Crypto venture firm Dragonfly Capital recently shared its view on Ethereum, the world’s second largest cryptocurrency in terms of market capitalization.
The company said while the asset is unlikely to become a popular currency, it can still compete with Bitcoin in the long run.
Kevin Hu, General Partner of Dragonfly Capital, and Celia Wan, Junior Partner of the company, said, “Investors are investing in BTC as the store-of-value narrative takes hold, their understanding of Ethereum and ETH is muddled.”
They added that this will become truer when decentralized finance (DeFi) and non-fungible tokens (NFTs) are added to the mix.
It is unlikely to become popular
For an Ethereum bull, it can be argued that crypto will become a popular currency as their network becomes ubiquitous and staggering gas fees stabilize.
However, the report’s authors said “this is highly unlikely and stablecoins are fundamentally much better in both functions,” adding that it will continue to do so as Ethereum becomes a dominant platform.
Additionally, the duo also said the altcoin will not be successful as a medium of exchange and a unit of account.
While Ethereum has five times the market capitalization of ERC-20 stablecoins, there is a huge discrepancy in their overall volume in the chain that ETH is losing.
All is not lost for Ethereum
However, Hu and Wan conceded that Ethereum is used as security in DeFi and as a non-government store of value, it still has a lot of potential for gaining potential market share.
“In the long term, it is conceivable that ETH will even be able to compete with Bitcoin in terms of scarcity, durability and protection against forgery,” said the duo.
Image courtesy of Cointelegraph News / YouTube
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