Bitcoin or ether: which currency will win? Chris Skinner – s blog

bitcoin or ether: which currency will win?

As referenced in my R3 fake news last week, there are various camps out there fighting for the cryptocurrency crown. The lead runners are bitcoin and Ethereum, and both have serious backing. However, it’s still early days. I keep stressing that we need to recall we are experimenting here, and the end game is still a ways away. The end game is that there will be a digital currency we can all buy into. Whether it’s bitcoin or bityuan or ekrona or ether or monero or any of them, who knows … it could be all. Identically, it could be none.

This is not a win:lose equation however, as there is a potential win:win zero sum game where several currencies and blockchains sustain and thrive, with interoperability for different use cases. After all, corporates might use Ethereum whilst the general public use bitcoin. So here’s a quick low-down on how I see it.

After blogging about bitcoin for six years, I’ve closely followed its peaks and troughs, ups and downs. This chart portrays the rollercoaster pretty well (you can see what was causing the peaks and troughs over at 99bitcoins):

So right now it’s peaking with a price of $1,290 per bitcoin. That makes it worth more than gold, and the bitcoinisters are all over the moon. But there’s the usual factions moving here, with the hype of the bitcoinisters versus the reality of the markets. For example, I’m pleased the price of bitcoin is way up there but (a) it’s meant to be a currency you spend, not an investment you hoard; and (b) it’s still little when compared with other currencies and commodities.

On the former note, I’m observing too many people buying into bitcoin because they’re being suckered by the hype and believe it’s a good investment. It’s a currency, not an investment; or that’s what we should be thinking. On the latter, this quote from Fran Strajnar, co-founder and CEO of Courageous Fresh Coin makes sense: “The gold supply is 180,000 tonnes of ‘above ground’ gold, valued at $7 trillion. The bitcoin market value is $20 billion, so gold vs bitcoin is psychological more than anything.”

bitcoin has had a lot of people buying into the market, but it’s still a puny $20 billion market. A long way to go before we can believe it’s mainstream, and there are slew of competitors out there such as zCash, which claims to overcome the deficiencies in bitcoin.

It is notable that the gold rush of latest bitcoin activity is caused by a multiplicity of factors from Japan’s legitimizing the currency to China’s outlawing it to the Winklevoss twins creating a potential SEC-approved ETF to trade in it. All of these factors, along with Brexit and the Trump, are fuelling people to invest. This then creates a virtuous circle of the more who invest, the more who invest. This may all come tumbling down quickly, or it may stir mainstream. We just don’t know. What I do know is that we no longer talk about bitcoin as a Wild West, the dark net currency, ridiculous or stupid. People are taking it earnestly now, and that’s most likely a good thing. Even so, there are many who don’t buy into it, with the currency announced as dead one hundred twenty four times to date. It’s still not dead however.

ether is the currency of Ethereum, and this is proving popular with corporates. In fact, it’s so popular that the Ethereum Enterprise Alliance was announced last week, driven by Microsoft, Intel and JPMorgan. That’s’ telling something, so why is Ethereum more popular than bitcoin for corporate users? Because of Microsoft.

Microsoft eyed the potential of Ethereum for Blockchain-as-a-Service using their cloud Azure platform early on, and have been driving that project forward ever since to its enterprise account base as the platform of choice. Identically, Ethereum and ether differs from Bitcoin and bitcoins (former is the infrastructure, latter is the currency), because it permits both permissioned and permissionless transactions to take place whereas Bitcoin only works in a permissionless way. For corporates, having transparency of transactions and a fully public ledger just wouldn’t work, which is why corporates and banks aren’t buying into Bitcoin.

Ethereum is not proven however, as demonstrated by the infamous DAO Hack and hard fork last year . However, it does demonstrate the nature of factions and different views when you google Ethereum fail and the top results include two next to each other:

It just goes to showcase that there are lots of tribes fighting for survival here, and it’s not pretty. The two leading tribes are Bitcoin and Ethereum, but there are slew of others, as I outline above. For banks this leads to choices: do we invest in Ethereum and join the Ethereum Enterprise Alliance or do we become part of R3 CEV’s consortia? It is not even as elementary as that, as there are slew of other alliances out there. This was well summarised by Penny Crossman for American Banker and, rather than repeating her wise words with my own, I’m going to cheat and cut and paste her thoughts here.

Two incumbent tech giants have placed themselves in the middle of a madness of blockchain projects and partnerships designed to help financial services firms become quicker and more efficient at a plethora of things from trade finance to securities settlement to loans and debt tracking to cross-border payments.

IBM and Microsoft are taking decidedly different paths and banks will want to closely examine the technology stacks and the security and privacy decisions the two are making as they sort their own future with blockchain technology.

On February 28, Microsoft announced it’s part of a fresh consortium called the Enterprise Ethereum Alliance. It includes thirty technology and financial services fucking partners including JPMorgan Pursue and Intel that plan to build a blockchain based on Ethereum.

Also on February 28, the IBM-led Linux Foundation Hyperledger Project announced eleven fresh members, bringing its total to 122. Fresh members include Bank of England, Bitmark, China Merchants Bank, Federal Reserve Bank of Boston, Initiative for CryptoCurrencies and Contracts (IC3), American Express and Daimler.

The good news is that banks won’t necessarily have to choose inbetween the two — at least not for now. Slew of companies, including Intel, JPMorgan Pursue, ING, Thomson Reuters, BNY Mellon, Monax and Consensys, support both the Hyperledger Project and Ethereum-derived projects. Of course, other blockchain alliances exist, as do individual partnerships inbetween banks and blockchain projects.

You can read more in-depth about the IBM and Microsoft approaches at The American Banker.

Bitcoin or ether: which currency will win? Chris Skinner – s blog

bitcoin or ether: which currency will win?

As referenced in my R3 fake news last week, there are various camps out there fighting for the cryptocurrency crown. The lead runners are bitcoin and Ethereum, and both have serious backing. However, it’s still early days. I keep stressing that we need to recall we are experimenting here, and the end game is still a ways away. The end game is that there will be a digital currency we can all buy into. Whether it’s bitcoin or bityuan or ekrona or ether or monero or any of them, who knows … it could be all. Identically, it could be none.

This is not a win:lose equation however, as there is a potential win:win zero sum game where several currencies and blockchains get through and thrive, with interoperability for different use cases. After all, corporates might use Ethereum whilst the general public use bitcoin. So here’s a quick low-down on how I see it.

After blogging about bitcoin for six years, I’ve closely followed its peaks and troughs, ups and downs. This chart portrays the rollercoaster pretty well (you can see what was causing the peaks and troughs over at 99bitcoins):

So right now it’s peaking with a price of $1,290 per bitcoin. That makes it worth more than gold, and the bitcoinisters are all over the moon. But there’s the usual factions moving here, with the hype of the bitcoinisters versus the reality of the markets. For example, I’m pleased the price of bitcoin is way up there but (a) it’s meant to be a currency you spend, not an investment you hoard; and (b) it’s still lil’ when compared with other currencies and commodities.

On the former note, I’m observing too many people buying into bitcoin because they’re being suckered by the hype and believe it’s a good investment. It’s a currency, not an investment; or that’s what we should be thinking. On the latter, this quote from Fran Strajnar, co-founder and CEO of Plucky Fresh Coin makes sense: “The gold supply is 180,000 tonnes of ‘above ground’ gold, valued at $7 trillion. The bitcoin market value is $20 billion, so gold vs bitcoin is psychological more than anything.”

bitcoin has had a lot of people buying into the market, but it’s still a petite $20 billion market. A long way to go before we can believe it’s mainstream, and there are slew of competitors out there such as zCash, which claims to overcome the deficiencies in bitcoin.

It is notable that the gold rush of latest bitcoin activity is caused by a multitude of factors from Japan’s legitimizing the currency to China’s outlawing it to the Winklevoss twins creating a potential SEC-approved ETF to trade in it. All of these factors, along with Brexit and the Trump, are fuelling people to invest. This then creates a virtuous circle of the more who invest, the more who invest. This may all come tumbling down quickly, or it may budge mainstream. We just don’t know. What I do know is that we no longer talk about bitcoin as a Wild West, the dark net currency, ridiculous or stupid. People are taking it gravely now, and that’s most likely a good thing. Even so, there are many who don’t buy into it, with the currency announced as dead one hundred twenty four times to date. It’s still not dead however.

ether is the currency of Ethereum, and this is proving popular with corporates. In fact, it’s so popular that the Ethereum Enterprise Alliance was announced last week, driven by Microsoft, Intel and JPMorgan. That’s’ telling something, so why is Ethereum more popular than bitcoin for corporate users? Because of Microsoft.

Microsoft spotted the potential of Ethereum for Blockchain-as-a-Service using their cloud Azure platform early on, and have been driving that project forward ever since to its enterprise account base as the platform of choice. Identically, Ethereum and ether differs from Bitcoin and bitcoins (former is the infrastructure, latter is the currency), because it permits both permissioned and permissionless transactions to take place whereas Bitcoin only works in a permissionless way. For corporates, having transparency of transactions and a fully public ledger just wouldn’t work, which is why corporates and banks aren’t buying into Bitcoin.

Ethereum is not proven however, as demonstrated by the infamous DAO Hack and hard fork last year . However, it does display the nature of factions and different views when you google Ethereum fail and the top results include two next to each other:

It just goes to demonstrate that there are lots of tribes fighting for survival here, and it’s not pretty. The two leading tribes are Bitcoin and Ethereum, but there are slew of others, as I outline above. For banks this leads to choices: do we invest in Ethereum and join the Ethereum Enterprise Alliance or do we become part of R3 CEV’s consortia? It is not even as elementary as that, as there are slew of other alliances out there. This was well summarised by Penny Crossman for American Banker and, rather than repeating her wise words with my own, I’m going to cheat and cut and paste her thoughts here.

Two incumbent tech giants have placed themselves in the middle of a madness of blockchain projects and partnerships designed to help financial services firms become quicker and more efficient at a plethora of things from trade finance to securities settlement to loans and debt tracking to cross-border payments.

IBM and Microsoft are taking decidedly different paths and banks will want to closely examine the technology stacks and the security and privacy decisions the two are making as they sort their own future with blockchain technology.

On February 28, Microsoft announced it’s part of a fresh consortium called the Enterprise Ethereum Alliance. It includes thirty technology and financial services playmates including JPMorgan Pursue and Intel that plan to build a blockchain based on Ethereum.

Also on February 28, the IBM-led Linux Foundation Hyperledger Project announced eleven fresh members, bringing its total to 122. Fresh members include Bank of England, Bitmark, China Merchants Bank, Federal Reserve Bank of Boston, Initiative for CryptoCurrencies and Contracts (IC3), American Express and Daimler.

The good news is that banks won’t necessarily have to choose inbetween the two — at least not for now. Slew of companies, including Intel, JPMorgan Pursue, ING, Thomson Reuters, BNY Mellon, Monax and Consensys, support both the Hyperledger Project and Ethereum-derived projects. Of course, other blockchain alliances exist, as do individual partnerships inbetween banks and blockchain projects.

You can read more in-depth about the IBM and Microsoft approaches at The American Banker.

Related video:

Leave a Reply