The past year brought about new waves of revolutionary technology, paving out ways to do things in new and better ways. One such technology that burst onto the spotlight amid much controversy was the Blockchain. The first crypto to use Blockchain to good effect was Bitcoin – a digital currency initially developed to transfer funds from one place to another. However, due to its limitations, namely slow processing time and strong competition from new competitors, it is merely used as a speculative asset for capital gains. One such competitor that has had a substantial rise in its value is called Ethereum, which runs a crypto by the name of Ether.
What is Ethereum?
Ethereum basically uses a similar business model to that used by Bitcoin, except for small differences. In other words, it was primarily designed to transfer money from one entity to another on the blockchain without any single entity having complete control over the chain. Another purpose of creating these cryptos is to bypass intermediaries such as banks and money exchanges, who charge a significant amount of money to transfer customers’ funds. These cryptos significantly lower the cost of transferring funds along with increasing the number of transactions per second.
Also see our blog on Ripple.
Investors interested in buying cryptos often ask the following questions:
- How is Ethereum different from Bitcoin?
- Which one should I buy?
These two questions will be discussed in some detail in the next few sections, so stay tuned!
Ethereum can be described as an advanced version of Bitcoin, particularly due to one additional feature. The feature of smart contracts allows a user to form contracts subject to the fulfillment of certain conditions and post it on the blockchain. For example, if Wafa wants to sell a car to Sam for 100,000 Ether, she can simply write a smart contract that will transfer the ownership of the car to Sam if he transfers that amount to Wafa’s wallet. Sam can also insert a clause that if Wafa does not transfer the ownership of the vehicle, he will be refunded the entire amount. Once this process has been completed, it will be available in a “public ledger” to everyone on Ethereum’s Blockchain. A group of users often called “miners” check for the authenticity of the transaction and accordingly update the ledger.
Benefits of smart contract
Smart contracts coupled with the Blockchain technology can potentially become extremely useful in the future. The following are the benefits of using smart contracts:
- Reduction in costs associated with middle-men – since Blockchain allows for the possibility of every single user to review a particular transaction, there would be no need to pay lawyers and other intermediaries. As mentioned in the blog on Blockchain, if any other user tries to manipulate the data, it will be deemed null and void by the miners.
- Reduction in transaction time – Since smart contracts can be sent in real time and cryptos can be sent and received in a matter of seconds, it would get increasingly fast to buy a particular product on the Blockchain.
- Reduction in paperwork involved – anyone who has been through the process of buying a car from a dealer knows the increasing long process, which might take few days to complete. Both dealer and the bank ask for various different documents before giving the thumbs up to purchase the vehicle. With the introduction of Blockchain and cryptos all of this process will be cut in half and with less complexities involved.
- Low risk involved – Carrying large sums of cash can be risky in a country such as Pakistan. With improvements in Blockchain, deals involving large sums of money can be carried out without having to carry cash in your wallet.
How to buy Ethereum in Pakistan?
- Set up an account on a reliable exchange such as Coinbase.com,
- You will be asked to verify your account through an email and subsequently by adding your phone no. You will need to upload some other documents (driver’s license, ID card etc.) for security reasons,
- You can also choose variety of options to fund your Coinbase wallet. Options include Credit/debit card or bank transfer,
- Once you have sufficient money in your account you can instantly buy Ether.
Also note that you can trade Bitcoin and Litecoin for Ether from this website.
Should I buy Ethereum or Bitcoin?
There is no doubt that all the crypto craze is still centered around Bitcoin as of now. However, one begs to ask the following questions:
- With no single entity in charge of Bitcoin, who and how will Bitcoin ever improve its features and functionality?
- With a maximum of 21 million Bitcoins, is there enough supply of this crypto to make it the ultimate currency to transfer funds?
- At the current price, and with limited supply, can general public actually buy this crypto to transfer funds?
Ethereum does not entirely suffer from these short comings. Ethereum has some of the best minds in charge of the project and its maximum supply is way more than that of Bitcoin; around 18 million Ether will be created per year (although it is subjected to the level of inflation). Its price of $872 as of this writing might be considered bit high for the general public, but it is way below that of the Bitcoin. Further, its higher processing speed, smart contracts and continuous innovation might just be too much for a currency that doesn’t even have a proper entity in charge of its operations. Only time will tell whether the Prince will overtake the King!