Bitcoin or Ethereum – strongest cryptocurrencies withstand

 They say there is a cryptocurrency war going on – between Ethereum and Bitcoin. But what is really going on?

Bitcoin or Ethereum – the strongest cryptocurrencies withstand the race

How does Ethereum compete with Bitcoin?

Ethereum has a lot more developers, programmers, and more applications than Bitcoin. The growth in the number of owners of this cryptocurrency is approximately at the level of Bitcoin.

Why Ethereum and Bitcoin Are Successful?

The Bitcoin model is based on behavioral economics and is based on Metcalfe’s Law. According to him, the usefulness or value of a communication system is proportional to the square of the number of its users.

When, for example, Facebook was created, the expectation was that you will bring your acquaintances, relatives and friends to the site. Shareholders and investors will make money on this, not users. Users are rewarded with emotional rewards in the form of communication with friends, likes and reposts.

In the case of Bitcoin, a network was created in which participants received rewards for those they brought with them. The number of participants grew and the rewards increased for everyone. Thus, Bitcoin chose the path of a completely new adaptation of money. It is the reward path that works most effectively.

How is Ethereum fundamentally different from Bitcoin?

How to evaluate the prospects for Ethereum?

This cryptocurrency is completely different and does not really compete with bitcoin. It is possible that Ethereum will become the new foundation of digital value.

Everything that will be of value in the future will be digitized. Ethereum 2.0 is expected to be released soon, which will strengthen the position of this cryptocurrency, reduce inflation and speed up transfers.

To improve both cryptocurrencies, Level 2 solutions are being created. This is a different level of a set of technologies and systems with security measures of the main protocol, the ability to process a larger volume of transactions, accelerate the speed of operations and reduce their cost.

The main difference between Ethereum and Bitcoin

Bitcoin or Ethereum – strongest cryptocurrencies withstand. The main difference between Ethereum is that it is able to change, but this crypto coin is also undergoing development and growth, similar to the evolution of Bitcoin. Look at the Ethereum model from the same angle, that is, by the number of active addresses on the network. Then the development according to Metcalfe’s law becomes obvious. Only growth is observed earlier and faster than Bitcoin.

But what if we compare the price charts of both cryptocurrencies when they had the same number of users? 5 million active wallets, i.e. wallets. This is the approximate amount required to see the onset of network effects. This phenomenon can be traced when the value of something directly depends on the number of consumers. It turns out that with a difference of 4 years, the price was the same and the same growth chart emerges. Both cryptocurrencies are at the same stage of development and are priced the same. This is the network effect.

Why are Ethereum and Bitcoin the most successful cryptocurrencies?

The entire cryptocurrency system is based on the principle of network effects. Many projects and startups are based on it. If there are fewer users after exponential growth, the price falls. Then the project may fail or begin to develop further, but in a different direction with changes in the practice of application. The same fate befell bitcoin – it “survived” and changed. The new growth curve started over and over again.

All existing cryptocurrencies are experiencing similar changes. Those who survive the race become “stronger”.

It is important to understand the development system for such projects. Exponential growth means that the growth rate curve also goes up. Development is constantly accelerating. Crypto exchanges such as Binance, FTX, Coinbase are developing according to this principle. The network effects in this area are incredible. Plus, many large companies build their projects on Ethereum.

In one of the following articles, we will talk about smart contracts based on crypto platforms.

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