No.1 Cryptocurrency: Can Ethereum beat Bitcoin in future?
The recent decline in Bitcoin price has put the spotlight back on the second biggest cryptocurrency, Ethereum, which, some say, has the potential to replace it as the number one digital currency in market share. Bitcoin has seen a major fluctuation in price in the past couple of months. It rose to the all-time high of $65,000, only to fall 50 per cent to $30,000. Its market share also went down to 42 per cent ($1.6 trillion) from 70 per cent before the start of 2020, CoinGecko data shows.
The month of May saw the biggest fall in Bitcoin price, thanks to the tightening of cryptocurrency laws by China and Tesla chief executive Elon Musk changing his stance on Bitcoin.
When compared to the market share, Bitcoin is still way ahead compared to Ethereum. The May rout helped Ethereum narrow this gap by about $350 billion. While Ether dropped by around 11 per cent in May, Bitcoin suffered a much worse route at 37 per cent. On year-on-year growth too, Ethereum seems to be beating Bitcoin. While Ethereum grew over 900 per cent over the past year, Bitcoin saw a 275 per cent jump.
Ethereum investors and its fans say there are two big reasons for a strong momentum – popularity for blockchain-based financial services and digital collectables and a major upgrade in its technology, which is underway and will bring a tectonic shift in the way Ethereum works.
Also read: Big change coming in Ethereum! To give huge advantage against Bitcoin
As countries become more open towards cryptos, interest in digital currencies have expanded beyond Bitcoin. Experts say Bitcoin will eventually lose its title as the number one crypto as another digital currency with better technology and tech agility will become more popular among crypto investors, and Ethereum seems to be offering just that.
“(Ethereum) will likely exceed Bitcoin at some point in the future, as Ethereum will be superior when it comes to innovation and developer interest,” said Tegan Kline, co-founder of blockchain software company Edge & Node, reported Bloomberg. Some also believe that replacing Bitcoin won’t be an easy game for Ethereum as it still has many advantages over Ethereum. “Bitcoin will still remain king of the cryptos,” Edward Moya, senior market analyst at Oanda Corp told the news platform.
Also read: Bitcoin price recovers to $38,403 after Elon Musk’s meeting with miners
Ethereum is also working on a major shift that will help save up to 99.5 per cent of the energy it currently consumes. Given the stiff opposition cryptos like Bitcoin are facing over climate change issues, it’s possible that more investors get drawn towards Ethereum in future.
Ethereum already uses lower energy than the most popular cryptocurrency Bitcoin. It will soon be completing the transition to Proof-of-Stake (PoS) from the Proof-of-Work (PoW) system, according to Carl Beekhuizen, an Ethereum Foundation researcher. The technological shift will mean Ethereum will consume even less energy than Bitcoin.
Meanwhile, in the past 24 hours, Bitcoin has seen 0.18 per cent growth in its price to $36,291.92, while Ether grew 3.79 per cent to $2,589.5.
Also read: Cryptocurrency market crashes! Is it time to sell Bitcoin?
Ethereum, dogecoin surge as cryptos continue volatile recovery
Ethereum — the world’s second most popular crypto — soared more than 10% on Tuesday morning. Photo: Reuters
Cryptocurrencies were broadly higher on Tuesday morning as they continue a volatile recovery after a major sell-off the weekend before last.
Bitcoin (BTC-USD) was up 3.6%, trading at $36,878 (£25,915). It once again fell below $40,000, although last week it did manage to crawl past the mark. It remains far from its all-time high of $63,000.
Ethereum (ETH-USD) — the world’s second most popular crypto — soared more than 10%, to trade at $2,655, while dogecoin (DOGE-USD) gained 8.6% to $0.33.
“It seems like everything is very much hanging in a holding pattern,” said Naeem Aslam, chief market analyst at Ava Trade.
But he said “the upward momentum still looks like it lacks any major backing, and a threat for a further downward shift in the bitcoin price is still certainly on the table.”
“Basically, as long as the bitcoin price doesn’t cross above the 40K and break another resistance which is at 50K, it is unlikely we may see a beginning of another major bull rally” he added.
Kaia Parv, head of Investment Research at trading platform Fxprimus, told Yahoo Finance UK that “bitcoin and correlated crypto assets may have found their bottom as there seems to be bullish price action this morning. Having said that, technical indicators are still deeply bearish for the upcoming trading sessions.”
Over the weekend crypto portfolio management app Blockfolio asked Tesla CEO Elon Musk to create a hot tub heated by dogecoin, to which the crypto supporter replied: “great idea.”
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Musk has been a dogecoin supporter for a while now, tweeting about it regularly. Almost every time this sends the price of the joke token higher and this time was no different.
Meanwhile, bitcoin has been dampened by many things recently, including a crackdown in China and Iran. Last week, Bank of Japan governor criticised digital currencies for speculation.
Watch: What are the risks of investing in cryptocurrency?
“Most of the trading is speculative and volatility is extraordinarily high,” Haruhiko Kuroda had said.
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And the country’s regulator has also issued a warning to crypto derivatives exchange Bybit for allowing residents of Japan access to the exchange without registering with the country’s regulator.
“Cryptocurrencies were the biggest losers in May… seeing a massive slump as authorities struck a distinctly negative tone towards them in multiple countries,” noted a Deutsche Bank (DBK.DE) note.
Read more: European markets open higher amid third wave fears
But cryptos are continuing to get mainstream acceptance.
Financial advisory organisation deVere Group said it will offer its clients a fixed-yield bond that tracks futures of bitcoin and ethereum on the Chicago Mercantile Exchange over a one-year maturity period.
The decision “was made to cater to the soaring client demand regarding cryptocurrencies,” the company said.
WisdomTree, an exchange traded fund and exchange traded product (ETP) sponsor, announced its physically-backed bitcoin and ether ETPs have listed on Euronext (ENX.PA) exchanges in Paris and Amsterdam.
“Listing on Euronext opens up more access points for investors to conveniently allocate to, and trade, both WisdomTree Bitcoin (BTCW) and WisdomTree Ethereum… This milestone represents the growing acceptance of cryptocurrencies, the evolving European regulatory landscape and the latest signal that digital assets are here to stay,” said Jason Guthrie, head of digital assets, Europe, WisdomTree.
“A willingness from regulators and exchanges to list cryptocurrency ETPs is lending further credibility to this growing and popular asset class. This development will buoy institutional investors, trading via Euronext, that have been waiting for further signs of acceptance before making their first allocations to digital assets.”
Watch: What is bitcoin?
Why YouTuber TechLead is ‘selling all my Ethereum’
Patrick Shyu, a former tech lead at both Google and Facebook, as well as a popular YouTuber with over 1 million subscribers, recently announced that he is selling all of his Ethereum.
Why? He says it’s because Ethereum is an over-engineered project that does not scale, and that Vitalik Buterin has recently taken some marketing missteps that could damage the project long-term.
“There’s so much hype around Ethereum, but I think few people actually understand how ridiculous it truly is,” said Shyu. “So I wanted to make this quick video exposing Ethereum as the over-engineered project it truly is because as an ex-google, ex-Facebook tech lead, I can actually understand some of this stuff.”
Where Ethereum goes wrong
Admittedly, Ethereum has a respectable mission, but the way it tried to accomplish that mission made it bound for disaster. What could have been a system that infinitely scaled from launch day, is now a system that requires complex engineering and updates that nobody really understands for it to scale.
Shyu says this is the main problem that he has with Ethereum, and in his recent video, “SELLING ALL MY ETHEREUM – My Problem With Ethereum (as a millionaire),” Shyu takes a deep dive into a recent blog post by Vitalik Buterin titled, “The Limits to Blockchain Scalability.”
“Vitalik goes on a rampage creating this blog post, elegantly titled, “The Limits to Blockchain Scalability,” [it’s really just] a wall of text, technobabble, techno-jargon in which you can’t understand a single thing that he’s talking about here. He talks about database internal storage having structures like a tree and that it’s in RAM and you have to do multiple disk lookups, and then he goes on to talk about sharding and how Ethereum is using quadratic sharding and he maybe can even look into cubic sharding or exponential sharding. He goes on about shard chains, beacon layers, coordination layers, and all of this is meant to bedazzle and bewonder you into submission,” said Shyu. “This is the core of the problem that I have with Vitalik Buterin, not to mention, by the way, this whole essay is pretty much an admission of defeat that ethereum is not scalable.”
What Shyu says about techno-babble and techno-jargon that the masses cannot understand is nothing new. It reminds me of when I sat in on an Ethereum 2.0 presentation in 2019. At that point in time, ETH 2.0 had allegedly been in development for several months if not at least a year at the point, but regardless, all the presenter could do was talk about scalability theories, they did not even have a demo that they could show, just a PowerPoint with graphs, elaborate pictures, and techno-speak that the masses could not identify with or even have an idea of whether that kind of solution works or not.
This is a problem that has plagued Ethereum scalability for a long time—it is so complex, that only a select few engineers can really understand what Vitalik is trying to build while the rest of the world has to trust that his idea will eventually be created—which is highly questionable—and that it will work.
Ethereum 2.0 has been in production for several years now, yet, we still have not seen any tangible evidence of it.
Vitalik Buterin vs. Elon Musk
Shyu goes on to talk about how Elon Musk saw Vitalik’s blog post and responded by saying that Vitalik fears Dogecoin and the upgrades that Musk has proposed for it.
He fears the … pic.twitter.com/78WzM5ICjA — Elon Musk (@elonmusk) May 24, 2021
Shyu saw this as a sign that Elon Musk is opposed to Ethereum and is more interested in making Doge an Ethereum competitor that is superior to the Ethereum network or ETH 2.0—which he sees as a big problem. From a marketing perspective, it would have been advantageous to have Elon Musk on their team, but now, Musk has made it very clear that he has no interest in Ethereum’s future.
“We needed this guy on our team,” says Shyu, “And to make matters worse, the other Ethereum co-founder left the project to go build Cardano, so now we have all these little sub-factions of people working against each other trying to make their coin the best instead of trying to create a single unified global currency that is going to change the face of money.”
Many people share Patrick Shyu’s views on Ethereum. It isn’t until you actually try to build on the protocol that you realize that the Ethereum blockchain’s functionality is lackluster and that for it to be fixed would require upgrades that are difficult to create and implement. As Shyu says in his video, the path forward for Ethereum is full of obstacles, and the chance that Ethereum can overcome these obstacles does not look great.
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