Ethereum’s myriad use cases and applications have challenged the cryptocurrency world, particularly Bitcoin.
While it enabled the creation of smart contracts and other decentralized finance applications like NFTs, it also set the tone for Bitcoin’s changes this year. You’d have several options to take advantage of the cryptocurrency market rebound in 2023 through Bitcoin, like mining or investing in it. However, as cryptocurrencies are on the path to recovery and more and more people learn how to buy Bitcoin with debit card, Bitcoin is also witnessing transformations.
So far, you can only turn to Ethereum, Solana, and several other blockchains to experiment with NFTs. However, Bitcoin ordinals, or NFTs, are the latest development enabling crypto supporters to experiment with the new technology.
So, can Bitcoin steal Ethereum’s spot in terms of advancements?
Which one is more advanced, Bitcoin or Ethereum?
Bitcoin’s lightning network, a second layer in the protocol, already improves the transaction speed and reduces costs compared to Ethereum. Bitcoin underwent the Taproot upgrade to give users the gift of enhanced security, speed, and cheaper transaction fees. The lightning network is more affordable than widely-used payment processors like Visa and Mastercard. However, these improvements aren’t all it takes to surpass Ethereum’s myriad applications, innovative characteristics, and volatility.
The taproot upgrade introduced the BRC-20 standard – an experimental token standard like Ethereum’s ERC-20. This was necessary to permit fungible tokens to be developed on the Bitcoin blockchain.
Some Bitcoin advocates expect this long-awaited advancement to dethrone the ERC-20 token standard. However, it’s safe to say that both Bitcoin and Ethereum have their trump cards. Bitcoin, for instance, has the first-mover advantage as it is the pioneer in cryptocurrency. What secures its top spot is not a platform where individuals could build and use decentralized applications but that it delivers on its promises of solving some of the limitations in the traditional financial system and being an improved form of money.
On the other side, Vitalik Burner, who envisioned Ethereum as an online platform for all sorts of internet applications, launched a project that has revolutionized the finance world. Up to this day, smart contracts are associated with Ethereum, even though Bitcoin has recently started to interact with this technology, as well.
Bitcoin is to follow in Ethereum’s footsteps
While you may have correlated smart contracts with Ethereum so far, being recognized in popular culture as an Ethereum thing, the latest developments in the Bitcoin network have turned things around. Bitcoin is witnessing the inception of a new era as it follows in Ethereum’s footsteps and starts exploring the smart contracts world.
Bitcoin supporting smart contracts is a significant improvement for the network. The general opinion is that it can catalyze the coin’s increased adoption as its use cases increase, representing an investment vehicle.
What are smart contracts?
Smart contracts were introduced to the world in 1994 by a computer scientist called Nick Szabo, who associated them with vending machines that operate when they’re fed the correct amount of money. This comparison can help newcomers gain a clearer picture of smart contracts and decipher their mystery.
In simple terms, smart contracts are computer programs stored on a blockchain that automatically execute the terms of a contract when the pre-programmed conditions are satisfied. They’re self-executing, meaning the agreement between parties will run without needing a lawyer or any other third party. It is used to streamline, verify, and enforce the contract’s performance or negotiation.
After outgrowing the initial proposal stage, smart contracts keep a low profile, regarded as niche and mainly theoretical projects. They were far from being used at a large scale, and only a few industries would use them. However, they started gaining traction with the inception of the Ethereum blockchain in 2015.
The idea behind a smart contract is that if you increase its complexity, you can build decentralized applications on Ethereum. In the decentralized finance (DeFi) realm, this enabled the development of several insurance services, like borrowing and lending, which rely on trustless mechanisms that take any middlemen out of the equation.
Bitcoin’s ordinals are the new hot topic in cryptocurrency
Bitcoin’s ordinals are enjoying much popularity these days, making the headlines ever since they were announced. April witnessed four daily inscription records as the network featured content like video games and images.
Bitcoin ordinals were launched in January of this year to create NFTs on the Bitcoin network, similar to how NFTs on Ethereum work. However, Bitcoin NFTs brought nothing new to the crypto realm. Stacks and Counterparty, two layer-2 networks on the blockchain, already permitted Bitcoin-based non-fungible tokens. However, the new ordinal NFTs employ a different structure from existing ones.
Simply put, ordinals attach content like videos and images to satoshis on the Bitcoin blockchain, thus enabling Bitcoin NFTs. They differ from other non-fungible tokens in that they only exist on the parent blockchain’s layer. They rely on an arbitrary system called ordinal theory to provide each Satoshi a unique number and are 100% dependent on the Bitcoin network.
Since their inception, more than 200.000 ordinal NFTs have been created, and more are expected to be issued. They’re supported by a growing community of crypto developers and devotees who believe in the potential of Bitcoin NFTs.
Understanding them necessitates learning how they work. The first step to achieving this knowledge is to make a difference between “inscriptions” and “ordinals,” which point to the same thing – Bitcoin NFTs.
Inscriptions take the form of video, text, image, or any other type of data that can be associated with an NFT. In contrast, ordinals represent a system for ordering satoshis in a way that enables the development of NFTs.
So, is there any winner?
When it comes to winning the advancement battle, only time can tell which is triumphant. So far, they have both punched high above their height, making significant contributions to the financial system. Which one do you think deserves more recognition?