Clash of the Titans

BTC is (still) at the top of the cryptocurrencies, followed by ETH. However, experts estimate that the number two could prevail over the crypto leader in the long run. Even though the crypto market is flourishing, little is changing at the top. Bitcoin clearly remains the largest cryptocurrency with a market capitalization of about $753 billion (as of mid-March 2022), followed by Ethereum by a respectable margin. ETH is currently worth about $2,600, giving it a market value of $318 billion. Ethereum’s numerous use cases for DeFi, however, suggest that the runner-up could knock the crypto-legend off its throne.

This opinion is held by Prof. Dr. Aleksander Berentsen, who teaches economic theory at the University of Basel, among others. In the podcast “Bitcoin, Fiat & Rock’n’Roll”, which deals with digital and physical currencies, he recently explained that while Bitcoin and Ether are similar in structure, ETH could score points due to its myriad functions and use cases – in this context, he cited the smart contract capability of the ETH blockchain, which is likely to drive the DeFi sector in particular. It is the diversity of use cases that could give ETH supremacy in the long run. Berentsen envisions nothing less than a replacement of the financial system in its current form, not least because of ETH’s greater efficiency and the lower cost of maintaining the architecture behind it.

NFT Boost for ETH

The Ethereum blockchain is also being used by current trendsetter NFT. Not only does it allow crypto fans to purchase digital collectibles of their favorite artists or tokens, but ownership of the tokens is also clearly defined and stored on the blockchain. But Ethereum could also benefit from the ever-growing sustainability movement, as Dr. Larisa Yarovaya of Southampton Business School tells CNBC: She explained that the Ethereum blockchain is not only significantly more efficient, but also more environmentally friendly than the one underlying Bitcoin. As a result, she advocates for Bitcoin to be discontinued altogether, as she called for last year, telling the Financial Times. “Bitcoin could be the first inefficient version of a breakthrough technology,” Yarovaya told the financial paper, blatantly calling for its death, “It should die for the good of the planet and be replaced by a new model. It consumes more electricity than an entire country.” She also says that the increase in value does not justify the high energy consumption: “It is a speculative asset. [Bitcoin] does not create a significant number of jobs. It is not used frequently for transactions.”

One man’s sorrow, another man’s joy

The environmental concerns about BTC work to ETH’s advantage, especially as developers are working hard to create a “greener version” of the platform. “Ethereum is currently undergoing a series of upgrades that will replace mining with staking,” the project’s website states. “This will eliminate computational power as a security mechanism and reduce Ethereum’s carbon footprint by 99.95%.” This means that in the long run, a transaction on the network could consume less energy than, say, a payment via Visa, especially since greener payments via Ethereum will not be introduced at the expense of the blockchain’s decentralization and security.

Where are you off to, Ether price?

Bill Barhydt, co-founder and CEO of Abra, also predicts a bright future for ETH and, in an interview with CNBC host MacKenzie Sigalos, held out the prospect of the Ethereum blockchain acting as the “world’s computer” in the long run and believes it is conceivable that various stablecoins, as well as widespread DeFi programs and games, will be built on the technology. Barhydt is also confident about the NFT trend with regard to Ethereum. However, the development of these network effects is just at the beginning, according to the expert, the price of the cryptocurrency could increase to $30,000 to $40,000 – but he did not specify an exact timeframe for this.

The “flippening” (the point in time when the market capitalization of Ethereum overtakes that of Bitcoin) is certainly still a long time coming, but “the developments around decentralized applications on the Ethereum blockchain could further shorten the gap to the industry leader Bitcoin in the future,” financial analyst Timo Emden from the financial services provider IG is convinced. “At the same time, however, Bitcoin has a pioneering effect, especially since the cryptocurrency is considered the first of its kind. Against this background, it acts as a classic exchange currency on many exchanges.” He sees an advantage for BTC especially in poorer countries that want to break away from dependence on the reserve currency, the U.S. dollar. So the race for dominance remains exciting….

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