tezos and ethereum are some of the most popular smart contract platforms in the cryptocurrency space. Although Ethereum is the larger of the two, Tezos has been gaining ground and the project has recently garnered some high-profile partnerships.
This article will compare and contrast the two platforms, looking at the advantages and disadvantages of each.
Reading: Tezos vs ethereum
advantages of ethereum
ethereum has a couple of key advantages over tezos. the first is decentralization. ethereum is often considered the second most decentralized cryptocurrency, second only to bitcoin. A decentralized protocol is important because it reduces the chances that a single organization can censor transactions or freeze accounts.
There are a couple of big ethereum organizations, like enterprise ethereum alliance and consensys, but even these influential organizations don’t have unlimited control over the network.
Ethereum’s second advantage is its vast developer community. Ethereum has more developers than any other cryptocurrency, even more developers than Bitcoin. These developers volunteer their time to improve the protocol and build new features, like staking, which has recently been released.
Having a large community of developers is a significant advantage because bugs are fixed faster and new features are released regularly. a large community can also build upon itself. there is a lot of technical documentation for ethereum, which makes it easy to build. the community can also offer support to developers who are working with ethereum for the first time.
finally, ethereum is home defi. Although other blockchains, such as Polkadot, are also building a Defi ecosystem, Ethereum currently has the largest suite of decentralized finance products in the world.
Having all these products is advantageous because they are interoperable. for example dozens of different defi protocols are all connected to uniswap in some way. even if another blockchain, like tezos, starts building its defi ecosystem, it won’t have the diversity of applications that ethereum has.
Arguably the number one selling point for tezos is that it has been built with an autocorrect feature. that’s how the tezos team describes it.
“tezos is a self-modifying blockchain network that embeds an on-chain mechanism to propose, select, test, and trigger protocol updates without forking.”
If you’re familiar with a traditional blockchain, like ethereum or bitcoin, you’ll know that making a big change often requires running a hard fork. the problem is that hard forks can be contentious and can fragment the network. In general, a hard fork is not an elegant way to upgrade a network.
the advantage of tezos is that the network can be upgraded without a hard fork. what this provides is long-term stability. anyone who builds on tezos can be sure that the network will not split, as it did in bitcoin with bitcoin cash and ethereum with ethereum classic.
This autocorrect feature was cited as one of the reasons why a large consortium of car manufacturers decided to develop tezos. BMW, Audi, Porsche and some other big car manufacturers have decided to use Tezos to verify the authenticity of the firmware installed in their cars.
In addition to favoring the autocorrect feature, automakers also praised the fact that Tezos is able to settle significantly more transactions per second than Ethereum. Although Tezos is more centralized, the advantage of centralization is speed. For certain clients, such as car manufacturers, fast transactions are more important than decentralization.
This could also be the case for other large companies. perhaps the advantage of tezos is that the blockchain appeals to large manufacturers and other corporations, for whom speed is more important than building on top of the more decentralized protocol.
tezos beats ethereum in gas costs
During the summer and fall of 2020, ethereum has experienced periods of extreme network congestion. some days, there was so much traffic on ethereum that sending even a simple transaction could cost up to $5 or $10.
More complex transactions can cost $50-$100 or more. this is a bad situation as it makes ethereum unusable for the average person. while some ethereum scaling solutions will come out, it is not clear that these solutions will fix the issue right away.
Recognizing an opportunity, Tezos recently implemented the “delphi” update, which lowered the gas requirements to run smart contracts. Tezos claims that in many cases, the gas requirement can be reduced by up to 75%. in other words, executing a smart contract will be 3 times cheaper than before.
Fast transaction speeds combined with low fees could drive a percentage of ethereum users and developers to switch to tezos. The longer ethereum stays congested and the longer fees stay high, the more people will move to other chains like tezos. this puts pressure on the ethereum community to find a way to scale the blockchain.
which blockchain is better?
There is no blockchain that is always going to be better no matter what. the best option will depend on the different needs of the user or developer.
if you want to be a part of the larger defi ecosystem that means ethereum as no other cryptocurrency in the world has such a large decentralized finance movement. ethereum is also the best option if decentralization and immutability are important. when a developer wants to create an application that cannot be closed, it is based on ethereum.
on the other hand, if scalability and fast transaction speeds are a priority, tezos is the best protocol. tezos autocorrect feature is also great as it removes hard forks.
It could be a few years or more before we see which smart contract platform ends up being the long-term winner: Ethereum with its decentralized structure but slower speeds, or Tezos with its high-speed transactions and self-modifying protocol. Of course, both can appeal to different markets as they have different features. it doesn’t have to be one or the other.
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