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Disclaimer: I'm invested in Ethereum, and not Bitcoin. There is no good reason that Bitcoin is still going up once Ethereum came on the scene. Transaction times

Disclaimer: I'm invested in Ethereum, and not Bitcoin. There is no good reason that Bitcoin is still going up once Ethereum came on the scene. Transaction times, transaction cost, decentralization, future development work, consensus under one leader all favor Ethereum. The only reason I see for Bitcoin to still be strong is that it has name recognition and first mover advantage. People talk about "Bitcoin" and "cryptocurrency" as synonyms. If you want to "get into cryptocurrency" you buy Bitcoin. I think this is a bad thing, but I don't know what it means. Anyone have any insight with a differing opinion as to why I am wrong? Does anyone know a good reason (technical or economic) Bitcoin is going up while Ethereum is not?

panarky 9y ago
In the last year Bitcoin is up 7x while Ethereum is up 38x.
__s 9y ago
Ethereum isn't a store of value
- lgas 9y ago
  How is it any more/less of a store of value than BTC?
  - mhartl 9y ago
    The supply of Ether isn't algorithmically capped, while the supply of Bitcoin is. This makes Bitcoin more resistant to the greatest long-term threat to a store of value, namely, currency dilution via the creation of new money.
    - hhhxyxyy 9y ago
      No, store of value by definition cannot be diluted. Possession is the biggest risk, which seems low mathematically at this time based on prevailing wisdom. That could change, and if done so in secret for long enough, could render the validity of ownership null and void.
      - alexasmyths 9y ago
        "No, store of value by definition cannot be diluted" This not correct, it also misses the point. Assuming a fixed amount of BTC's some day in the future - they could be valued at $5K one day and $0 the next day - without any 'dilution' at all. This whole issue of the fixed supply of something does not give it any financial valuable properties at all. A BTC is 'just a number' - after all. A 'store of value' is something that you can hold, and be sure that in 'x period of time' - it will be 'roughly worth the same amount' of whatever you want to measure it in. That's it. There are a lot of decent 'stores of value' available to anyone today. BTC's volatility alone - and risk of nobody caring about it in the future - make it not a very poor 'store of value'. Volatile, speculative things are the opposite of 'stores of value'. A 'store of value' is something you could buy now, and be 99% confident you could give to your great-great-great-grandchildren - and it would still have value.
_jtrig 9y ago
Seems like you read too many articles, and not enough white papers.
logical42 9y ago
Because people actually use bitcoin. It’s heavily used for transactions for gray market activities (its very popular for online gambling transactions).
- samsonradu 9y ago
  Why is it so popular among online gambling transactions? Afaik to be able to withdraw money from a gambling site you will go through a screening (id, address verification) so anonimity is broken anyway.
  - chrxr 9y ago
    US banks aren't allowed to process transfers directly from gambling sites to players. So poker sites etc use Bitcoin as an intermediary step.
  - logical42 9y ago
    Some sites do not require full blown identification for gambling when you use bitcoin. Coupled with the fact that it is a super convenient way to move large sums of money in and out (without waiting for wire transfer delays and whatnot), it’s a bit of a no brainer, at least in terms of convenience.
FreeRadical 9y ago
There is a good reason; Bitcoin has a known supply and is a financial constant. To serve the ‘world’ the money supply in bitcoin has to increase in USD terms. Think of the market cap as the money supply of bitcoin in USD terms. In a simple model, one would expect the price to increase proportional to what it is at a given moment due to the rate of new people learning about it and passing on knowledge. On a long term trend an exponential model is a good proxy so far. Why is BTC going up and ETH not? This is purely mean reversion on the ETHBTC ratio. Look at momentum indicators on the ratio and the recent breach of the 200day after multiple lower bounces off it. ETH was up 50x at one point this year, you need to factor that in also.
- sputknick 9y ago
  I think you have the right answer, this is a multi-year event and some mean reversion is to be expected.
Obi_Juan_Kenobi 9y ago
Saying that Ethereum is strictly superior to Bitcoin is a very bold statement. I would certainly not invest based on that assumption. First, Bitcoin is already as good as it will ever need to be to function as a practical store of value. Even without scaling, it can support enough transactions to effectively work this way. This can support price growth for a long time, and first-mover advantage is critically important here. Second, Bitcoin development, as fraught as it is, isn't dead. If such changes come about as to make Bitcoin seem obsolete, there's still a good chance that Bitcoin would adopt those changes. Also consider that a solution for an effective 2-way swap would make protocol differences essentially moot. Finally, I admire Vitalik and other Ethereum developers and think their musings about cryptocurrencies in general have advanced the field as a whole. However, I'm still skeptical that Ethereum, as envisioned by Vitalik, can be made to work through sheer force of engineering. It's stunning how far it's come, but it still faces very real problems. A successful move to proof of stake would be the first indication that it might happen. Footnote: "consensus under one leader" is probably the most critical weakness for Ethereum right now. Not only for legal/state interventions with the DAO precedent, but as a single point of failure. I think it's fair to say that Satoshi left Bitcoin precisely because it needs to "stand on its own feet" if it's to be truly decentralized. In this way, I consider Bitcoin to be far more mature.
- sputknick 9y ago
  You make good points, but I think where having Vitalik makes a difference is evident in the large number of contentious hard forks Bitcoin has had/will have this year. Obviously the Ethereum model isn't perfect, or else we wouldn't have Classic, but I think it helps to have one person who says "follow me, this is the way we are going".
- alexasmyths 9y ago
  "Bitcoin is already as good as it will ever need to be to function as a practical store of value." Bitcoin is the worst possible 'store of value'in any financial scenario. It's highly volatile, subject to unknown future regulations, competition from other things - and of course, it could go to zero tomorrow. Moreover - there are any number of other, better opportunities for 'store of value' - most notably real-estate. There has been demand for real-estate in London for at least 1000 years. So think, in 100 years, will there be at least some demand for real-estate in London. Probably. Probably more than today - but at least some. What will the demand be for BTC in 100 years? Will it even exist? Will anyone even remember what it is? The volatility alone makes it really not something you want to 'store a lot of value for the future'. Just because there is pragmatically a 'fixed number of BTC's that will ever be created, and that it has some crypto-viability - does not inherently make it a 'good store of value' - or a 'store of value at all'.
alexasmyths 9y ago
"There is no good reason that Bitcoin is still going up once Ethereum came on the scene. Transaction times, transaction cost, decentralization, future development work," BTC is not popular because it's a currency - though 'it can be a currency' and people like to think about it as such, that's just what gives it the veneer of 'utility' and therefore value. 'That it is technically a currency' is a necessary aspect of getting some kind of valuation - that's not what is driving the valuation. BTC is popular because it's a speculative thing that has 'gone up' which creates a further dynamic of that, at least for some time. It's really not used as a currency, there's no underpinning value, there's no 'ownership of anything' - and so there is no way to actually value BTC. It's the most purely speculative thing ever. To compare Coins on their 'technical merit' misses the underlying premise of their valuation, which has nothing to do with technology, valuation or finance - and everything to do with mass psychology and memes. 'Some people are willing to pay $X for a number'. That is the beginning and end of it's valuation at any given moment.
dpc_pw 9y ago
Bitcoin is the first, the biggest, the sanest, the nopremine, no tricks blockchain. Bitcoin has the biggest amount of brainpower behind it. Bitcoin has the biggest market cap, liquidity, and brand. Bitcoin is the best crypto for government resistance, and the victory over Bcash, and soon over segwit2x, shows the determination of the community to ability to fully utilize it all over the world and behind anonymization network like Tor etc. Bitcoin has its scalability vision ready (Lighting Networks). Bitcoin is the killer-feature of the blockchain, and the only reason blockchain makes any sense. Ethereum is just a pump for people that think they've missed the boat on Bitcoin. That's why it grew up so quickly, and people are willing to throw so much money at whitepapers with nothing behind them. Ultimately, Bitcoin can do anything that Ethereum can - it's just a matter of time before it will suck the marketcap out of ETH, just like it did with many other cryptos.
- grover_hartmann 9y ago
  I completely agree, I love bitcoin. I got paid a few BTC for remote work when the price was about ~600 USD per BTC, I will never sell.
Lufton 9y ago
The reason for the recent Bitcoin pump is most likely the upcoming fork. Everyone wants to hold, in hopes that the Bitcoin gold will rise like Bitcoin Cash did in the last fork - Although, I doubt it will I also invest in Ethereum over Bitcoin, along with a few other cryptos. However, it is pretty awesome seeing the prices a coin can reach.

panarky 9y ago

In the last year Bitcoin is up 7x while Ethereum is up 38x.

__s 9y ago

Ethereum isn't a store of value

lgas 9y ago
How is it any more/less of a store of value than BTC?
- mhartl 9y ago
  The supply of Ether isn't algorithmically capped, while the supply of Bitcoin is. This makes Bitcoin more resistant to the greatest long-term threat to a store of value, namely, currency dilution via the creation of new money.
  - hhhxyxyy 9y ago
    No, store of value by definition cannot be diluted. Possession is the biggest risk, which seems low mathematically at this time based on prevailing wisdom. That could change, and if done so in secret for long enough, could render the validity of ownership null and void.
    - alexasmyths 9y ago
      "No, store of value by definition cannot be diluted" This not correct, it also misses the point. Assuming a fixed amount of BTC's some day in the future - they could be valued at $5K one day and $0 the next day - without any 'dilution' at all. This whole issue of the fixed supply of something does not give it any financial valuable properties at all. A BTC is 'just a number' - after all. A 'store of value' is something that you can hold, and be sure that in 'x period of time' - it will be 'roughly worth the same amount' of whatever you want to measure it in. That's it. There are a lot of decent 'stores of value' available to anyone today. BTC's volatility alone - and risk of nobody caring about it in the future - make it not a very poor 'store of value'. Volatile, speculative things are the opposite of 'stores of value'. A 'store of value' is something you could buy now, and be 99% confident you could give to your great-great-great-grandchildren - and it would still have value.

_jtrig 9y ago

Seems like you read too many articles, and not enough white papers.

logical42 9y ago

Because people actually use bitcoin. It’s heavily used for transactions for gray market activities (its very popular for online gambling transactions).

samsonradu 9y ago
Why is it so popular among online gambling transactions? Afaik to be able to withdraw money from a gambling site you will go through a screening (id, address verification) so anonimity is broken anyway.
- chrxr 9y ago
  US banks aren't allowed to process transfers directly from gambling sites to players. So poker sites etc use Bitcoin as an intermediary step.
- logical42 9y ago
  Some sites do not require full blown identification for gambling when you use bitcoin. Coupled with the fact that it is a super convenient way to move large sums of money in and out (without waiting for wire transfer delays and whatnot), it’s a bit of a no brainer, at least in terms of convenience.

FreeRadical 9y ago

There is a good reason; Bitcoin has a known supply and is a financial constant. To serve the ‘world’ the money supply in bitcoin has to increase in USD terms. Think of the market cap as the money supply of bitcoin in USD terms. In a simple model, one would expect the price to increase proportional to what it is at a given moment due to the rate of new people learning about it and passing on knowledge. On a long term trend an exponential model is a good proxy so far. Why is BTC going up and ETH not? This is purely mean reversion on the ETHBTC ratio. Look at momentum indicators on the ratio and the recent breach of the 200day after multiple lower bounces off it. ETH was up 50x at one point this year, you need to factor that in also.

sputknick 9y ago
I think you have the right answer, this is a multi-year event and some mean reversion is to be expected.

Obi_Juan_Kenobi 9y ago

Saying that Ethereum is strictly superior to Bitcoin is a very bold statement. I would certainly not invest based on that assumption. First, Bitcoin is already as good as it will ever need to be to function as a practical store of value. Even without scaling, it can support enough transactions to effectively work this way. This can support price growth for a long time, and first-mover advantage is critically important here. Second, Bitcoin development, as fraught as it is, isn't dead. If such changes come about as to make Bitcoin seem obsolete, there's still a good chance that Bitcoin would adopt those changes. Also consider that a solution for an effective 2-way swap would make protocol differences essentially moot. Finally, I admire Vitalik and other Ethereum developers and think their musings about cryptocurrencies in general have advanced the field as a whole. However, I'm still skeptical that Ethereum, as envisioned by Vitalik, can be made to work through sheer force of engineering. It's stunning how far it's come, but it still faces very real problems. A successful move to proof of stake would be the first indication that it might happen. Footnote: "consensus under one leader" is probably the most critical weakness for Ethereum right now. Not only for legal/state interventions with the DAO precedent, but as a single point of failure. I think it's fair to say that Satoshi left Bitcoin precisely because it needs to "stand on its own feet" if it's to be truly decentralized. In this way, I consider Bitcoin to be far more mature.

sputknick 9y ago
You make good points, but I think where having Vitalik makes a difference is evident in the large number of contentious hard forks Bitcoin has had/will have this year. Obviously the Ethereum model isn't perfect, or else we wouldn't have Classic, but I think it helps to have one person who says "follow me, this is the way we are going".
alexasmyths 9y ago
"Bitcoin is already as good as it will ever need to be to function as a practical store of value." Bitcoin is the worst possible 'store of value'in any financial scenario. It's highly volatile, subject to unknown future regulations, competition from other things - and of course, it could go to zero tomorrow. Moreover - there are any number of other, better opportunities for 'store of value' - most notably real-estate. There has been demand for real-estate in London for at least 1000 years. So think, in 100 years, will there be at least some demand for real-estate in London. Probably. Probably more than today - but at least some. What will the demand be for BTC in 100 years? Will it even exist? Will anyone even remember what it is? The volatility alone makes it really not something you want to 'store a lot of value for the future'. Just because there is pragmatically a 'fixed number of BTC's that will ever be created, and that it has some crypto-viability - does not inherently make it a 'good store of value' - or a 'store of value at all'.

alexasmyths 9y ago

"There is no good reason that Bitcoin is still going up once Ethereum came on the scene. Transaction times, transaction cost, decentralization, future development work," BTC is not popular because it's a currency - though 'it can be a currency' and people like to think about it as such, that's just what gives it the veneer of 'utility' and therefore value. 'That it is technically a currency' is a necessary aspect of getting some kind of valuation - that's not what is driving the valuation. BTC is popular because it's a speculative thing that has 'gone up' which creates a further dynamic of that, at least for some time. It's really not used as a currency, there's no underpinning value, there's no 'ownership of anything' - and so there is no way to actually value BTC. It's the most purely speculative thing ever. To compare Coins on their 'technical merit' misses the underlying premise of their valuation, which has nothing to do with technology, valuation or finance - and everything to do with mass psychology and memes. 'Some people are willing to pay $X for a number'. That is the beginning and end of it's valuation at any given moment.

dpc_pw 9y ago

Bitcoin is the first, the biggest, the sanest, the nopremine, no tricks blockchain. Bitcoin has the biggest amount of brainpower behind it. Bitcoin has the biggest market cap, liquidity, and brand. Bitcoin is the best crypto for government resistance, and the victory over Bcash, and soon over segwit2x, shows the determination of the community to ability to fully utilize it all over the world and behind anonymization network like Tor etc. Bitcoin has its scalability vision ready (Lighting Networks). Bitcoin is the killer-feature of the blockchain, and the only reason blockchain makes any sense. Ethereum is just a pump for people that think they've missed the boat on Bitcoin. That's why it grew up so quickly, and people are willing to throw so much money at whitepapers with nothing behind them. Ultimately, Bitcoin can do anything that Ethereum can - it's just a matter of time before it will suck the marketcap out of ETH, just like it did with many other cryptos.

grover_hartmann 9y ago
I completely agree, I love bitcoin. I got paid a few BTC for remote work when the price was about ~600 USD per BTC, I will never sell.

Lufton 9y ago

The reason for the recent Bitcoin pump is most likely the upcoming fork. Everyone wants to hold, in hopes that the Bitcoin gold will rise like Bitcoin Cash did in the last fork - Although, I doubt it will I also invest in Ethereum over Bitcoin, along with a few other cryptos. However, it is pretty awesome seeing the prices a coin can reach.