Will Ethereum dethrone Bitcoin?

Highlights 

• ETH has delivered excellent returns in the last year.
• ETH’s blockchain allows the use of smart contracts, which can be employed in various applications.
• Bitcoin has been underperforming periodically, a loss of crypto cart grip. Ethereum may top the table, as it is less than 50% of the way to relegating Bitcoin to the 2nd spot.

The new year brings with it a new beginning and new optimism. Investors, particularly Bitcoin holders, had been ecstatic that Bitcoin's ascent in 2022 would restore their fortunes. However, Bitcoin stumbled at the start of the new year and has been experiencing a rough patch. Despite reaching adolescence, the oldest crypto has seen no joy.

Bitcoin reached a lifetime high of US$69,044.77 on 10 November 2021 and has since fallen to US$42,880.32, representing a 37% drop. The crypto titan appears to be losing its stranglehold on the cryptocurrency industry.

Is the world's oldest cryptocurrency losing its lustre? Might be. Bitcoin has only grown by 16% last year, a pale increase in contrast to other altcoins.

The market is now murmuring about who will be the next crypto monarch? The first name that immediately springs up is Ethereum, which has gained 179.8% in a year. ETH is currently prices at US$3,244.47.

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Seems, over the time, ETH is well placed to give stiff competition to BTC, might even dethrone it. Why? One of the major advantages for Ethereum is its real-world utility that somehow underpins excellent returns delivered by ETH in the last year. Its blockchain allows for the usage of smart contracts, which can be employed in various applications. With a market capitalisation of US$402,541,118,760, Ethereum is the 2nd largest crypto behind Bitcoin.

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Let's look at the reasons why Ethereum might one-day eclipse Bitcoin.

What factors may make Ethereum the crypto market's king?

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Numerous applications

While Bitcoin is mainly used for payment, the Ethereum blockchain has a wide range of applications that might revolutionise several industries.

Ethereum, for example, may host smart contracts, which allow two people to do business without the need for a third party. Smart contracts also bring new technological and financial possibilities, such as non-fungible tokens (NFTs) and decentralised finance (DeFi).

While Ethereum is not the only network that hosts smart contracts, it is the largest and most often used for applications such as NFTs and DeFi. Even if crypto does not become generally accepted as a payment method, ETH might still flourish if smart contracts or any of its other applications become popular.

Faster & more eco-friendly

The mining mechanism within the blockchain is one of the key distinctions between Ethereum and Bitcoin.

Bitcoin employs the proof-of-work (PoW) system to verify transactions, which involves high-powered computers solving hard puzzles. Because Bitcoin tokens have a finite quantity, these puzzles will grow harder as more tokens are mined. Bitcoin mining already consumes more energy than other countries, and it will continue to do so in the future.

Ethereum is currently undergoing an upgrade, Ethereum 2.0, which will make it less expensive to use, faster, and considerably more ecologically friendly.

At the moment, Ethereum likewise employs the PoW method, but it will migrate to the proof-of-stake (PoS) protocol with Ethereum 2.0. Validators must invest a portion of their crypto holdings in verifying transactions under this method. The more you stake, the more you stand to gain rewards.

Furthermore, Bitcoin can only handle seven transactions per second and Ethereum can manage approximately 14 transactions per second.

According to Ethereum co-founder Vitalik Buterin, after Ethereum switches to a PoS architecture, it would be able to handle up to 100,000 transactions per second and this will significantly boost Ethereum over Bitcoin.

Developers back Ethereum

While Bitcoin's primary goal is to make it easier for individuals to send money, Ethereum is geared toward developers. Today, Ethereum is the most widely used blockchain on the planet. Almost everyone relies on blockchain, and they pay fees using the Ethereum coin. Ethereum's coin price should rise as more developers adopt the platform.

Endless possibilities to grow 

Because ETH is an open-source blockchain, developers can construct new applications that run on the network. These might be decentralised applications like NFTs or new cryptos hosted on the Ethereum blockchain.

Developers' creativity only limits the ETH network's potential because anyone can build a new application or crypto on it. While no one knows how revolutionary Ethereum will be, some enthusiasts feel that if the internet today is deemed Web 2.0, Ethereum and its decentralised applications might be Web 3.0.

Although Bitcoin is currently the most popular cryptocurrency, Ethereum has several benefits that could catapult it ahead in the competition.

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Last thoughts

Bitcoin has been experiencing quite a dull growth spurt recently, while Ethereum has shown a triple-digit growth in a year. With technology calling for smarter eco-friendly platforms, let’s hope the top 2 cryptos in the world make their investors happy with upgrades and good performance, keeping competition intense.

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