Will we invest in and transact with Ether differently than we do with Bitcoin, since the two currencies have different monetary policies?
What individuals make of the growing debate over Ether and Bitcoin rages on with comparison being made from the point of view of how people invest in and transact with the two digital currencies.
Ethereum as a means of exchange
Analyst and Blockchain Products Lead at ARK Investment Management, Chris Burniske, predicts that Bitcoin will be used more as a store of value, while Ether, which is needed to power the smart contracts that are the main appeal of the Ethereum network, will be used more as a means of exchange.
In a Forbes piece, he states:
“Both the Bitcoin and the Ethereum systems are built on a blockchain through which every transaction is recorded publicly allowing money and assets to be exchanged more quickly and more cheaply than using a long chain of middlemen.”
Potential for trading
In December 2015, Ether was trading at less than $1. Now it has risen to $15 - almost by a 15-fold increase in six months. This, as well as Ethereum’s ability to create binding financial agreements that can be enforced entirely by software, has created a great deal of user interest in investing in the digital currency.
It didn’t then come as a surprise that about 11,000 anonymous people invested $150 million into the DAO - or the Decentralized Autonomous Organization. This Ether-nly crowdfund gives every investor the right to vote directly on any major allocation of the organization’s capital for proposed projects with a view to share in the profit accruing from such investments.
Different consumers of Ether and Bitcoin
However, unlike Bitcoin, which now boasts of 670 BTMs (teller machines) and payment acceptance in more than a hundred thousand outlets in various parts of the world, Ether-denominated electronic payments are still rare. It is mostly used to run programs on the Ethereum network, just like the DAO.
The Executive Director of Strength in Numbers Foundation, David Duccini, notes to CoinTelegraph:
“The consumers of Ether will likely be slightly different. Both support speculation but Ether itself is consumed by applications. So people who want their apps to run are going to need to top off the gas tank as it were. It also is an issue for a DAO that, unless the DAO is capable of generating new Ether, it will eventually stop running “Pay to Play” platform.”