Bitcoin vs Ethereum
BITCOIN
History of bitcoin
Bitcoin was launched in the year 2009.The bitcoin whitepaper was published in the cryptography mailing list metzdowd.com by an anonymous author Satoshi Nakamoto.
The Genesis block(the first block )of bitcoin was mined on January 3 , 2009 and it contained the message “The Times 03/Jan/2009 Chancellor on brink of second bailout for banks”
https://www.blockchain.com/btc/tx/4a5e1e4baab89f3a32518a88c31bc87f618f76673e2cc77ab2127b7afdeda33b
Right after the 2008 crash, governments around the world were printing cash out of thin air to bail out the banks . Bitcoin was designed to solve this corrupt system and to create a more people driven currency
It leverages the blockchain technology to create a transparent,secure and reliable transaction. It uses the proof of work consensus system to make sure each transaction is valid and is not sent by a malicious actor .
Check the below video to know more about the blockchain technology and how bitcoin achieves its consensus
Why does bitcoin has value ?
When I discuss this technology with my friends and family the most frequent question I get is where does bitcoin acquires its value from and what drives its price .
Every currency at its core derives the value from the network participants. Let us take the example of Indian Rupee. Indian citizens has trust in the Government of India which issues the Indian rupee and each Indian citizen believes that he can exchange the rupee for a different asset/product at a future date
If you think about it if all the Indian Citizens collectively think a seashell is more legitimate than Indian rupee and we start using seashell to buy and sell things , the rupee notes will end up worthless
As long as the people has trust in the government and as long as Indian government requires its citizens to pay taxes in Indian rupee . Rupee will remain legitimate.
Now let us take the understand where does bitcoin acquires has value from?
Bitcoin acquires its value from the classic economic concept Demand & Supply . There will be only 21 million bitcoins to exist and we can be sure of this unlike fiat currency (Government Issued currency). This introduces artificial scarcity
If you want to transact on the bitcoin network you will have to spend transaction fees which is denominated in bitcoin (You can compare this to the taxes we pay to the government) .
Around 83% of bitcoin have already been mined which leaves about 17% left to mine. With increased adoption and usage of bitcoin network by Governments(El salvador), Institutions(GrayScale etc ) and Companies (Tesla etc) there is very little bitcoin left in the supply for future companies and Governments to accumulate
Bitcoin also follows the halving process which means approximately every four year the rate of bitcoin being issue per block(as mining rewards)is slashed by half. The most recent halving was on May 11,2020 which halved the bitcoin issued per block as mining rewards to 6.25 this ensures that there proper supply and demand ratio is maintained
