Can ethereum overtake bitcoin? These signals tell you the answer

Bitcoin has long been known as “digital gold”, while Ether’s vision is to become the “world computer”.

Throughout the history of cryptocurrency, the qualities and performance of Bitcoin and Ether have been tested and proven by time.

Bitcoin has been compared to “gold” because of its scarcity, it is outside the traditional payment system, secure, private, in fixed supply, and transferable, and is therefore increasingly used as a store of value and a hedge against risk. And Ether, in addition to cryptocurrency, allows for the creation of a wide variety of applications and products in the form of assets in code, including financing tools, DeFi, and more.

The DeFi boom and the booming NFT segment in 2020 have opened up a huge imagination for capturing the value of ETH, and the value and potential of Ether is increasingly on the radar of institutions and banks. Since July 2020 to date, ETH has traded up from $226 to $2,516, a gain of over 1,013%, and up 1,834% from this year’s high price ($4,371).

On May 25, Todd Morley, founder of Guggenheim Investments, said in an interview with Bloomberg TV that the utility of ethereum is “much higher” than that of bitcoin. Bitcoin is “much higher”. And Wall Street banking giant Goldman Sachs has twice reported that “Ether is likely to replace Bitcoin as the dominant store of value.

Is it really possible for ethereum to overtake bitcoin? When will it catch up with Bitcoin? There is no doubt that this topic is still quite controversial. Opponents argue that Bitcoin will always be the king of cryptocurrencies, while agreeers believe there are multiple signs that Ether is on track to overtake Bitcoin.

The “Flip Index”: The Possibility of Surpassing Bitcoin
First, here’s an interesting index, the ” Flippening Index”, launched by the Blockchain Center, which represents the likelihood of Ether (ETH) replacing Bitcoin (BTC) as the largest cryptocurrency. Initially, it was only used to describe a hypothetical moment in the future when the market capitalization of ethereum would exceed that of bitcoin. The index later used eight metrics to measure the dominance of Ether over Bitcoin, including the number of nodes, transaction volume and total transaction fees, number of transactions, number of active addresses, Google search interest, and other aspects.

Can ethereum overtake bitcoin? These signals tell you the answer

Flippening Index Source: blockchaincenter

Current data shows that the Flippening Index is 47.3%, meaning that there is currently a 47% chance that Ether will overtake Bitcoin. Of course, the main determinant of who is the largest cryptocurrency is its market cap, which currently stands at $614.3 billion for Bitcoin and $290.2 billion for Ether, with Bitcoin still far ahead of Ether. However, compared to the beginning of the year, Bitcoin’s market cap accounted for about 70% of the crypto market and Ether accounted for 12.8%. Now, Bitcoin accounts for only 39.6% of the market and Ether accounts for 18.8%. This trend shows how quickly the crypto market share is being swallowed up by ethereum and other cryptocurrencies.

Ether has surpassed Bitcoin in terms of settlement transactions
When it comes to measuring important metrics of blockchain networks, one of them is their practical utility in facilitating economic activity, reflected in numbers i.e. the total value of settlements. Usually, the more value settled on the blockchain represents the greater economic utility of the network. Ether is a universal, programmable settlement layer, with most US dollar stablecoin transfers, DeFi protocols and NFT transactions implemented through Ether, and ETH already has a significant advantage in terms of transaction volume compared to Bitcoin.

According to Messari Research, Ether’s trading volume has surpassed Bitcoin’s in the past month. As of May 21 data shows that the daily trading volume of Ether has exceeded $20 billion.

This point shows that Ether has surpassed Bitcoin in value as a settlement currency, while Bitcoin is being used more as a store of value.

Ether network transaction fees hit record high
Ether surpassed bitcoin in May in terms of adjusted on-chain transaction volume and miner revenue, with adjusted on-chain transaction volume up 35.4 percent to an all-time high of $1.07 trillion, according to The Block Research. Centralized exchange spot trading volume grew 38% to a new all-time high of $2.18 trillion.

In addition, CoinMetrics statistics show that ethereum miner revenue reached a record high of $2.35 billion in May, compared to $1.45 billion for bitcoin miners.

This means that ethereum has a higher cost of book than bitcoin. The ethereum network currently pays more to miners than bitcoin, and miners are more sticky and incentivized. At the same time, with the increase in the number of nodes comes a corresponding increase in the security of the network. In other words, the distributed ledger is also more secure.

Eth2 will bring advantages to ethereum in terms of energy consumption
Recently, Bitcoin’s energy consumption and environmental issues have been brought to the forefront again, and it has also become one of the reasons why Tesla no longer accepts Bitcoin payments, and this event has once again aroused the concern and discussion on the shift to PoS mechanism. And Eth2’s new proof-of-stake blockchain verification is seen as a solution to growing environmental and security concerns. Industry insiders, including V God and Messari senior research analyst Ryan Watkins, believe that with the shift to Eth2 (Ether 2.0 network) and PoS (Proof of Stake), it will become possible for Ether to eventually overtake Bitcoin.

V God recently said at the StartmeupHK virtual conference that Ether’s upcoming transition to Proof of Stake consensus mechanism (PoS) is the solution to the blockchain’s energy consumption problem, and that while proof of stake is still in its infancy and has only been tested in a relatively small number of real-world situations compared to the current proof-of-work model (PoW), it could eventually reduce Ether’s energy consumption by up to 10,000 times. If Bitcoin continues to use PoW, the world’s largest Bitcoin blockchain will eventually be “left behind” as users demand more energy efficiency and environmental options.

In addition, Ether’s upcoming Eth2 upgrade and EIP 1559 deployment will convert ETH into a productive asset with a potentially deflationary monetary policy. This will help Ether be adopted by the mainstream and increase its attractiveness as a store of value asset.

Ether’s practical uses and innovative potential
As the largest underlying blockchain, the ethereum ecosystem supports smart contracts and enables developers to create new applications on its platform, with almost 80%+ of DApps built on ethereum. Ether also enables almost all information to be stored securely and privately on a decentralized ledger. This information can be tokenized and traded. This means that the Ether platform has the potential to become a large marketplace for trusted information. For example, through the use of NFT to sell digital art and collectibles online, more intellectual property, archives, etc. are being issued on the chain, and this is only a fraction of their practical use.

More importantly, Ether has brought new trends and waves to the crypto space such as DeFi and NFT, thus creating a diverse and large-scale economic ecosystem. Nick Tomaino, founder of cryptocurrency venture capital firm 1confirmation, even believes that without Ether, Bitcoin would not have the market cap it has.

The innovative play and high returns on ethereum are bringing more and more new users to the crypto space, and most settlements are based on ETH as the underlying asset. This means that in contrast to Bitcoin, which only acts as a store of value, Ether can be used as a payment system along with a store of value. Over time, the boom in decentralized applications, and the popularity of more innovative areas like DeFi and NFT, will allow Ether to attract new users faster than Bitcoin.

That’s why Goldman Sachs Bank has concluded that ETH is likely to overtake Bitcoin as the dominant digital store of value, given the importance of practical use in determining the store of value.

As to whether Ether can overtake Bitcoin, we leave it to time to see.

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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