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Bitcoin vs Ergo: Crypto Rich

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Bitcoin

Bitcoin is known around the world. Yet it is old. It is slow. Really slow. 

Globally, Bitcoin is becoming a common, understood, and adopted term. Investors are amazed at its growth over the last decade. It has a market cap of over a trillion dollars. In the early days, cryptocurrency exchanges were built for a single purpose, to facilitate Bitcoin trading. 

Bitcoin as a software protocol has weaknesses. The main weakness is that it is not able to upgrade easily. The problem is it has no governance. Every time there are proposed changes, there seems to be a fight, and the system splits. So far, there are 107 total versions of the bitcoin protocol in existence. 

Ergo 

It is hard to compare Ergo to Bitcoin based on the network effect, popularity, adoption. Ergo sits quietly below 300 on Coin Market Cap. It is only on a few minor exchanges. In terms of current social, market awareness, and value, it isn’t even a close competition. Ergo has been a research-first-driven project. The majority of the focus has been on developing advanced software protocols, not marketing. In comparison to Bitcoin, Ergo has a potential upside of 14571x when compared to Bitcoin.

Similarities

Bitcoin and Ergo are both pure Proof of Work currencies. 

Bitcoin and Egro both run on a custom codebase that was built from scratch code. 

Bitcoin and Ergo both run the UTxO model

Bitcoin and Ergo both launched with no premine and no Initial Coin Offering (ICO)

Schnorr Signatures

Schnorr signatures are a digital signature scheme known for their simplicity and efficient size. Schnorr signatures also have the benefit of supporting smart contracts. Schnorr signatures also provide potential privacy uses. 

You may read about Bitcoins taproot upgrade. This is a proposal to integrate Schnorr signatures into the bitcoin software. This will be a major change and a significant upgrade if it happens.  

Ergo already has Schnorr signatures (Sigma Protocols), smart contracts, and privacy tools available for use today. Ergo launched with its own version of Schnorr signatures. It has already been running since Ergo mainnet launched in 2019. 

The biggest upgrade of Bitcoin brings it on par with Ergo in 2019. It is somewhat amazing that the network effect has had such a powerful impact on the market performance of Bitcoin. Yet, investors seem blind to the fact that the actual technology of the Bitcoin protocol is quite outdated. 

The path forward for Bitcoin is to try to be like Ergo

Schnorr Signatures 

A UTxO Smart Contract Model 

Privacy Application Potential

Ring Signatures

Efficient MultisigTransactions

Mixer Applications

Other Major Solutions on Ergo Bitcoin Has Yet to Even Consider 

NiPoPow’s

Oracle Data Schemes

Extended UTxO Smart Contract Schemes

Tokenized Governance

Storage Rent

ASIC Resistance

Ergo is trying to recreate the network effect, recognition, and adoption that Bitcoin has achieved. 

In almost every technical aspect, Bitcoin is trying to recreate what Ergo has already achieved 

CoinJoin/Coinswap

Bitcoin might have some privacy features that allow for mixing once it has schnorr signatures. Isn’t that such exciting potential? 

Ergo already a non-interactive mixer that can mix ERG its native token as well as any other custom token on Chain. With the implementation of the ErgoSwap exchange, ANY CUSTOM TOKEN on the Ergo blockchain has the potential to be mixed. 

Adjustable Block Sizes/On-Chain Governance

Ergo has a path to adjust the size of blocks through governance. Miners can vote to amend the protocol if needed. Bitcoin has 105 forks that demonstrate why on-chain governance is important. 

Current Level 2 Solutions

Bitcoin has a lead in one area. The lightning network.

Bitcoins network is slow, as transactions move faster than they can be processed. Imagine a busy day on the road, and cars must pull off the road and part until the traffic opens. These parked transactions in the Bitcoin protocol can remain in the Mempool for hours, sometimes days. 

The lightning network was a mechanism to process transactions off the base layer of the blockchain. Lightning also is the chosen path for Bitcoin to operate in lite client environments, like your phone. 

The base layer of the blockchain has the highest security guarantees. The downside to the lightning network and lite client environments is that they sacrifice security guarantees.

NiPoPoW’s offer a more secure path to lite client environments. Ergo offers a better path to lite client environments. As NiPoPow’s are adopted onto phones, these Dapps offer the highest level of security.  

Ergo does have off-chain plans to speed up transactions. However, at this point, it is not required. The blockchain does not suffer from traffic jams like Bitcoin. 

Ergo’s Optimization Plan 

Ergo is always exploring options. The lead developer is a scientist who has had a long career not only in blockchain software development but also in academic research. Ergo is committed to evolving Proof of Work. That is the core ideal of the Ergo blockchain. When will Ergo be finished? Ideally, never. 

That is the point of having a science first project. As new research and techniques are released that are compatible, they can be adopted. As new challenges arise in the future, new solutions must be implemented. 

Layer 0 The Network Layer

The network layer in Ergo has yet to be optimized. 

This optimization will allow new users to download a full node at a faster speed. It will also increase the speed at which nodes refresh as new blocks are created. 

Layer 1 Blockchain Layer

Ergo’s blockchain layer is already very advanced. Ergo’s sigma protocols are cutting edge in the blockchain industry. 

Ergo already has support for stateless clients for full nodes. Ergo’s solution for stateless clients is based on hash-based data structures, so they are simple and while remaining efficient. A stateless client is a sorting mechanism that does not download the entire blockchain, and rather it only processes relevant data. If a Dapp is very popular, it makes sense to use a stateless client. 

That means the Dapp does not interact with the whole blockchain. Rather it only interacts with transactions that are relevant. In order to create a stateless client, there must be a full node that is running a data sorting program and relaying it to the stateless client. This improves how apps operate and makes them faster. 

NiPoPoWs will allow for Ergo Dapps and Wallets in multiple environments. They also will allow for multiple blockchains to communicate. Imagine your phone, or perhaps in the future, your smartwatch being able to interact with multiple blockchains with full security. Optimal security in multiple environments is one of the most important aspects of Ergo’s research. Considering it is people’s money, the best security practices are important.  

There is also a pathway through governance in which miners could adjust the block size. A change in block size could increase the number of transactions that can fit into each block.  

The next development on Layer 1 will most likely be based on the outcomes of future side chain research between Ergo, Emurgo, and IOG.

Layer 2 OffChain Protocols

Ergo has the possibility of supporting the lightning network in the future. There is also the potential to implement a rainbow network in layer 2. 

Zero-Knowledge Contingent Payments and FairSwap/FastSwap protocols are layer two protocols that Alex has been researching. Other state channels can be implemented as required. 

Ergo was designed to easily implement Layer 2 solutions. The truth is the Ergo blockchain is not congested to the point scalability issues are required.

Luckily plans are in place to address scalability issues before problems arise. Research in the best layer two protocols and their security guarantees are continually advancing.  

This theory-led project offers a multitude of useful outcomes for not only Ergo but cryptocurrencies as a whole. Ergo is committed to discovering and implementing solutions that maximize the potential of Proof of Work.  

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