A top exec at one of America's oldest banks explains why Ethereum holds so much promise
Brown Brothers Harriman & Co.
Ether tokens and bitcoin are built on a technology called blockchain. That's a kind of digital ledger that records and verifies transactions made on it.
Ether tokens, which are built on ethereum blockchain, are newer to the crypto-scene than bitcoins, which can trace their origins back to 2009.
Mike McGovern, the new head of Investor Services Fintech Offerings at Brown Brothers Harriman & Co, one of the oldest private banks in the US, thinks one blockchain is clearly superior.
"When looking at bitcoin blockchain versus ethereum, there's no doubt ethereum is superior," McGovern told Business Insider in a recent phone interview.
Brown Brothers Harriman has been working on blockchain for five years, according to McGovern. It started with an R&D center in Krakow, Poland.
One reason why McGovern thinks Ethereum is better is because its cheaper.
"It doesn't cost as much to mine ether tokens, because it requires less electricity than bitcoin," he said.
McGovern's second reason relates to the original purpose of the two blockchains that power the currencies.
Bitcoin was designed to be a currency from the start. Vitalik Buterin, a Russian native and young programmer, however, founded Ethereum as a platform on which two parties could enter into a contract without a third party, according to Paul McNeal, a Bitcoin evangelist and long-time cryptocurrency investor.
These so-called smart contracts create trust between two parties. The ethereum platform is powered by ether tokens and can be used as both a currency and can "represent virtual shares, assets, proof of membership, and more."
"Ethereum is not only cheaper than bitcoin, it is also more robust and has more applications outside of simply financial transactions," McGovern said.
Here's a handy explanation from Nathaniel Popper, a New York Times reporter and author of Digital Gold: Bitcoin and the Inside Story of the Misfits and Millionaires Trying to Reinvent Money:
"Ethereum was designed to do much more than just serve as a digital money. The network of computers hooked into Ethereum can be harnessed to do computational work, essentially making it possible to run computer programs on the network, or what are referred to as decentralized applications, or Dapps. This has led to an enormous community of programmers working on the software."
McGovern isn't the only person who is more bullish on Ethereum. A survey recently cited by Popper in The New York Times indicates that a lot of business are singing the same tune. Almost 94% of surveyed firms said they feel positive about the state of ether tokens. Only 49% of firms surveyed had a positive feeling about bitcoin.
MGT Capital, the company run by John McAfee, is one such firm. It said it would start to mine Ethereum in its latest bid to turn a profit. "We are more convinced each day of the growth and value of digital currencies, and our company is uniquely positioned to be a leading provider of processing power to relevant blockchains," McAfee said in a statement.
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