Ethereum Dilemma and Bitcoin New Opportunities

Recently, doubts about Ethereum have been growing. Although Bitcoin's price has reached new highs, Ethereum is still nearly 40% away from its peak in 2021. Despite the recent rise in Ethereum's price, the market remains skeptical about its prospects.

Why has Ethereum lagged so far behind Bitcoin in this cycle? Has it really shown signs of decline, making it difficult to recreate its former glory? Will the next round of paradigm innovation in the cryptocurrency industry still happen within the Ethereum ecosystem?

Let's return to the starting point of cryptocurrency - Bitcoin, re-examine Ethereum and the entire industry, and explore potential paths for the cryptocurrency industry to regain vitality.

1. Breaking the Ethereum Thinking Pattern

First of all, no one can completely deny the value and pioneering significance of Ethereum. Smart contracts have indeed opened up new horizons for the crypto industry. Before the birth of Ethereum, most projects were just simple imitations of Bitcoin.

After the emergence of Ethereum, the industry entered a wave of imitation of Ethereum. Various so-called public chains have emerged, and most ecosystems have largely copied the Ethereum model. Nowadays, investors have become numb to various concepts and are instead chasing simple and crude Meme coins, despite knowing that it is difficult to last.

The industry generally lacks innovation and vitality, with fragmented consensus and filled with pessimistic emotions.

However, looking back at Bitcoin, it remains head and shoulders above the rest, continuously reaching new highs, seemingly unaffected by these factors.

Perhaps the entire industry has been trapped in the "Ethereum mindset" for too long, to the point of neglecting Bitcoin. After all, Ethereum originated from an interpretation of Bitcoin, but the industry views the Ethereum model as everything.

To identify the problems with Ethereum and seek new innovative opportunities, we must return to Bitcoin, re-understand it, and draw inspiration from it, just as we did at the dawn of Ethereum.

2. Mechanical Consensus and Social Consensus

The essence of a public chain is a decentralized system that continuously consolidates social consensus through mechanical consensus. Mechanical consensus is a mechanism in which everyone can participate fairly, such as Proof of Work (PoW); social consensus is reflected in aspects such as ecology and influence, ultimately manifesting in the price of the coin.

Participants in the mechanical consensus are the primary investors, beneficiaries, and builders of the public chain. They invest a significant amount of costs to participate in the operation of the public chain, thus they are the most motivated to promote ecological development. This explains why the early promoters of the Bitcoin ecosystem mostly come from the mining community.

When the price of a public chain coin is weak, it means that social consensus is weakening, and the deeper reason is the weakening of mechanical consensus or the loss of participants.

3. Comparison of Bitcoin and Ethereum Consensus Mechanisms

Bitcoin adopts a dynamic competition model, while Ethereum is based on a static fixed income model.

Bitcoin miners must continuously invest computing power and energy to compete for block rights, resulting in huge redundancy costs, which are embedded in the value of Bitcoin. Therefore, the actual consensus cost of the Bitcoin network far exceeds its current market value, estimated to be around 50 times. This model provides Bitcoin with a strong consensus security.

The proof-of-stake (PoS) mechanism of Ethereum is a static fixed income model, where participants do not need to incur additional redundant costs. This reduces the consensus cost and value of Ethereum. The consensus strength of Ethereum has an upper limit, and the staking rate is its consensus upper limit.

From a thermodynamic perspective, the PoW mechanism of Bitcoin makes it closer to a living organism, functioning as a negentropy system. The computing power and energy provided by miners are "negentropy", helping the network reach consensus and create order. This is the physical principle behind the sustained growth of Bitcoin.

After Ethereum transitioned to PoS, it lost the ability to continuously absorb "negative entropy," which may lead to the gradual decline of the system.

4. Potential Advantages of Bitcoin

Revisiting Bitcoin, we have discovered some overlooked advantages:

1. The UTXO model is superior to the account model: Bitcoin's UTXO model can achieve concurrent processing of transactions and independent state changes without a unified world state tree. This makes Bitcoin potentially more efficient than Ethereum in processing transactions.

2. Parallel Processing Capability: The concurrent processing and independent state change capabilities of the UTXO model can be extended to other fields, such as prediction markets, AI security models, etc.

3. Powerful consensus security: The Bitcoin network has the largest mechanical consensus in the world, providing strong protection for its unique capabilities.

Combining these advantages, "shared Bitcoin consensus security + UTXO concurrent state changes" has become a highly promising innovative direction. Teams have already begun exploring this field, such as the BitVM and BEVM projects.

Conclusion

Breaking away from the Ethereum mindset and re-examining Bitcoin, we can discover unlimited possibilities for innovation. True paradigm innovation is not mere imitation, but understanding the principles behind the abstraction. The scientific principles embedded in Bitcoin have yet to be fully explored and applied.

We have seen some teams begin to rethink Bitcoin, which brings new hope to the industry. More people need to join together to promote the arrival of the Bitcoin paradigm revolution and open up a new future for the cryptocurrency industry.