ANDREW SINGER 5 HOURS AGO

The great crypto !ippening: Can Ethereum overtake Bitcoin?

Is BTC, crypto’s !agship, prepared to fend o" Ethereum with its “incredible network value, rich

community and pace of innovation?”

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“Ethereum’s ascent to the top of the cryptoverse seems unstoppable,” declared Nigel Green in

mid-August, and it’s not hard to see why the deVere CEO thinks this. DeFi is on a tear, NFTs

are mushrooming, Ethereum (ETH) remains more scalable than Bitcoin (BTC) and it also o"ers

more uses including smart contracts. Moreover, Ethereum will soon move to a proof-of-stake

(PoS) consensus algorithm, looking to be more eco-friendly than Bitcoin’s energy-intensive

proof-of-work (PoW) protocol.

ANALYSIS

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“Ethereum is already years ahead of Bitcoin in everything but price and fame,” said Green

earlier this year, adding: “There’s a real sense that 2021 is the year for Ether. Its time has

come.” But, is it really a foregone conclusion that the world’s #rst, largest and best-known

cryptocurrency is ready to relinquish its market-cap crown? Maybe not.

“If you look at CoinMarketCap’s homepage over the past #ve years, Ethereum is usually sitting

in second position, right under Bitcoin — and it really hasn’t moved from that number two

spot in any permanent way since its launch,” Molly Jane Zuckerman, content lead at

CoinMarketCap, told Cointelegraph, adding: “History shows us that there is only one

cryptocurrency that can ever claim the ‘king of the cryptoverse’ title.”

So, is there a chance for a !ippening — the term often used to describe a reversal of ETH and

BTC? Are altcoins still bene#ting from the light that shines upon Bitcoin or are they stepping

out and becoming popular by themselves? Ultimately, can the two even be compared since

they are seen to serve di"erent purposes within the crypto and the wider #nance space?

Not a done deal

“Ethereum’s eventual dominance is hardly a sure thing,” commented Eswar Prasad, professor

of economics at Cornell University and author of the soon-to-be-published book, “The Future

of Money.” There could be technical complications with Ethereum’s switch to the PoS

consensus protocol, “and there are many risks of attacks on DeFi products that could

undermine con#dence in those products and in Ethereum itself,” he told Cointelegraph.

Still, Bitcoin hasn’t proven itself as an e"ective medium of exchange, added Prasad, and its

blockchain has only “limited functionality” compared with Ethereum, speci#cally when it

comes to decentralized #nance (DeFi): “Ethereum provides more !exibility, especially for DeFi

products and services, and it has the potential to become a viable and e$cient medium of

exchange, featuring both low latency and high throughput for transactions.”

Maybe Green went a bit too far, suggested associate professor of #nance at the University of

Western Australia Lee Smales. “Inevitable” is a strong word, after all, he told Cointelegraph,

“but, I’d say it’s highly likely that this will occur — although the recent rally in Bitcoin has

outpaced that in Ethereum and has maybe delayed the timing a little bit. I would suspect it

[!ippening] happens in the next two to three years.”

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So, how long?

Many seem to be betting on Ethereum and the question is often: not if but when? Ether could

surpass Bitcoin as the crypto world’s top store of value in the coming years, said Goldman

Sachs analysts in July, while deVere’s Green put the !ippening “probably within #ve years.”

“I think it will be di$cult for ETH to !ip Bitcoin any time soon,” Justin Hartzman, CEO and co-

founder of Canadian-based crypto exchange CoinSmart, told Cointelegraph. “The next [BTC]

halving is in 2024, which will inevitably push the price up. Also, keep in mind that ‘Ethereum

killers’ like Cardano and Tezos are coming up big time. If they work out, they could siphon out

a lot of potential market cap from Ethereum’s kitty.” If the trading of places does occur, “I

could see it potentially happening in #ve to six years.”

“I don’t believe in terms of market cap and overall valuation that Ethereum will surpass

Bitcoin,” CEO of Banz Capital John Iadeluca told Cointelegraph, adding: “Bitcoin stands as the

global ‘introduction’ to cryptocurrency, at least for the foreseeable future. For example, I don't

see any scenario where the SEC approves an Ethereum ETF prior to approving a Bitcoin ETF.”

Jason Peckham, an analyst at investment management #rm Invictus Capital, told

Cointelegraph: “I disagree that it’s inevitable. In fact, #ve years is enough time for an outsider

to !ip ETH and BTC both.” A lot hinges on how the two crypto communities manage their

regulatory challenges, he added, as well as internal factors, like the pace “at which ETH has

been burnt at post-EIP-1559,” which should make it less in!ationary and potentially more

attractive to investors. He added:

Environmental factors must also be taken into account. Bitcoin mining’s prodigious use of

electricity has been long known, but when Elon Musk drew wider attention to it earlier this

year, BTC’s price plunged. While Bitcoin has rallied since then, “the energy [issue] continues to

garner attention,” said Smales, and that should only intensify. “So, the Ethereum move to PoS

creates an additional advantage that could result in the !ip occurring sooner.”

“If I had to pin it on one thing, I would say that ETH needs the supercycle/doublebubble thesis to play out. That should allow for its various sectors to continueprospering in a way that won’t be possible in a bear market, which would likely bebearish for ETH relative to BTC as we have seen historically.”

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What could derail Ethereum?

Green recounted that ETH had already gained 300% in 2021, compared with only 55% for BTC,

and it has outperformed all other assets during the #rst half of the year. Is there anything that

could halt its momentum?

In order to stay in contention for !ippening BTC, Ethereum needs to maintain its role as the

biggest smart contract platform, however, some new competitors continue to emerge. “POS is

not completely proven as of yet,” said Smales, and it could evolve so that the market is

dominated by a few very large players — essentially centralizing it — creating market frictions

and possibly even higher transaction fees.

The EIP-1559 upgrade was supposed to make Ethereum gas fees more manageable, but

according to YCharts, the average gas fees have reached a three-month high. Given that the

gas fees have placed a continuous strain on the usability of the network, the upgrade to

Ethereum 2.0, or Eth2, cannot come soon enough.

Moreover, Bitcoin isn’t standing still, technologically speaking. “The planned Taproot upgrade

could signi#cantly enhance Bitcoin’s e$ciency, privacy and the functionality of its blockchain,”

said Prasad.

Bitcoin also enjoys the “#rst mover” advantage which can be critical with networks. “The case

for BTC's dominance boils down to its superior Lindy E"ect,” Peckham told Cointelegraph,

referring to a concept popularized by Nicholas Taleb which holds that the older a technology

is, the longer will be its life expectancy. “Together with this is the long-term trend towards

stronger-handed market participants holding the majority of Bitcoin while the rest of the

world continues to be drawn into owning their stake in the headline cryptocurrency,” added

Peckham.

Still, Ethereum seems to have momentum now. “The trends in the crypto markets have

indeed been shifting towards Ethereum ever since the explosion of the DeFi summer,

followed by the continuing popularity of NFTs,” said Zuckerman, as Peckham added:

“Cohorts of users were drawn into Ethereum for DeFi and for NFTs, while Bitcoin isless diverse in its range of uses by comparison. Most of what crypto natives like myselfare excited about in crypto right now is either built on Ethereum or an Ethereum

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Ethereum has the richest ecosystem in the crypto space, and DeFi, which largely lives on

Ethereum, today holds vast amounts in total value locked, despite the early summer

downturn and assertions that DeFi was just a bubble with no inherent value.

“DeFi had its strictest test yet and passed with !ying colors. The number of DeFi users has

already passed 3.25 million as utility and use cases increase every day,” said Hartzman,

adding: “With more applications and users coming in, Ethereum could leverage Metcalfe’s Law

and exponentially increase its overall network value.”

Are Bitcoin and Ethereum really comparable?

Upon further re!ection, though, does it even make sense to compare Bitcoin with Ethereum?

One is a (putative) form of money, the other is a platform, a new supercomputer powering

Web 3.0, upon which one can build new technologies, arguably.

Right now, the two platforms perform di"erent tasks. Once the e"ects of the Taproot

upgrade come to the forefront and developers start constructing a DeFi ecosystem around

the Bitcoin network, then that could turn into a whole new argument. For right now, however,

Bitcoin is primarily a store-of-value while Ethereum is a decentralized application platform.

“This is not a ‘Coca-Cola vs Pepsi’ debate. This is a ‘gold vs internet’ debate,” said Hartzman.

“Both Ethereum and Bitcoin are cryptocurrencies, but vision-wise, they pursue two very

di"erent goals,” added Iadeluca: “I don’t believe Bitcoin and Ethereum are in competition with

one another; rather, I believe their respective growth compliments one another.”

Related: London’s impact: Ethereum 2.0's staking contract becomes largest ETH holder

“From a technical standpoint, they are fundamentally di"erent,” stated Peckham, but from an

investor’s perspective, it does make some sense to compare them.

“Bitcoin is unique as a store-of-value,” said Hartzman. “There really is nothing quite like

Bitcoin, and there won’t be anything like it any time soon. However, having said all that, it is

impossible to bet against Ethereum due to its incredible network value, rich community and

pace of innovation.”

competitor.”

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Peckham told Cointelegraph: “As a trader right now, I’m more optimistic about Ethereum in

terms of price action. I think it will continue to o"er superior upside to Bitcoin in a bull run.”

Rather than picking a winner, though, “a more realistic prospect,” Prasad told Cointelegraph,

is that “over the next few years, Bitcoin and Ethereum cement their joint dominance of the

crypto space while the competition between their adherents leads to innovations in both

ecosystems.”

#Bitcoin #Cryptocurrencies #Altcoin #Bitcoin Price #Ethereum 2.0

#Ethereum Price

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