Crypto hope Ethereum: Can the second largest cryptocurrency prevail against Bitcoin?

• Ethereum is well behind Bitcoin
• DeFi industry likely to drive Ether
• Basis for NFT trading

Bitcoin or Ethereum: Who is ahead in the long term?

The cryptocurrency market is thriving. And even if new tokens keep finding their way to various trading exchanges for the digital coins, little is happening on the winners’ podium. With a market capitalization of approximately $753 billion (as of March 15, 2022), Bitcoin remains the undisputed largest cryptocurrency. Ethereum follows at a large distance. The coin is currently worth around $2,600, giving it a market value of $318 billion. Even if Ethereum is well behind Bitcoin, there is already speculation on the market as to whether the runner-up could dethrone the crypto veteran.

Ethereum with numerous use cases for decentralized finance

This is also the opinion of Prof. Dr. Aleksander Berentsen, who teaches economic theory at the University of Basel. In the “Bitcoin, Fiat & Rock’n’Roll” podcast, which deals with digital and physical currencies, the economics expert recently explained that although Bitcoin and Ether are similar in structure, Ethereum can score with its numerous functions and use cases. Above all, this includes the smart contract capability of the ETH blockchain, which, according to Berentsen, should primarily drive the decentralized finance sector. “My conviction that Ethereum will ultimately play a more important role than Bitcoin in the long term is because there are many more possible applications that can be implemented with Ethereum,” the economics professor told podcast host Jonas Groß. So you could use it to replace the entire financial system in its current form. Not only is Ethereum significantly more efficient than Bitcoin, the cost of maintaining the architecture behind the coin is also likely to be significantly cheaper than that of the market leader.

NFT trend drives Ethereum

In addition, the Ethereum blockchain is also increasingly used in the current trend towards non-fungible tokens (NFTs). Not only can crypto fans purchase digital collectibles from their favorite artists or brands, ownership rights to the tokens are also clearly defined and stored on the blockchain. “NFTs are tokens that we can use to represent ownership of unique items,” writes the Ethereum Foundation. “They allow us to tokenize things like art, collectibles and even real estate. They can only have one official owner at a time and are secured by the Ethereum blockchain – nobody can change the record of ownership or copy/paste a new NFT.”

Ethereum could benefit from sustainability awareness

also dr Larisa Yarovaya of Southampton Business School believes Ethereum is superior to Bitcoin in many ways. The finance professor recently told “CNBC” moderator Ryan Browne that the Ethereum blockchain is not only significantly more efficient, but also more environmentally friendly than the one on which Bitcoin is based. Therefore, the researcher is in favor of Bitcoin being completely discontinued, as she requested last year to the “Financial Times”. “Bitcoin could be the first inefficient version of a breakthrough technology,” Yarovaya told the financial daily. “It should die for the sake of the planet and be replaced by a new model. It uses more electricity than an entire country.” Accordingly, the high energy consumption cannot be justified by the fact that the cryptocurrency is sometimes increasing in value. “It’s a speculative good. [Der Bitcoin] does not create a significant number of jobs. It is not often used for transactions.” According to the professor, she repeatedly receives criticism from the crypto community for her criticism of Bitcoin.

Ethereum could continue to benefit from environmental concerns about Bitcoin. The developers behind the associated blockchain architecture are working flat out to make the platform greener. “Ethereum is currently undergoing a series of upgrades that will replace mining with staking,” the project’s website says. “This will do away with computing power as a security mechanism and reduce Ethereum’s carbon footprint by ~99.95%1.” In the long term, a transaction on the network could thus consume less energy than a payment processed via the credit card provider Visa. Furthermore, more environmentally friendly payments via Ethereum will not be introduced at the expense of the decentralization and security of the blockchain.

Ether course near $ 40,000?

Bill Barhydt, co-founder of crypto payments app, also predicts a bright future for Ether. In an interview with CNBC moderator MacKenzie Sigalos, the entrepreneur promised that the Ethereum blockchain would act as the “computer of the world” in the long term. It is conceivable that various stablecoins, but also widespread DeFi programs and games, will build on the technology. He is also confident about the NFT trend with regard to Ethereum. However, the development of these network effects is only just beginning, and the blockchain is currently struggling with high transaction fees. As soon as these are eliminated, nothing will stand in the way of the success of the platform. According to the expert, the cryptocurrency price could increase to between $30,000 and $40,000. However, he did not name an exact period for his target price.

Bitcoin maintains pioneering effect

Although the “flippening”, i.e. the time when the market capitalization of Ethereum has overtaken that of Bitcoin, is not yet in sight, the share of Ether’s market value in that of its big brother is currently around 42 percent. “The developments related to decentralized applications on the Ethereum blockchain could further reduce the gap to the industry leader Bitcoin in the future,” says financial analyst Timo Emden from the financial service provider IG. “At the same time, 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 stock exchanges”. In addition, the strategist sees the oldest cryptocurrency at an advantage, especially in poorer countries that want to break free from their dependence on the US dollar as a reserve currency.

So it remains to be seen how the race between Bitcoin and Ethereum will develop in the future and who will come out on top.

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