Some dreams are meant to be broken — or are they? Ethereum plans to become the biggest cryptocurrency in the world but it needs to go through BTC first! Will it happen? Find out right here!
The wizardry mind of Vitalik Buterin created Ethereum (ETH), a cryptocurrency that broke major records in the blockchain world and became the #2 ranked digital currency by market capitalization placed just behind Bitcoin — ETH’s eternal rival.
Bitcoin (BTC), on the other hand, is the first-ever cryptocurrency that was made by Satoshi Nakamoto in 2009. Since its inception, Bitcoin has held the #1 position in the cryptocurrency market and is currently trading at $36,659.60 after a fall from its all-time high of $68,789.63 just three months ago.
Several analysts in the cryptocurrency world believe that Ethereum can overtake Bitcoin in the near future. These speculations are based on the comparison between the recent performance of Bitcoin which had a mixed year of highs and lows so far, to Ethereum, which went up 425% in 2021 and continued to gain momentum as it reached an all-time high of $4,878.26 in November 2021.
Despite the ever-growing popularity of ETH (currently valued at $2,428.48), Bitcoin enthusiasts hold a strong opinion that Ethereum cannot surpass BTC. However, the winds of change seem to be in the favor of Ethereum. In this article, we present you with a set of reasons that support the narrative of Ethereum’s dominance over Bitcoin in the near future.
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ETH Is More Stable & Profitable Than BTC
While Bitcoin recovers from its hash rate collapse, Ethereum is leading the revolution in the DeFi world as the demand for smart contract cryptocurrencies is reaching new levels of popularity. Ether's decentralized financial ecosystem provides a much bigger return to both big and small investors. The general user adoption is also a great reason why many crypto analysts believe that Ethereum can overtake Bitcoin in the upcoming bull run(s).
An obvious but important point to note here is the significant price difference between ETH and BTC. Ethereum is valued at $2,428.48 and BTC is hovering close to $40,000 with its valuation standing at $36,659.60 as of Jan. 25, 2022. This price difference is a big reason why most investors who missed out on the BTC train (when the first cryptocurrency was valued at 10 cents in 2009), do not want to miss on the next big thing i.e. ETH. Crypto analysts believe that it is only a matter of time before Ethereum passes the $10,000 mark — some have even claimed the timeframe of the $10,000 mark to be the end of 2022!
New Upgrades Continue to Spike Ethereum's Price
Ethereum has always come up with new upgrades to their blockchain mechanism which has spiked ETH's price to new levels and garnered the interest of millions of crypto investors. A major upgrade in this regard would be Ethereum 2.0 (ETH2). (Although the Ethereum Foundation would like us to retire that term in favor of “consensus layer,” we will use ETH 2.0 in this article for clarity).
ETH2 will revolutionize the way Ethereum's network is maintained, enabling much better transaction throughput and lower transaction costs. Furthermore, Eth2 will cut Ethereum's yearly issuance rate from 4% to 0.4 percent. Ethereum is likely to become more limited over time as a result of the fee burn imposed by EIP-1559.
Instead of a proof-of-work method (used by Bitcoin), Ethereum 2.0 will switch to a proof-of-stake system, which is more practical and effective. In such a system, an algorithm selects the node that registers each transaction, with the likelihood of selection rising with the amount of currency held by the node's owner. As a result, the intricacy of cryptographic operations can be greatly reduced, resulting in huge throughput benefits for the entire network. Because each node must stake its currency to participate, disrupting the network would remain prohibitively expensive.
The upcoming improvements will also add a processing mechanism known as sharding to increase Ethereum's efficiency and ability to expand. In the present version of the blockchain, every data contributed to the chain must be verified by all participating nodes. This indicates that the system's overall processing speed is constrained by the slowest participant. It causes a bottleneck, raising transaction costs and slowing throughput.
Ethereum 2.0 can greatly improve the efficiency of its resource utilization by incorporating sharding into the mix. The new system does this by dividing data verification chores across groups of nodes, each of which is accountable for only checking the data it receives. This allows the entire blockchain to leverage parallel processing, potentially increasing capacity by several orders of magnitude. The new Ethereum blockchain should be quicker and more accurate than its predecessor thanks to this new method and the conversion to proof-of-stake.
Ethereum’s Race Towards Going Green
With the rising acceptance of cryptocurrency in the world, people are starting to understand how things work with the most well-known players (Bitcoin & Ethereum) in the crypto market. This is why the two giants of crypto have come under fire for the devastating environmental impact of the mining operations that keep their blockchains functioning. These two networks utilize more energy than many major industries of the world. A single Ethereum transaction footprint takes up 146.41 kWh of power, which is equivalent to the power consumed by an average U.S. household in 4.95 days, as per Ethereum Energy Consumption Index by Digiconomist.
Recently, the CEO of Tesla, Elon Musk tweeted his concern about the climate and mining activities of Bitcoin (usage of fossil fuels) along with the termination of Bitcoin payments for his company. Other companies such as Greenpeace also came forward with their decision of stopping Bitcoin donations. This caused Bitcoin’s price to take a nosedive and the recovery wasn’t swift, to say the least.
Ethereum has understood the underlying problem of climate associated with cryptocurrency mining and therefore the founder of ETH, Vitalik Buterin is advocating his invention to go green with the release of Ethereum 2.0.
ETH 2.0 promises to reduce the network's energy consumption by more than ninety-nine percent and lead the way to provide a "green" option for crypto users and developers. Ethereum 2.0 is the result of more than five years of research and development, with the specific goal of making the fast-growing blockchain "more scalable, more secure, and more sustainable"—that is, if Ethereum can do so without alienating its present community. The end goal of ETH is to lessen the impact of blockchain on the environment and this can become a major reason for Ethereum overtaking Bitcoin in the race of ‘going green’.
‘The Flippening’ Has Already Made Huge Progress
This unfulfilled dream of ETH to surpass Bitcoin has become popular in the crypto world and there is a term for it now, known as ‘The Flippening’. The metrics that will determine whether Ethereum has truly dominated Bitcoin are highlighted in numbers on a website named Blockchaincenter. The website highlights a total of 7 ‘flippening’ metrics to determine the closing distance between ETH and BTC. At present the ‘flippening’ stats are as follows:
1. Active Addresses
Distinct addresses that transmit or receive a transaction in 7 days (week).
- ETH Target Achieved: 63%
- Leader - Bitcoin
2. Transaction Count
The transaction count stats show the number of on-chain transactions taking place on the network.
- ETH Target Achieved: >100%
- Leader - Ethereum
3. Transactions Volume
This metric displays the volume of USD that is traded over the network.
- ETH Target Achieved: 75%
- Leader - Ethereum
4. Trading Volume
BTC & ETH's adjusted exchange trading volume.
- ETH Target Achieved: 73%
- Leader - Bitcoin
5. Total Transaction Fees
The total amount of USD payments made on the network to execute a transaction.
- ETH Target Achieved: >100%
- Leader - Ethereum
6. Node Count
The total number of public reachable nodes.
- BTC Nodes: 13499 NODES
- ETH Nodes: 5596 NODES
- Leader - Bitcoin
7. Google Search Interest
The search volume of 'Bitcoin' vs. 'Ethereum'
- ETH Target Achieved: 25%
- Leader - Bitcoin
From these stats, it is clear that Ethereum is going to catch up to Bitcoin very soon. Once the trading volume (standing at 82%) surpasses Bitcoin all other stats will see massive growths.
CEOs of Multi-Million Companies Back the ‘Flippening’
The CEOs of major tech companies and financial institutions are backing Ethereum to overtake Bitcoin.
Nigel Green, CEO, and founder of the deVere Group says:
“Ethereum (ETH) is outperforming Bitcoin (BTC) and it can be expected to continue this trend for the rest of 2021. Ether is up around 240 percent this year, while Bitcoin is up less than 38 percent. It has outperformed all other benchmark assets in the first half of this year.”
“First, Ether has a higher level of real-use potential as Ethereum – the platform on which it is the native cryptocurrency – is the most in-demand development platform for smart contracts, thereby highlighting that network’s value not only as a platform for developers but as a worldwide financial utility,”
“Second, investor enthusiasm for the game-changing transition to ETH 2.0, which makes the Ethereum network considerably more scalable, sustainable and secure. These upgrades represent a major boost not just for Ethereum but for blockchain technology itself.”
CoinSmart CEO Justin Hartzman, says:
“People don’t like transacting with BTC since it’s more of a store of value. Ethereum, on the other hand, has built a full-on multi-billion dollar ecosystem so the frequency of ETH transactions is definitely going to be a lot more.”
Celsius Network CEO Alex Mashinsky, says:
“The flippening already happened. Ethereum already surpassed Bitcoin in dollar terms as the total holdings of the Celsius community, and I think that the broader market will follow it in the next year or two. We will see that flippening happening also in the broader market.”
Pantera Capital’s CEO, Dan Morehead says:
“You’ll see a transition of people who want to store wealth, doing it in Ether rather than just Bitcoin,” Morehead believes that ‘’the cryptocurrency’s shift to Ethereum 2.0 will significantly reduce Ether’s mining energy consumption levels compared with the one of Bitcoin. Ethereum’s wide implementation in decentralized finance applications would also help Ether grow bigger than Bitcoin’’
The list of CEOs backing the ‘flippening’ continues to increase as time passes by. Now, all eyes are set on the launch of Ethereum 2.0 and how it will revolutionize the crypto world of ETH.
BTC vs ETH: Who Will Win?
Only time will tell if Bitcoin will quash the “flippening” effect or Ethereum manages to overtake BTC and become the new market leader. However, in this race of reaching the top of the crypto mountain, one thing is for sure: The world of cryptocurrencies is here to stay and investors who haven’t entered this trillion-dollar market might regret their decision in the long run.
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