Bitcoin plunges, but can ethereum really overtake it?

With the recent plunge in the Bitcoin market, many practitioners in the digital currency industry are speculating that Ether is likely to outperform Bitcoin in 2021.

Bitcoin plunges, but can ethereum really overtake it?

In May this year, institutional money flowing into ethereum surpassed bitcoin for the first time, an important signal that drew everyone’s attention back to this highly promising digital asset at once. Coupled with the recent plunge in the bitcoin market, many practitioners in the digital currency industry are speculating that ethereum is likely to outperform bitcoin in 2021.

Bitcoin, by far the most popular and valuable cryptocurrency, was the first cryptocurrency to use peer-to-peer technology for online payments and transactions. 2021 saw the price of Bitcoin soar to a peak of $63,000, but it has recently declined due to tighter domestic regulation. Ethereum, on the other hand, is an open source digital currency that, like most other cryptocurrencies, uses blockchain technology to build decentralized computing networks where each participating user holds an identical copy of a public ledger contract, and is currently the second most popular and second largest cryptocurrency by market capitalization.

Just as the price of bitcoin has plummeted in recent weeks and the value of the digital currency market has generally fallen, ethereum has performed relatively strongly and has managed to “capture” nearly 19% of the total digital currency market cap. Not only that, but during the market rally, when the bitcoin price was up around 42-43%, ethereum rose by a whopping 280%. Moreover, recent data also shows that the volume of decentralized transactions on the Ether blockchain has grown by 8,500% in the last 12 months, a metric that reflects the massive growth in both the size of the Ether user base and the actual economy, as people can now do many things on Ether, including running decentralized applications, making transactions, etc. As a result, there is speculation in the digital currency market that Ether could continue its bullish trend and reach a 5-digit or higher value in the near future.

So, is the reality that Ether has really started to “overtake” Bitcoin? Is this the best time to invest in ETH? Next, let’s focus on comparing bitcoin and ethereum based on the current market conditions.

As you can see from the data collected, although Ether has been relatively strong, due to market adjustments and panic, as well as the recent increase in regulatory pressure, the growth pattern of Ether has reversed in recent months, especially in recent weeks, the price of Ether has fallen. The current Ether price is basically fluctuating around $2,000, which is still a large gap between the current price compared to the all-time high of $4,700.

However, the current short-term panic in the market has not affected the pace of Ether’s growth, and if you follow some of the key webcasts, you will see that almost all of them are showing growth. If you look at the growth rate alone, it could even reach the “trillion dollar market cap” level in the near future. We found that the total value locked in Ether smart contracts has grown by more than 9,000% in the last 12 months, and the number of users has also grown tremendously, which seems to suggest that Ether has the potential to grow to the “trillion dollar” level of the market.

So what exactly are the factors driving such a rapid growth in the number of Ether users? First, we see some users who “simply” buy and hold ETH, and others who need to send stablecoins (or similar digital currencies) to transfer money; second, some users use DeFi for borrowing or lending activities, as well as for revenue farming (liquidity mining); and then there are users who make lottery transactions or buy insurance policies.

In contrast, while Bitcoin has facilitated the emergence of new things like the lightning network and the sovereign network, and there were high hopes for these new things and new frameworks, the reality doesn’t seem to be as good as it could be. In fact, not many people are locking bitcoin into the lightning network because it’s really not very payment-friendly. For the most part, the total amount of bitcoin locked into the Lightning Network has not risen significantly, and the Lightning Network has not grown in size accordingly.

In contrast to the two, Ether has shown explosive growth in both ecosystem size and total on-chain settlement. Incredibly, the current average daily on-chain settlement for Ether is $46.37 billion, compared to about $15 billion for Bitcoin, and most Bitcoin on-chain settlement transactions come from investors and traders who simply send Bitcoins to exchanges to sell for cash, or buy them on exchanges and then withdraw them to cold wallets to keep.

If you look at the above economic activity, you can say that ethereum is “overtaking” bitcoin step by step.

Not only that, but Bitcoin is just something called “digital gold” and you rarely see Bitcoin-based applications. Instead, people can do a lot of interesting things with ethereum, such as borrowing money and buying NFTs, that they can’t do with bitcoin. In addition, Bitcoin mining also has a more serious energy consumption problem, compared to Ether which is moving from Proof of Work (PoW) to a low energy Proof of Stake (PoS) consensus algorithm, which then eliminates a number of environmental problems associated with mining.

In addition, there are countless other advantages of Ether, such as: its ecosystem can provide developers with a huge store of value; it provides the infrastructure for most decentralized financial applications; it offers solutions for creating entirely new applications; the carbon emission rate will be reduced from 4.5% to 0.5%; it is worth mentioning that Ether is also about to upgrade EIP-1559 to introduce in ETH The deflation mechanism, which turns ETH into a deflationary asset with every transaction, means that the token’s store-of-value property will become more and more obvious, which will then drive the price further up in the coming years.

Therefore, if you compare Ether and Bitcoin from these perspectives, Bitcoin is no match for Ether in terms of energy usage, storage of value, or amount of infrastructure. Ether is in the process of upgrading towards proof of stake, while Bitcoin is indeed a very conservative digital currency, and if Ether 2.0 is successfully completed, its network will run on perhaps a thousandth of the energy consumption of Bitcoin. And with Ether about to complete all the upgrade work in the near future, the market performance is bound to show exponential growth.

Posted by:CoinYuppie,Reprinted with attribution to:
Coinyuppie is an open information publishing platform, all information provided is not related to the views and positions of coinyuppie, and does not constitute any investment and financial advice. Users are expected to carefully screen and prevent risks.

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