounting unit

Exchange media : Both are good exchange media, but BTC now has more exchanges (BTC pays and accepts BTC much more than ETH).

Value storage : Both can be good long-term value stores. It remains to be seen which one is better. (Time will be decided).

Accounting unit : Both are currently unstable and cannot be a good accounting unit (hence the stablecoin).

The upper limit of BTC is 21 million (this event is more than 100 years later). Eventually, there will be no more Bitcoin mining (unless most Bitcoin networks agree to change the policy). If when the BTC limit is reached, the Bitcoin network will transition to a transaction fee incentive policy (it always exists). Over time, transaction fees will increase with the relative security of the network. As fees increase, lower-value transactions will be transferred to other networks, while higher-value transactions may remain on the Bitcoin network to improve security.

As the security and settlement layer of the Value Internet, this is not a problem, because transactions are generally quite valuable. The average value of BTC transactions today is about $ 5700. People who trade thousands of dollars do not mind paying a small fee. Today Bitcoin has a thriving fee market. I can’t think of any reason to believe that this market will not grow in the future.

For those who do not need so much security, there are now low-rate and no-rate options, including sidechains and lightning networks. If you can find someone who is willing to accept payment, you can even consume BTC through the Ethereum side chain, the cost is almost zero.

As early as 2011, Satoshi Nakamoto talked about low-fee transactions on state channels. This has always been part of the Bitcoin project and has been very successful for 10 years. Today there is no reason to think that there is any difference.