How Bitcoin differs from other digital assets like Ethereum

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Bitcoin is a virtual currency that was created to compete against the gold standard and fiat currencies that are ubiquitous with traditional finance and investing. While the blockchain on which it exists is considered inefficient by many, it’s becoming increasingly recognised as a store of value and is often referred to as digital gold.

Ethereum is a ‘token’ that facilitates ‘smart contracts’ and which exists on a separate blockchain ecosystem, far more advanced than that of Bitcoin. What Bitcoin does for money, Ethereum does for contracts. A smart contract is basically a digital agreement where you can say “if this happens, then something else happens.” For example:

• If I vote for the president, then my vote is official and no one else can vote as me.
• If I sign my name on this document, then I own the car and you no longer own the car.
• If I buy Bitcoin on this platform and transfer it to another environment, I still own it and it has not been duplicated.

Up to now, we concluded agreements with a signature at the bottom of a paper document and a stamp from an authority. The document could be scanned, filed, copied or even counterfeited. Ethereum has dramatically improved on this model. It is digital and proof of the transaction can never be deleted or duplicated.

Altcoins, such as Ripple and Dash, use the same decentralised concept as Bitcoin, but take things a bit further with some unique features. For example:

• Ripple and Dash offer a fresh take on the transactability and speed of payment.
• Ripple is designed to facilitate cross-border transactions between large corporations and institutions.

Altcoins are replacing the traditional global swift system used by banks and the likes of TransUnion. Instead of waiting for days and spending a fortune in fees for a cross-border payment to arrive, when you send Ripple to another user, it is there within seconds and at a fraction of the cost that you would have paid using swift.

Dash claims to have transaction speeds as fast as one second per transaction, focusing on superior security and an easy ecosystem for individuals to manage their money.

Article written by Andrew Ludwig https://www.linkedin.com/in/andrewjohnludwig/ , Head of Distribution @ CURRENCY HUB https://currencyhub.co.za/and founder of BLACK ONYX https://blackonyx.co.za/ and FUND HUB https://fundhub.co.za/.

Disclaimer: This article does not constitute financial advice. While the author and his firms are regulated by the FSCA, cryptocurrencies are not a regulated investment.  Please refer to CURRENCY HUB https://currencyhub.co.za/ a juristic representative of BLACK ONYX (FSP 47701) https://blackonyx.co.za/ for more information.