The crypto community enjoys pitting Ethereum against Bitcoin like it’s a King Kong versus Godzilla story. In reality, Bitcoin vs. Ethereum is more like James Bond versus one of his maniacal foes. And this story will end the same way- with James Bond being triumphant.
I’m an Ethereum fan. I buy Ethereum (and Bitcoin) daily and my portfolio even has a greater dollar value of Ethereum in it than Bitcoin. I would love it if Ethereum could flip Bitcoin’s value and become King of the Crypto Universe. Unfortunately, it’s not going to happen. Just like the Beatles are considered the best band ever, Bitcoin will always remain at the top of the crypto food chain. Three reasons: function, competition, and community will ensure that Bitcoin will always be the Hulk Hogan to Ethereum’s Macho Man Randy Savage.
Comparing Bitcoin to Ethereum is a bit of a misnomer. It’s almost like comparing a vital organ such as your heart or lungs to an arm or a leg. Bitcoin is a store of value and, as Michael Saylor would say, owning Bitcoin allows you to protect and store your monetary energy. It can’t be printed away at a central bank’s will, its supply is finite and defined on a mathematical inflation schedule, and it can be owned by any person on earth. Bitcoin has no counterparty risk. Unlike most other financial assets, it is not dependent on any third party to derive its value.
Ethereum is not a store of value. It is a crypto commodity. Ethereum is to crypto what the iPhone was to cell phones in 2007. Ethereum has unlocked the ability for smart contracts and decentralized applications to run 24 hours per day with no third party controlling or interfering with their function. Many argue that Ethereum could become a store of value, but that in itself would be a paradox. If Ethereum were a store of value, why should anyone use it for its designed purpose? Wouldn’t it make more sense to use another smart contract platform to perform similar functions if Ethereum becomes more valuable than Bitcoin?
Bitcoin and Ethereum can (and most likely will) co-exist. But just like you wouldn’t go to a financial planner to get surgery on your eye, Ethereum should not be viewed as the best solution for storing wealth over time.
It’s important to identify that Bitcoin and Ethereum serve different purposes and functions when projecting which crypto asset will rule the empire. If a competing store of value offered better engineering or a way of capturing monetary energy, then Bitcoin would be under threat. As of today, the closest competitor is Dogecoin. Dogecoin would need to 21X where it is currently at to overtake Bitcoin’s market cap. It is conceivable but improbable as over 90% of Dogecoin is held by less than 1% of the wallets. Click here to see for yourself.
On the other hand, Ethereum has multiple competitors. And while no project has a product on the market to give Ethereum a reasonable challenge, many competitors are aiming to do just that. Cardano, Polkadot, Solana, and several other smart contract operators are either launching or about to launch smart contracts. There’s a lot at stake. Let’s go back to the cell phone metaphor used earlier. Just like cell phones, there is room in this space for many smart contract platforms, but each option is going to take market share from the others. This does not bode well for Ethereum in the long run as it has a first-mover advantage, but that does not guarantee its continued success. We saw earlier this year when Binance Smart Chain and then Polygon stole Ethereum’s market share practically overnight by offering a cheaper and faster alternative for decentralized finance applications and transactions. Look at these charts comparing daily transactions between the three chains.
Ethereum could come out with some great pieces of technology in the future and keep its upper hand just as Apple has done with its iPhone since 2007. However, it will always have to look over its shoulder as its competitors are threatening, are hungry, and are at the gates.
Michael Novogratz laid out an important point in an interview with Allison Nathan, ‘“A core group of crypto people see this as-and I quote the Blues Brothers here- “A mission from God”…they will never sell. And because of that Ether and Bitcoin can’t go to zero (reference, Goldman Sachs).’ This supports my case for owning both Bitcoin and Ethereum.
If we take a closer look under the hood, Bitcoin has more social engagement and significantly more notoriety than Ethereum. Take a look at these stats from theblockcrypto.com.
Moreover, the US government is considering a Bitcoin ETF and El Salvador recently decided to make Bitcoin legal tender.
Enter the Bitcoin Maximallists. Bitcoin Maxis believe that Bitcoin is the true and only crypto asset that needs to be owned. Their argument has held up well as investing in Bitcoin has proven to be extremely fruitful unlike many of the altcoins that have seen their value go to zero. As time has progressed, however, we have seen Bitcoin’s dominance (percent of total crypto market share) decrease.
You will be hard-pressed to find any Ethereum Maxis. The evangelical ranks in the Bitcoin community will continue touting their logical argument and, more importantly, will never let go of their precious Bitcoin ensuring that a good portion of the 21 million Bitcoin never see the market.
A good rivalry helps crypto as a whole
Joe Frazier vs. Muhammed Ali, Ohio State vs. Michigan, Real Madrid vs. Barcelona, the Red Sox vs. the Yankees; these rivalries improve the narrative for their respective sports and draw media attention while giving people a feeling of community that draws them together. Perhaps Ethereum vs. Bitcoin hasn’t reached the pinnacles of these sport rivalries. But I believe that it is a good thing for moving the space forward and introducing the opportunities crypto brings to millions of more individuals.
Do you think that Ethereum will be able to sustainably be the ruler in the crypto kingdom? If so, please share your reasons in the responses on why and how Ethereum can be the supreme governor. In the meantime, thank you for reading my opinions. This is not financial advice. If you like this article, I invite you to read some of my other pieces and a reward of a clap would be greatly appreciated!