Andrej Jikh in this video started to explain the differences between Bitcoin and Ethereum and ended up talking about the disruption of every major institution on the planet, about the Kardashev Scale and about the future of civilization.
At the 6:21 spot he talks about Milton Freedman who predicts the appearance of a global digital currency. Well, right now that currency seems to be Bitcoin, since its dominance outmatches all the rest.
To sum up the video, Bitcoin is digital gold, store of value and it’s the Kardashev 1 scale of money. Meaning it’s on a good path of becoming global and dominate everything, even the US dollar. Much like English is the global language right now, social media is the global way to communicate and waste time but also do amazing things, pop culture is becoming global, megacorporations are already global and swallowing up pretty much every other small company in their path, we’re on our way towards becoming at Type 1 civilization. That won’t happen anytime soon, but it’s rather close, about 100 years or so.
Now, Ethereum is similar but different. Whereas Bitcoin is digital gold, with a limited supply and does only one thing but does it amazingly well, Ethereum does everything else. It’s not scarce, meaning there’s no limit to the amount of Ethererum that can be minted. Ethereum 2.0 will introduce burning of tokens which will make it a little bit deflationary but it remains to be seen. As it is right now, Ethereum is awesome. It can handle smart contracts, and developers haven’t even scratched the surface of what its capabilities are. DAOs, DeFi, NFTs, and whatever comes next will disrupt entire corporations, banks, and institutions. Just like Andrej’s example of a decentralized Uber, we can make an Uber that is fair, global, where code is law and nobody needs to trust anybody else because the code will facilitate the transaction for us. We’ll be able to log in, create a smart contract that will tell the driver, “If you get me from A to B I will give you X amount of Ethereum.” The driver doesn’t need me to show my Ethereum, it will be held in escrow inside the smart contract. When conditions are met programmatically, meaning when my GPS tracks that I’ve arrived at my destination and have tapped that I’m satisfied with my ride, the Ethereum payment is added to the driver’s wallet.
That, the real estate thing, physical ownership, NFTs, identity, and so many other things that can be done with this technology will disrupt everything. Just like Andreas said in his video about zero-knowledge proof he gave a few examples of tokens one would hold about his various attributes, degree, residentship, nationality, and so many other things that define us. You’d be able to vote in the Eurocouncil as a European citizen, vote in your condominium’s decision about the new landscaper, proving that you live there, you’d vote on your children’s school policies, you’d be able to prove that you have a driver’s license to a police officer without presenting any other data about you. So many applications and frankly, we can’t even imagine the stuff that we’ll actually use in the future.
As a sci-fi writer and a computer nerd I love these things, but I also don’t think they’re too far out there. Just like the average user on the internet has amazing tools at his literal fingertips, stuff that were considered science fiction a few decades ago, the applications for Ethereum and Dapps in general are unimaginable. And just like Andrej says, the best thing about them is that they’ll ask no permission from anyone. Just like bitcoin just popped up on an obscure cryptography newsletter one day and slowly became a dominant force of nature, in much the same way the better systems will rudely push away the archaic ones we have right now. And we will all use them, because they will be better, transparent, reliable, and hopefully fast and cheap. Dapps generally have a problem with the last two attributes, and current gas prices are beyond insane. Hopefully the new fixes on the network will address those growing pains and help Ethereum become the smart money that it’s aiming to be, the foundation for every nifty new technology for the next decade and more.
As for Bitcoin, I’ll admit that I hadn’t actually grasped the implications of it up until this year. I mean, I understood it, but I was thrown off by the difficulty in handling the wallets and making a transaction, I just couldn’t see how it could be used in daily life as currency. But, silly me, I didn’t get that Bitcoin doesn’t have to be your daily cryptocurrency to buy you coffee. Actually with Layer 2 technologies such as the Lightning network it can be, but it doesn’t have to. Bitcoin is a wire transfer. That’s it. It’s secure, it takes some time, it’s for larger sums and hefty purchases. Lightning and RSK are still too raw for the average user, but hopefully they’ll get there.
I think that Bitcoin will reach the projected heights of the Stock to Flow model, that it will become the global currency that will be used by everyone and I also believe that Ethereum, barring some catastrophic update that will render it useless, will run along in parallel doing crazy things and zipping back and forth like a weirdo.