Bitcoin and Ethereum both use a blockchain, a globally distributed ledger that stores all of the prior transactions, going all the way back to the currency’s very first transactions or “genesis block.”
As I demonstrate in today’s video below, Bitcoin is primarily a state transition ledger: it makes use of a decentralized blockchain to record the movement of coins on its network, going all the way back to the first transactions when the currency was launched back in January 2009.
As I argue in the video, this might be a more fair way to issue money than our central bank-generated currencies, as Bitcoin is acting like an impartial clock or machine that spits out a predictable amount of new monetary supply over time - central banks aren’t nearly so predictable; a new crisis, war, deficit, or whatever else strikes unexpectedly and off to the printing presses they go.
Beyond its important currency use case, however, Bitcoin does not appear to be used for much yet. Ethereum, on the other hand, has shown a rapid increase in transactions this year and allows programmers to create all kinds of apps, financial experiments, and games that may become in high demand at some point in the future.
As I write this, Bitcoin remains the world’s highest valued cryptocurrency, with a total market capitalization of $10.4 billion, while secondplace project Ethereum has a total market cap of $857 million.
I did a video sharing some of the amazing use cases for Ethereum that enterprising Ether fans have already showed off: one couple put their marriage and a charming photo on the blockchain. Someone developed a simple auction contract that enables an Internet auction for any conceivable good or service to get underway quickly, without the help of a trusted third party platform like eBay to mediate the auction process. This means you can do an auction without a large chunk going to auction fees.
And that’s only the start. It’s entirely likely that in 5 years or less, today’s use cases for the blockchain will seem absolutely primitive to us. Watch the whole video below:
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