When it comes to Ethereum vs Bitcoin, those seeking a truly censorship-resistant and decentralized digital money will find that Bitcoin stands head and shoulders above Ethereum.
While both are digital currencies built on blockchain technology, Bitcoin uniquely boasts an absolutely fair and decentralized release, with no premine or insider distribution, solidifying its position as the premier base money for a new era of digital cash.
Ethereum’s troubled origins and recent pivot to proof-of-stake render it merely “fiat 2.0” unlikely to survive as a neutral, non-sovereign currency.
Ethereum Vs Bitcoin: Dissecting the Internal Mechanisms
Created in 2009 by the anonymous Satoshi Nakamoto, Bitcoin was released as open source software into the wild internet. Without any presale, anyone was free to acquire bitcoin by running a node and mining.
Initially trading for almost nothing, Bitcoin’s distribution has remained remarkably fair, upheld through a system where anyone can mine or purchase bitcoin.
Although Bitcoin might not be for everyone, it is available to anyone who chooses to participate, ensuring that its acquisition is not confined to a privileged few but open to all through mining and grassroots adoption.
In stark contrast, Ethereum’s ether tokens were issued through a highly centralized “presale” in 2014. A cozy group of insiders scooped up 60 million of the initial 72 million ethers at prices around $0.31 each — a blatant premine that handed ether’s control to a select few before public distribution.
A decade later, Bitcoin exhibits by far the most decentralized and secure network among all digital currencies created. Although some early adopters do hold large amounts of bitcoin, they rightfully earned their holdings by helping bootstrap the network during its crucial initial stages when it needed support.
Bitcoin carries far less risk today than it did in the beginning. Contrary to often cited figures, substantial analyses of addresses suggest that even if wealth concentration exists, it remains less pronounced than in many traditional asset classes.
The 80–20 rule is ubiquitous, so it should come as no surprise to observe it in Bitcoin as well. No central party can inflate Bitcoin or abuse its monetary policy. This broad distribution underpins Bitcoin’s role as a sound money system.
While Bitcoin exemplifies a truly decentralized protocol with no central issuers, Ethereum more closely resembles a security according to established legal frameworks like the Howey test.
The Ethereum Foundation, a recognizable entity, facilitated the release of ether tokens through a crowdsourced investment sale, where participants had a reasonable expectation of profits derived from the efforts of the Foundation’s developers.
Although ether possesses functionalities beyond traditional securities and the SEC’s enforcement approach has faced criticism, these factors do not negate ether’s apparent satisfaction of the Howey test criteria.
Consequently, ether struggles to attain Bitcoin’s status as a fair, neutral protocol for transferring value over the internet without centralized control or profit-sharing arrangements characteristic of investment contracts.
Bitcoin had no such centralized, security-like release. Its neutral, unbiased entry into the world without corporate allegiances allowed it to organically grow into a worldwide, non-sovereign money controlled by no single group or nation.
Satoshi walking away from the project only strengthens this neutrality.
Furthermore, Ethereum’s shift to a proof-of-stake model fatally compromises its ability to serve as sound money free from intermediaries. Its consensus process will require constant validation and permissioning by a those who can hold the most tokens.
Worryingly, PoS opens the door for nation-states and central banks to potentially “print” unbacked fiat currency and use it to accumulate ether holdings, ultimately co-opting the network by becoming the very stakers responsible for validating transactions.
In this scenario, ether risks devolving into merely a rebranded form of fiat under control of monetary authorities, permanently stripping it of any attributes of sovereign, decentralized sound money.
Bitcoin’s unchanging proof-of-work code and lack of centralized authorities make such co-option impossible.
But Ethereum’s proof-of-stake architecture provides nation-states a Trojan horse to inevitably infiltrate and dominate the network from within if they so choose.
Rather than blazing a new path for neutral monetary freedom as intended, PoS Ethereum simply reconstructs many of the same centralized choke points and subversion risks that have plagued fiat money for centuries.
Only Bitcoin, with its fair proof-of-work launch, inelastic supply controlled by no central party, and commitment to resisting institutional entanglements at all costs, can credibly claim to be in a class of its own as the world’s first truly sovereign money.
As nation-states and corporations inevitably attempt to co-opt blockchain technology for their own permissioned and controllable “money 2.0” systems, Bitcoin will remain the only neutral, decentralized, and ethically-launched reserve currency for a free people.
For sound money built on principles of fairness, decentralization and immutability, there is no substitute for Bitcoin.
All other “cryptocurrencies”, Ethereum included, are mere fiat replicas destined for centralization and control. In the battle for financial freedom, Bitcoin stands alone as the revolution.
