Bitcoin has long reigned as the undisputed king of cryptocurrencies, dominating headlines, dictating market trends and setting the standard for digital assets. In fact, according to YCharts, the daily Bitcoin transactions recently hit $505859, up from $317064 a year ago. As if that’s not enough, some experts claim that about 400,000 individuals own the token.
And this is without mentioning the significant price changes the token has been making in the past. While the Bitcoin price in USD remains the standard for the entire crypto market, Ethereum has also been making serious waves. This was majorly contributed by the shift from the proof-of-work to the proof-of-stake mechanism a few years ago. And because of such changes, questions like whether Ether will surpass Bitcoin have not ceased in this industry. To find out the answer, continue reading.
Utility and Smart Contracts
Bitcoin mainly serves as a digital store of value, often compared to gold. During design, its scripting abilities were majorly considered as secondary, no wonder the currency itself does not have a dedicated smart contract market size. Although improvements were made in 2012 and 2021 to improve Bitcoin’s smart contract flexibility, Ethereum takes the lead in this area.
At a time when individuals are seeking to optimize resources by automating manual processes, the appeal of smart contracts continues to soar. In fact, according to Grand View Research, their market size has already exceeded $684.3 million and could grow by a CAGR of about 82.2% within the next few years. And since most are built on Ether, this trend could put more pressure on the token’s supply and significantly increase its prices.
On top of that, these self-executing programs are the backbone of DeFi, a technology that’s making waves in the finance sector. Platforms like Aave and Compound are using it to manage lending and borrowing protocols. Others implement smart contracts to create insurance protocols that protect users against various risks in DeFi, such as protocol failures.
A recent Vancelian report revealed Ethereum’s dominance in the DeFi industry, accounting for more than 60% of the total value locked in the system. If more organizations continue to welcome this technology, you definitely expect Ethereum to dominate the financial sector.
And then there’s NFTs. From digital art to music rights and gaming assets, NFTs have transformed ownership and intellectual property. The NFT market, largely built on Ethereum, is expected to reach $820.6 billion by 2035 and continues to evolve despite market fluctuations. The fact that Ethereum is the go-to platform for such innovations further solidifies its role as the leader in blockchain applications.
Ethereum 2.0 and Scalability
Beyond just using it for investments, individuals and organizations are turning to crypto as an alternative for payments. In fact, according to eMarketer, about 2.6% of crypto owners will be using it as a payment method by 2026. But there is always the question of scalability, especially for large-scale businesses.
For instance, you want to be sure that the payment method can still work well even during peak seasons. This is where Bitcoin loses it because it can only support seven transactions per second. Unfortunately, this is not anywhere close to some of the most robust traditional payment networks like Visa. In fact, Visa alone can handle up to 24,000 TPS, implying that Bitcoin might not be a convenient solution.
While Ethereum 1.0 had similar challenges, the upgrade to Ethereum 2.0 has really changed a lot. Interestingly, Ethereum 2.0 seeks to increase TPS to as much as 100,000 and even more, making it more suitable for high throughput applications. Plus, the transition to a more energy-efficient consensus mechanism (which reduces Ethereum’s energy consumption by 99.95%) really makes a case for Ethereum.
According to the United Nations University, increasing Bitcoin’s price by 400% between 2021 and 2022 stirred up a 140% rise in energy consumption across the global Bitcoin mining network. Since the world is becoming more energy-conscious, perhaps such factors could discourage sustainability-conscious individuals from welcoming the currency further.
So, Can Ether Overtake Bitcoin?
Well, as much as it might not be clear whether Ether can overtake Bitcoin, it is possible. But that won’t happen overnight. Of course, Bitcoin still hosts the crown as the most recognized and widely adopted crypto, and its ‘digital gold’ might not fade anytime soon.
Ethereum, on the other hand, is more adaptable and has a great allowance for constant innovation, which gives it an undeniable edge in terms of real-world application. Therefore, if it continues to expand its role in DeFis, NFTs and other more innovative solutions, it may overtake Bitcoin.
Plus, the world has become more sustainability-conscious, which provides more grounds for Ethereum’s further spread. Shockingly, the annual bitcoin mining electricity consumption is equal to that of Poland, according to Polytechnique Insights. To bring it into more perspective, it gets to anywhere between 155 TWh to 172 TWh.
But truth be told, the crypto industry is quite unpredictable, and these factors might not be enough metrics to predict the exact future of these two currencies. After all, Bitcoin registered historic highs of more than $100,000 just recently amid all its limitations.
Ethereum is not just an alternative to Bitcoin – it’s a revolution in itself. Therefore, you may want to keep an eye on both of them to see how their futures unfold.
