As Ethereum has risen to prominence in the past year, many have attempted to pit Bitcoin and Ethereum up against each other as competitors (see the Economist yesterday as the most recent example).I suspect the media will continue to do this for the foreseeable future — it makes for a compelling story and generates page views.This is the wrong way to think about the future of digital currencies though.It should be clear that BTC and ETH are complementors — two digital currencies that increase demand for each other and help each other reach more users around the world.Both Bitcoin and Ethereum are similar in that they are the leaders in a new category of technology with strong network effects of users, miners, developers, investors, and operators.But the reality is that they are no more competitors than oil and gold or calculators and computers.They have different characteristics and purposes and are far more helpful for each other than they are hurtful.To understand Ethereum’s current relationship with Bitcoin, you must first understand how Bitcoin is being used today.

Bitcoin was designed as a trustless p2p digital cash system (see the title of Satoshi’s whitepaper), a rudimentary system built for one purpose.It’s the “calculator” to Ethereum’s “computer” in the calculator — computer analogy and is currently used as such by millions of people across the world.Bitcoin’s use as digital cash is increasing rapidly (trading volume worldwide was at an all-time high last week).For investors and traders looking for an asset that is negatively correlated to equity markets and has “safe haven” characteristics similar to gold, BTC is the digital asset of choice.For people looking to avoid capital controls and get their wealth out of fiat currencies (see China, Venezuela, etc.)and into their own control with a store of value that can’t be manipulated, BTC is the digital asset of choice.Bitcoin has the brand recognition, security robustness and resiliency that no other digital currency platform can match (unless users and miners exit).

There’s no signs of an exit happening either — the network ownership effects of bitcoin are strong and appear to be strengthening rather than weakening as evidenced by the hash rate and transactions on the network.Because the underlying Bitcoin platform has much less technological uncertainty than any other platform, BTC is a less volatile digital asset that any other.bitcoin exchange in dubaiThe killer app for bitcoin is investment and speculation and it’s here to stay.Some have been frustrated by the lack of a “killer app” beyond investment and speculation in Bitcoin’s 7 year history.bitcoin baby jetThe $1.2B in venture capital that has poured into Bitcoin wants more use cases to accelerate adoption.bitcoin quote api

There’s some great Bitcoin related projects right now that are promising (see Open Bazaar, Brave, and 21), but they’re not yet attracting millions of new people to the ecosystem.“It’s taking too long and we need growth” is the sentiment coming from some investors and companies that have been in the space for a while.Ethereum is a digital currency platform that has improved on one key feature of Bitcoin — programmability.fastest bitcoin purchaseThe scripting language allows developers to write complex smart contracts.litecoin steuernTheDAO, a decentralized venture fund that raised over $130M worth of funds in a month, is the first widely used example of an Ethereum smart contract.litecoin web walletMany smart contract use cases will follow as a result of Vitalik, Gavin W. and team’s efforts to build a digital currency platform that maximizes for generality and developer-friendliness.The Ethereum community has done a fantastic job pushing the entire digital currency developer ecosystem forward.trang web kiem bitcoin

I first noticed last August at the Coindesk Consensus Hackathon that Ethereum had significant developer momentum and that momentum has continued — new developers continue to get started in crypto as a result of the easy to use libraries and simple docs (see here for a running list of new Ethereum apps).bitcoin calculator poundsThe momentum is additive to bitcoin though — developers are building new crypto apps and often getting into bitcoin as a result, new users are trading and new people are looking at digital currencies.ethereal gem youtubeLook no further than the trading volume for ETH/BTC (82% of ETH traded is the ETH/BTC pair) and the price of BTC since Ethereum launched in July 2015 (up over 70%) to see that.Ethereum wasn’t built for p2p cash just like Bitcoin wasn’t built to be developer-friendly and support general use cases — they’re two different platforms with different purposes.

Ethereum has been able to bootstrap on top of Bitcoin’s network and gain users quicker as a result of Bitcoin existing.And Bitcoin has benefited from new developers and added attention on digital currencies and trading.Both are likely to continue to help each the other — as innovation’s like BTCrelay and sidechains develop further, the two digital currencies will grow more complementary.It’s just semantics, you might be thinking.Who care’s about what they’re characterized as, as long as the digital currency ecosystem pushes forward as a result of the two existing?It’s important to clearly distinguish the characteristics and purposes of both digital currency platforms and frame the discussion in a positive way rather a negative way.As the ecosystem grows and more of the world tunes in, the messaging should be clear: digital currencies aren’t a zero sum game — this is a nascent category of technology and the success of one does not necessarily mean the failure of the other (in fact, the opposite is true).