02.03.2024

What does Ethereum need to bypass Bitcoin and become the world’s main cryptocurrency?

Ryan Watkins, chief analyst at research firm Messari, said on the air of the financial show FinTech Today that Ethereum may well overtake Bitcoin and take the first place in terms of capitalization among all digital assets.

According to Watkins, this will happen after the final transition to the Proof-of-Stake algorithm and a deflationary economy. If this really happens, the expert expects the ETH capitalization to rise above a trillion dollars .

By tradition, let’s start with an explanation. Ethereum is the largest cryptocurrency by market capitalization after Bitcoin. This means that the product of the number of coins in circulation by the exchange rate lags behind the corresponding indicator of BTC, but at the same time it is ahead of all other coins. A possible process for ETH to outpace the first cryptocurrency in the community is called «flipping».

Ethereum has been in second place in the overall ranking for a long time. On February 14, 2016, the cryptocurrency posted almost 75 percent growth during the week and displaced XRP from the second place in the overall cryptocurrency rating. The list of coins that day looked like this.

This article will focus on Ethereum 2.0, a massive blockchain upgrade that will add many benefits to the project. In particular, the network will be able to conduct thousands of transactions per second, which, in fact, will make it suitable for mass use around the world. Since the bandwidth will be huge, the transaction fees will be low.

We discussed in detail the topic of project transition to version 2.0. In particular, in this material, the topic of the launch of the so-called Beacon Chain, which took place on December 1, 2020, is analyzed. And the link can be used to explore the topic of network security based on Proof-of-Stake.

When Ethereum Beats Bitcoin

The transition to Ethereum 2.0 should be viewed exclusively as a positive development for the cryptocurrency project, Watkins is sure. Here is his line, in which he shares his attitude to the situation. The quote is from Cointelegraph.

Bitcoin’s advantage over Ethereum as a store of value is that its deflationary model is very predictable and Bitcoin’s blockchain is very secure. I think that with the move to Eth2 and Proof-of-Stake, Ethereum could potentially be more secure than Bitcoin.

That is, the analyst believes that as a result, the blockchain project from Vitalik Buterin and other developers will be in great demand. Nevertheless, the ETH network supports the active use of smart contracts, which allows it to be used for advanced projects from the niche of decentralized finance, trending NFT tokens and other advanced topics.

Here is a transcript of a conversation with an expert. We recommend that you watch if you understand English by ear.

The analyst also noted that the second version of the most popular altcoin will introduce a coin burning mechanism, which will eventually lead to a gradual reduction in the amount of ETH in circulation. With the growing demand for Ether, this will lead to an explosive rise in the price of the coin, Watkins said.

The Ethereum coin emission model in the second version will actually change, so that it will not only be less inflationary than Bitcoin, but also deflationary. So, every year there will actually be less and less ethers, because it will be burned.

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If Watkins’ prediction becomes reality, Ethereum’s $ 10K milestone is not the limit

Note that the cryptocurrency may become deflationary even before the transition to the Ethereum 2.0 update. Initially, this feature will be added by the so-called EIP-1559, that is, a proposal for improving Ethereum. It implies a change in the model for calculating the commission, which should make it easier for users to use the network. In addition, the update will allow to increase the size of blocks with transactions and introduce a flat fee per block that will be burned. And when the ETH network is used especially actively, the number of coins will really decrease, not increase.

Ethereum’s potential was in the focus of the leadership of the large Chinese corporation Meitu. The day before, she completed a round of investments in BTC and ETH in the amount of $ 50 million. The company converted $ 21.6 million into 386.08 BTC and $ 28.4 million into 16 thousand ETH , that is, Ethereum is the priority in this case.

In total, Meitu has spent over $ 90 million on crypto this month. Thus, the company has joined a growing list of major financial institutions that make direct investments in the crypto market.

The company representatives noted that while the crypto market is still in its infancy, they are confident that blockchain technology can become a disruptive force in the existing financial and technological industries. Here is a quote from Cointelegraph from Meitu.

The company’s board believes that the cryptocurrency industry is still in its infancy – similar to the mobile internet industry around 2005. Against this backdrop, the Board believes that cryptocurrencies have enough potential for price growth.

As you can see, every day the crypt attracts more and more attention of professional investors with millions of dollars of free funds. They continue to actively accumulate bitcoins, creating a shortage of free coins in circulation. Ultimately, this will significantly improve the reputation of blockchain projects and make it clear to less experienced investors that they can be contacted without any problems.

We believe that Ethereum really has a chance to bypass Bitcoin in the foreseeable future and become the main cryptocurrency in the world. The ETH network is waiting for a series of important updates that will allow it to become more popular in daily use.

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