Ethereum has two fundamental advantages over Bitcoin: one technological and one organizational. Whereas Bitcoin is a cryptocurrency only, Ethereum is a general-purpose platform for running blockchain-based apps, like a decentralized version of iOS or Android. Ethereum includes a cryptocurrency, Ether, plus anything else that software developers want to create for the platform. The range of possible use cases is potentially unlimited. This is why there are reportedly 30 times as many developers working on software related to Ethereum than to any other blockchain technology, including Bitcoin.
Bitcoin suffers from a lack of strong leadership. Its pseudonymous creator Satoshi Nakamoto hasn’t been heard from in years. In the last sixth months, Bitcoin has split into two: Bitcoin and Bitcoin Cash. In contrast, Ethereum’s creator Vitalik Buterin leads Ethereum development at the Ethereum Foundation. Development seems to be going well. On December 31, Ethereum launched a test network for alpha testing of Casper, its implementation of proof of stake, a less computationally intensive way to validate transactions.
These two fundamental advantages lead me to believe that at some point Ethereum will overtake Bitcoin in popularity and market value — already, the total circulation of Ether is worth $121 billion to Bitcoin’s $259 billion. In fact, there are four metrics that show Ethereum has already surpassed Bitcoin in network performance and indicate rising popularity relative to Bitcoin.
1. Daily transactions
The Ethereum network processes 1.2 million transaction per day. That’s over three times more than the Bitcoin network, which only processes 354,000 transactions per day.
2. Transaction fees
To get a Bitcoin transaction confirmed within 24 hours, it currently costs $7.19. To get a transaction confirmed within 20 minutes, it costs $25.57. By contrast, to get an Ethereum transaction confirmed in 30 seconds, it costs $1.59. Keep in mind Ethereum is processing over three times as many transactions every day.
There appears to be unusually high activity on the Ethereum network lately leading to higher fees. Whenever I have checked over the last few weeks, the fees for Ethereum have been under 10 cents to get a transaction confirmed in under a minute.
3. Active addresses
Since December 31, the number of active Ethereum addresses has surpassed the number of active Bitcoin addresses on three occasions. Active addresses do not perfectly correspond to number of active users, especially since Ethereum addresses can be assigned to software like smart contracts. Even so, higher activity on the network suggests that more people are getting more use out of it.
Ethereum has 31,800 nodes to Bitcoin’s 11,700. By number of nodes, the Ethereum network is already much larger than the Bitcoin network.