This content originally appeared on Level Up Coding - Medium and was authored by Dmytro Spilka
Often acknowledged as the long-standing understudy of the world-renowned Bitcoin, Ethereum is a cryptocurrency that’s often been considered an afterthought when it comes to speculative cryptocurrency investment. But as the age of Web3 continues to dawn, could we see ETH’s superior utility finally usurp BTC?
Although Ethereum has never flipped the power of Bitcoin before, the coin stands as the best positioned asset to stage a coup on the world’s most dominant cryptocurrency.
(Image: CoinMarketCap)
At present, ETH commands around 20% of the entire market capitalization of crypto, which outstrips a wide array of altcoins combined. Although it’s still some way off the dominance shown by Bitcoin, we can see that Ethereum has begun to close the gap to levels that haven’t been seen since 2018.
Crucially, Ethereum offers more in terms of utility and real-world use cases, as opposed to Bitcoin, which is widely recognized as a store of value. With this in mind, could we really see a long awaited ‘flippening’ occur? And is Ethereum a better investment option than Bitcoin today?
Why is Ethereum Different from Bitcoin?
Ethereum’s key strength comes in the form of network utility. This has led some cryptocurrency commentators to dismiss comparisons between Bitcoin and Ethereum as if it were comparing electricity and gold.
As the world’s oldest cryptocurrency, Bitcoin exists without much of a scalable network to accommodate the evolution of the technology around it. Ethereum, however, can bring plenty of new opportunities to the crypto ecosystem–as we’ve seen be the explosion of non-fungible tokens which are bought and sold on Ethereum’s blockchain as well as the emergence of smart contracts and other decentralized finance.
Although it has great utility, this has also brought more network congestion which has seen gas fees increase significantly for Ethereum users.
We’ve also seen ETH and BTC display different levels of energy consumption–with Ethereum’s merger from a proof-of-work mechanism to proof-of-stake in September 2022 helping to lower the coin’s carbon footprint by over 99%.
Another significant difference between the two assets comes in the form of supply. Although Ethereum’s merge is likely to reduce the volume of new ETH produced each year, it still remains that there’s no hard limit on the production of the coin–while only 21 million BTC can ever be produced.
Once again, this variation in supply highlights Bitcoin’s stance as a form of digital gold, while Ethereum clearly has a different purpose in supporting the growing decentralized finance ecosystem.
Ethereum and Bitcoin Shouldn’t be Viewed as Competitors
When exploring the merits of both Bitcoin and Ethereum as investment opportunities, it’s important to understand that both assets, although cryptocurrencies, are profoundly different in many ways.
As a capped-supply asset, Bitcoin has fixed scarcity and a lack of utility other than a store of wealth. While Ethereum has a larger volume of supply, its ability to host many more assets within its network means that holding ETH can be useful for using other technologies.
This means that investors should first consider their long-term intentions before buying into either asset, because this can play a significant role in determining their overall investing goals.
Finding Value in Utility
The key reason why investors are beginning to consider Ethereum ahead of Bitcoin is due to its widespread diversification opportunities. While BTC can be used for online payments, ETH has a sprawling set of prospective use cases. For instance, it’s become the leading blockchain for DeFi (decentralized finance) applications. Ethereum is also a market leader in the buying, selling, and trading of non-fungible tokens.
As the age of the metaverse continues to emerge, we’re also seeing more games developed on Ethereum’s network, with more decentralized applications with Web3 ambitions choosing Ethereum as a primary location.
This means that investing in Ethereum can also be regarded as an investment in both Web3 and the metaverse respectively. If investors believe that leading eyewear brands can become a popular choice in the future to build metaverse-ready eyewear, Ethereum may ultimately prove to be an ideal place to bet on the long-term viability of the future technology, considering the fact that 75% of adults need some form of vision correction.
Furthermore, this integration with more mainstream brands and technology is likely to make Ethereum more resilient to the sheer volatility of cryptocurrency markets. Whether this means that ETH will become more stable than BTC over the long term remains to be seen, but through utility we could see more solidity.
Is Ethereum a Better Investment?
Despite Ethereum’s superior utility, investors still remain largely bullish on BTC ahead of ETH over the short term at least. According to recent sentiment analytics from The Block, more investors are taking up options in BTC in comparison to ETH over the course of 7-day, 30-day, 60-day, 90-day, and 180-day expiry dates.
Although this points to a short-term bias towards BTC over ETH, investors in Ethereum are more likely to be looking to the longer term when buying into the cryptocurrency.
Here, there’s really no right or wrong answer, and it all comes down to the perception of the investor. Bitcoin can be bought for its fixed scarcity as a store of value, while Ethereum can be bought as an investment ahead of prospective explosion in utility throughout the age of Web3 and beyond. For investors who believe in the potential of the next generation of the internet, Ethereum may be regarded as the biggest market opportunity in crypto.
The Uprising of Utility: Has Ethereum Finally Become a Better Buy than Bitcoin? was originally published in Level Up Coding on Medium, where people are continuing the conversation by highlighting and responding to this story.
This content originally appeared on Level Up Coding - Medium and was authored by Dmytro Spilka
Dmytro Spilka | Sciencx (2023-02-10T14:37:26+00:00) The Uprising of Utility: Has Ethereum Finally Become a Better Buy than Bitcoin?. Retrieved from https://www.scien.cx/2023/02/10/the-uprising-of-utility-has-ethereum-finally-become-a-better-buy-than-bitcoin/
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