Ethereum will eventually surpass Bitcoin?

In the past ten days, the market has been abruptly. BTC rebounded 58% from the bottom (29k→46k), and ETH rebounded 88% (1.7k→3.2k) from the bottom.

Obviously, this round of ETH is stronger than BTC.

Therefore, there have been a lot of discussions about “Ethereum surpassing Bitcoin” in the market recently. In fact, since 2017, this kind of voice or controversy has always existed.

At present, the market value of Bitcoin is US$850 billion, accounting for 46% of the total market value of the crypto market ; while the market value of Ethereum is US$360 billion, accounting for nearly 20% .

Will Ethereum really replace Bitcoin as the leader of the crypto market? Is this a possibility or a necessity? When will the Great Reversal come?

Ethereum will eventually surpass Bitcoin?

Why are you optimistic about Ethereum?

“Ethereum will eventually surpass Bitcoin; it is only a matter of time before Ethereum surpasses Bitcoin…”

Why more and more people are optimistic about Ethereum? Uncle Jian believes that there are two main reasons:

1. The continued growth and prosperity of the Ethereum ecosystem

2. Ethereum’s own token mechanism has the logic of continuous rise

Now, let’s talk about these two points.

On ecology, Ethereum is the king

Looking back at the market hotspots this year: DeFi, NFT, gamefi, which one did not rise from Ethereum.

At this stage, no other public chain has the vitality and innovative power of Ethereum.

Whether it was EOS, TRON, or later ICP, Polkadot, and Cosmos, the so-called “Ethereum killers” are currently unable to compete with Ethereum.

As for Binance BSC, Huobi Heco, Fantom… these EVM-compatible chains can actually be regarded as side chains of Ethereum.

From a certain perspective, they are friends of Ethereum, and their ecological development resonates with the ecology of Ethereum, so they are also expanding the ecology of Ethereum.

If Bitcoin is digital gold, then Ethereum is digital oil.

The volume of oil is much larger than that of gold, because gold has only a single value storage function, while oil carries the entire industrial civilization of mankind.

Correspondingly, Ethereum as a supercomputer, the ultimate ideal is to carry all the decentralized applications in the world.

Without oil, we cannot see today’s industrial civilization. Without Ethereum, we might not be able to see the future of the crypto world.

On the inflation rate, Ethereum will be smaller than Bitcoin

On the evening of August 5th, the Ethereum London hard fork upgrade was officially completed, of which EIP-1559 was the most interesting.

EIP-1559 changed the fee structure of Ethereum, splitting the fee into a base fee (bass fee) and a miner’s tip (tip). And all basic fees will be destroyed.

So far, in less than a week, more than 30,000 Ethereums have been destroyed, worth more than 100 million U.S. dollars.

Ethereum will eventually surpass Bitcoin?

We can roughly calculate the change in the annual inflation rate of Ethereum after the activation of EIP-1559.

The current burning rate is 3.25 ETH/min, which will burn 1.7 million ETH in one year.

The additional issuance rate of ETH is 2 ETH per block, and the time interval between blocks is 13 seconds, so approximately 4.85 million ETH will be issued a year.

So the net additional issuance in one year is approximately 3.15 million ETH.

That is, the inflation rate dropped from 4.1% to 2.7%.

In other words, EIP-1559 has reduced the inflation rate of ETH by about 34%.

For Ethereum, EIP1559 is just the beginning, and the next ETH2.0 to PoS is the big picture.

Ethereum will eventually surpass Bitcoin?

In the design of ETH 2.0, the total amount of ETH participating in the pledge determines the number of block rewards, which also determines the inflation rate.

Ethereum will eventually surpass Bitcoin?

We assume that 100 million ETH will eventually participate in the pledge, and the inflation rate will be about 1.71%. After the implementation of PoS, the actual inflation rate of Ethereum will be lower than Bitcoin’s current 1.77%.

If the total amount pledged ETH less, then inflation will be lower, and then superimposed EIP-1559 combustion, Ethernet Square will even go to deflation !

There has always been a view in the market before: I am optimistic about the technology and ecology of Ethereum. I believe that the platform of Ethereum will generate great value, but the ETH tokens on Ethereum may not necessarily have great value.

However, the introduction of EIP-1559 and the adoption of the PoS consensus mechanism will greatly enhance the value capture capability of ETH. This view can be overturned.

Why is it impossible to overtake in a curve in the short term?

The ecological development and token mechanism of Ethereum have opened up people’s imagination and also opened up the upward space of ETH currency price.

But if you ask me: will Ethereum surpass Bitcoin?

I think it is possible.

So when will Ethereum surpass Bitcoin? I think it will be difficult in the short term, at least this cycle is unlikely.

Regarding the status quo of Bitcoin and Ethereum, we can look at two sets of data.

With the rapid development of the Ethereum ecosystem, the number of transactions on the Ethereum chain/the transaction fees consumed on the chain have surpassed that of Bitcoin. But the number of active addresses in Ethereum is lagging behind, only 67% of Bitcoin.

Ethereum will eventually surpass Bitcoin?

In addition, the AUM (asset management scale) of Bitcoin-related financial products is as high as 32.3 billion U.S. dollars, while Ethereum is only 11.7 billion U.S. dollars.

Ethereum will eventually surpass Bitcoin?

These two sets of data just reflect two perspectives. The former is the consensus of the masses and the latter is the institutional approval. Bitcoin has an advantage in both aspects.

This year’s cryptocurrency bull market was driven by “institutional entry.” If there is no institutional demand, it is difficult for Ethereum to surpass Bitcoin.

In the past year, we have heard news about institutions buying Bitcoin.

At the beginning of the year, Goldman Sachs even pointed out that institutional investors’ demand for Bitcoin has been suppressed. For example, pension funds and global sovereign wealth funds are temporarily unable to enter the market.

In contrast, the consensus of Bitcoin is constantly strengthening, and there are large funds that want to enter but cannot enter (ETF has not yet passed); as for Ethereum, there are indeed some institutions entering the market, but many institutions simply don’t know what Ethereum is. what.

As the founder of CryptoQuant mentioned in an interview in August:

A few weeks ago, I met executives from Goldman Sachs, Fidelity and other large institutional asset management companies in Miami, and they are still trying to explain to their bosses what is Ethereum/DeFi.

I think it will take several years for the Ethereum/DeFi project to build confidence in institutional adoption.

For cryptocurrency, the biggest benefit is to be understood.

And time is obviously on the side of Bitcoin. People have ten years to learn about Bitcoin, but less than half of the time to learn about Ethereum.

Uncle Jian’s summary

Bitcoin is a consensus asset, all it needs is to be understood and recognized by more people. It does not need to be changed, and being unchanged is precisely the biggest advantage.

Ethereum is different. As a productivity platform, it naturally needs to prove itself and innovate.

Bitcoin and Ethereum belong to different tracks and are not at odds.

Cheering for “Ethereum will eventually surpass Bitcoin” is indeed exciting. After all, no one likes to watch the story of the second child crushing the boss?

But as an investor, you should not be trapped by emotions, and there is no need to participate in arguments. After all, our ultimate goal is to win, not to win the debate.

If you only have faith in making money, then of course both are configured :)


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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