The Big Crypto Flippening: Can Ethereum Overtake Bitcoin?


"Ethereum's rise to the top of the crypto-universe seems unstoppable," Nigel Green stated in mid-August, and it's not difficult to see why deVere's CEO thinks so. DeFi is on the rise, NFTs are booming, Ethereum (ETH) remains more scalable than Bitcoin (BTC) and also offers more uses, including smart contracts. Additionally, Ethereum will soon transition to a Proof-of-Stake (PoS) consensus algorithm that is said to be more environmentally friendly than Bitcoin's energy-intensive Proof-of-Work (PoW) protocol.

“Ethereum is years ahead of Bitcoin in everything but price and fame,” Green said earlier this year, adding, “There's a real feeling that 2021 is the year for Ether. The time has come. ”But is it really a foregone conclusion that the world's first, largest and most famous cryptocurrency is ready to give up its market cap? Maybe not.

"If you look at CoinMarketCap's homepage for the past five years, Ethereum is usually in second place, just below Bitcoin - and it really hasn't moved permanently from second place since it was launched," said Molly Jane Zuckerman. Content Lead at CoinMarketCap, told Cointelegraph, adding, "History shows us that there is only one cryptocurrency that can ever claim the title of 'King of the Crypto-Verses'."

So is there any chance of some flippening - the term often used to describe a reversal of ETH and BTC? Do altcoins still benefit from the light shining on Bitcoin or do they step out and become popular on their own? Can the two ultimately even be compared, since they serve different purposes within the crypto and the wider financial area?

Not a closed deal

"Ethereum's ultimate dominance is hardly certain," commented Eswar Prasad, Cornell University professor of economics and author of the forthcoming book The Future of Money. There could be technical complications in moving from Ethereum to the PoS consensus protocol, "and there are many risks of attacks on DeFi products that could undermine trust in these products and in Ethereum itself," he told Cointelegraph.

Still, Bitcoin has not proven to be an effective medium of exchange, added Prasad, and its blockchain has “limited functionality” compared to Ethereum, especially when it comes to decentralized finance (DeFi): “Ethereum offers more flexibility, especially for DeFi products and services and has the potential to become a viable and efficient medium of exchange that has both low latency and high throughput for transactions. "

Perhaps Green was going a little too far, suggested Lee Smales as Associate Professor of Finance at the University of Western Australia. “Inevitable” is a strong word after all, he told Cointelegraph, “but I would say it is very likely that this will happen - although the recent rally in Bitcoin has overtaken Ethereum and may have delayed the timing a little. I would guess happens in the next two to three years. "

So how long?

Many seem to bet on Ethereum and the question is often: not if but when? Ether could outperform Bitcoin as the crypto world's most important store of value in the coming years, Goldman Sachs analysts said in July, while deVeres Green said the flippening was "likely within five years."

"I think it will be difficult for ETH to flip Bitcoin anytime soon," Justin Hartzman, CEO and co-founder of the Canadian crypto exchange CoinSmart, told Cointelegraph. "The next The halving will take place in 2024, which will inevitably drive up the price. Also keep in mind that “Ethereum killers” like Cardano and Tezos are on the rise. If they do, they could siphon off a lot of potential market capitalization from Ethereum's kitten. "If the trading of places takes place," I could see that possibly happen in five to six years. "

“I don't think Ethereum will outperform Bitcoin in terms of market capitalization and overall valuation,” John Iadeluc, CEO of Banz Capital, told Cointelegraph, adding, “Bitcoin is the global 'introduction' to cryptocurrency, at least for the foreseeable future. For example, I don't see a scenario where the SEC approves an Ethereum ETF before approving a Bitcoin ETF. "

Jason Peckham, an analyst at investment management firm Invictus Capital, told Cointelegraph, “I don't think this is inevitable. In fact, five years is enough time for an outsider to turn ETH and BTC both around. ”Much depends on how the two crypto communities deal with their regulatory challenges, he added, as well as internal factors such as the pace,“ with ETH EIP-1559 was burned “which should make it less inflationary and possibly more attractive to investors. He added:

“If I had to stick to one thing, I would say that ETH needs the super cycle / double bubble thesis in order to unfold. That should allow the various sectors to thrive in a way that is not possible in a bear market that would likely be bearish for ETH compared to BTC, as we've seen in the past.

Environmental factors must also be taken into account. The enormous power consumption of Bitcoin mining has long been known, but when Elon Musk drew greater attention to it earlier this year, the price of BTC collapsed. While Bitcoin has since bounced back, "the energy" continues to attract attention, ”Smales said, and that should only intensify. "So switching from Ethereum to PoS creates an additional benefit that could result in the flip occurring earlier."

What could Ethereum derail?

Green reported that ETH was already up 300% in 2021, compared to just 55% for BTC, and outperformed all other assets in the first half of the year. Is there anything that could hold its momentum back?

To stay in the competition for the flippening of BTC, Ethereum must maintain its role as the largest smart contract platform, however some new competitors continue to emerge. “POS is not yet fully proven,” Smales said, and it could develop in such a way that the market is dominated - essentially centralized - by a few very large players, leading to market friction and possibly even higher transaction fees.

The EIP-1559 upgrade should make Ethereum's gas fees more manageable, but according to YCharts, average gas fees have hit a three-month high. Since the gas charges have constantly burdened the usability of the network, the upgrade to Ethereum 2.0 or Eth2 cannot be made early enough.

In addition, Bitcoin does not stand still technologically. "The proposed Taproot upgrade could significantly improve the efficiency, privacy and functionality of its blockchain from Bitcoin," said Prasad.

Bitcoin also enjoys the "first mover" advantage that can be critical in networks. "The argument for BTC's dominance boils down to its superior Lindy effect," Peckham told Cointelegraph, referring to a concept popularized by Nicholas Taleb that the older a technology, the longer its life expectancy . "Along with this is the long-term trend towards stronger market participants who hold the majority of Bitcoin while the rest of the world continues to be tricked into owning their stake in the headline cryptocurrency," added Peckham.

Still, Ethereum now seems to have momentum. "Since the DeFi summer explosion, trends in crypto markets have actually shifted towards Ethereum, followed by the continued popularity of NFTs," Zuckerman said, as Peckham added:

“Cohorts of users were drawn into Ethereum for DeFi and for NFTs, while Bitcoin is less diverse in comparison. Most of what excites crypto-natives like me about crypto is either based on Ethereum or an Ethereum competitor. "

Ethereum has the richest ecosystem in the crypto space, and DeFi, which lives mostly on Ethereum, is holding huge sums of total value locked down today, despite the early summer downturn and claims that DeFi was just a bubble with no inherent value.

“DeFi had its toughest test to date and passed it with flying colors. The number of DeFi users has already exceeded 3.25 million as the utility and use cases increase every day, "Hartzman said, adding," With more applications and users, Ethereum could leverage Metcalfe's law and grow its overall network value exponentially . "

Are Bitcoin and Ethereum Really Comparable?

But on closer inspection, does it even make sense to compare Bitcoin with Ethereum? One is a (supposed) form of money, the other is a platform, a new supercomputer that drives Web 3.0, on which new technologies can probably be built.

At the moment, the two platforms are doing different things. Once the impact of the Taproot upgrade comes to the fore and developers start building a DeFi ecosystem around the Bitcoin network, this could become a whole new argument. For now, however, Bitcoin is primarily a store of value, while Ethereum is a decentralized application platform. “This is not a 'Coca-Cola vs Pepsi' debate. This is a debate between gold and the internet, ”said Hartzman.

“Both Ethereum and Bitcoin are cryptocurrencies, but visionary they have two very different goals,” added Iadeluc: “I don't think Bitcoin and Ethereum compete with each other; rather, I believe that their respective growth complements each other. "

Related: London's Influence: Ethereum 2.0 Staking Contract Becomes Largest ETH Holder

“From a technical point of view, they are fundamentally different,” says Peckham, but from an investor's point of view, a comparison makes perfect sense.

"Bitcoin is unique as a store of value," said Hartzman. “There's really nothing like Bitcoin, and there won't be anything like it any time soon. Still, it's impossible to bet against Ethereum because of its incredible network value, rich community and pace of innovation. "

Peckham told Cointelegraph: “As a trader, I am currently more optimistic about Ethereum in terms of price movement. I think it will continue to provide superior advantages to Bitcoin in a bull run. "

However, rather than picking a winner, "a more realistic prospect," Prasad told Cointelegraph, "is that Bitcoin and Ethereum will consolidate their joint dominance in the crypto space over the next few years, while competition between their supporters leads to innovation in both." Ecosystems. "

https://dailyaffiliatemarketingnews.com/the-big-crypto-flippening-can-ethereum-overtake-bitcoin/

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