Bitcoin is the king of cryptocurrencies, but “Ethereum’s rise to the top of the crypto-verse seems unstoppable,” says analyst
Bitcoin, the world’s leading cryptocurrency and the genesis of the current revolution in digital assets, could one day bow to a new king of the industry, speculates a researcher.
“Ethereum will continue to outperform Bitcoin in 2021 and ultimately outperform its rival,” wrote Nigel Green, CEO and founder of deVere Group, a major financial advisory firm and asset manager, in a statement on Wednesday.
Green argues that Bitcoin BTCUSD, + 0.25%, which was introduced in a 2008 white paper, could give up its dominance to Ethereum’s ether ETHUSD, + 0.21%,
what is viewed by some as a clearer use case than Bitcoin, which is viewed by some as digital gold.
Bitcoin’s value in 2021 is up 57% while that of Ether is up 318%, most recently on CoinDesk.
In comparison, traditional assets have produced far more mundane returns. The S&P 500 Index SPX is up more than 18% year-to-date, the Dow Jones Industrial Average DJIA is up 15% so far in 2021, the Nasdaq Composite Index COMP is up almost 14% and the gold futures are GC00 down almost 6%. , Show FactSet data.
Bitcoin’s main marketing point has been the enthusiast’s claim to be a store of value and, to a lesser extent, a currency, but Ethereum’s network is viewed by many as a powerful, decentralized, open source backbone from which a range of uses can be made based.
Founded in 2015 by a team including Vitarik Buterin, Charles Hoskinson and Gavin Wood, Ether enables software developers to write bespoke programs over their network. Sometimes these applications are called smart contracts.
Ether bulls argue that the world’s number 2 cryptocurrency by market capitalization is the most sought-after development platform, underscoring the “value of the Ethereum network not just as a platform for developers, but as a global financial services company,” Green wrote.
Ethereum also serves as the backbone of a number of popular and breakthrough platforms, including decentralized financial networks or DeFi, non-fungible tokens or NFTs and DAOs or decentralized autonomous organizations.
These growing uses have cemented Ether’s works, but that will change in the coming months.
A major upgrade to the Ether network, which includes a gradual transition from a proof-of-work protocol to a proof-of-stake, as well as increased storage and processing power for smart contracts, is underway.
Put simply, a proof-of-work network requires tremendous computing power to verify the distributed ledger network that forms the basis of traditional cryptocurrencies, while a proof-of-stake requires proof of ownership and is considered greener because it reduces the cost of ownership Carbon footprint of checking transactions in the blockchain and paying out rewards to the “miners” that underpin the network.
The process by which investors stake their Ether in preparation for upgrading to Ethereum was also offset against the rising prices of the digital asset.
“These upgrades are a big boost not only for Ethereum, but also for blockchain technology itself,” Green writes. “Ultimately, this will mean that its value will exceed Bitcoin’s – probably within five years,” he predicts.
Green is hardly the first to speculate that ether will one day displace ether. Industry enthusiasts even have a name for it: the flippening. The flippening is the day Ethereum overtakes Bitcoin in market value.
Still, Bitcoin remains the dominant player, accounting for 44% of the crypto market value of nearly $ 1.96 trillion, according to CoinMarketCap.com, compared to Ethers for nearly 19%.
Of course, it’s impossible to know which, if any, crypto will survive, let alone the most dominant one. Control of the sector is intensifying as regulators attempt to put in place guard rails to protect potential investors and central banks consider using central bank digital currencies and stablecoins, which could also pose an existential threat to the existing range of crypto assets.