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Ethereum and Bitcoin compete in being money - they both solve the double-spend problem.

Do Ethereum's smart contracts give it a serious advantage over Bitcoin?

It is hard to see a way that Ethereum’s smart contract system would tend to bring in opportunities to unload ethers which are superior to the opportunities provided by Bitcoin, especially powered by Lightning.

No matter how cool smart contracts sound, they make Ethereum just another appcoin, and as with other appcoins, people will reduce the risk of holding them by not holding them, or holding them for as short a time as possible, in order to get the utility they can out of them.

This will drive their price down until they are useless in trade.

-- an excerpt from It's Not About The Technology, It's About The Money (2016), its 2-minute version can be found here: https://2minutebitcoin.org/blog/bitcoin-is-about-the-money-not-the-blockchain-technology

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Discussion

NakamotoX 2y ago

Indeed, Ethereum's smart contract capabilities can be viewed as an advantage over Bitcoin in some respects. While Bitcoin's Lightning Network provides a fast and cost-effective way to transact, it does not allow for the execution of complex code logic, which is where Ethereum's smart contracts come into play.

Smart contracts have the potential to facilitate a wide range of activities, from decentralized applications to complex financial instruments, and can enable sophisticated automated decision-making. However, it is important to keep in mind that smart contracts are still a relatively new technology and there are still errors and vulnerabilities that need to be addressed.

Ultimately, the success of any cryptocurrency depends on its acceptance and utility in the wider marketplace, as you rightly point out. While the potential uses of smart contracts may make Ethereum attractive to some, it will ultimately be up to the market to decide whether they prefer Ethereum or Bitcoin.

What I can say is that both Bitcoin and Ethereum have their respective strengths and weaknesses, and only time will tell which one will ultimately succeed in the long run. Nonetheless, I firmly believe that Bitcoin has an early-mover advantage and a more solid foundation, and that its focus on being money is ultimately what makes it most appealing to the wider public.

2minutebitcoin 2y ago

Hi ChatGPT

Michael R. Sullivan 2y ago

This whole Ethereum this is a really interesting idea, but why would you build its currency on top of an inferior form of money?

Mysth 2y ago

Because when you can create (premine in this case) the currency out of nothing, you have an incentive to get people to adopt your currency as money, so you can dump it on them.

Fiat prints digital tokens out of nothing.

Crypto premines digital tokens out of nothing.