Ethereum and Bitcoin are currently the top 2 cryptocurrencies by market cap. Although there is a huge price gap between them.
Currently, Bitcoin is trading at about $33K and Ethereum is trading at $2.1K, due to the market cap and circulating supply of each coin.
Both Bitcoin and Ethereum rely on blockchain technology. Blockchain is essential to carry out transactions in a decentralized way. That is what these cryptocurrencies are known for.
The whole point of bitcoin was to have a completely decentralized digital currency. So that it can be traded in different parts of the world with ease and with fewer fees than traditional centralized money.
Ethereum is a completely different type of blockchain. Like bitcoin it can also carry transactions, but it can also also do a lot of other things.
This is because the code on which Ethereum runs is flexible and programmers can create their own decentralized apps (dapps) which carry out various services in a decentralized manner.
A popular example of a decentralized service is Decentralised Finance, or DeFI. It is a service that is the complete opposite to existing centralized Finance, or CeFI services (like a loan you get from your bank).
Developers and users can code smart contracts according to theirs needs by using Ethereum. These are automated contracts that do not need monitoring by your bank and they can also eliminate 3rd party snooping on personal finances.
Other services like exchanges for trading crypto tokens can be made by using the Ethereum blockchain. Customized tokens can be created on the Ethereum blockchain to represent basically anything. It can represent votes, currency, shares, etc and all this data will be decentralized.
Ethereum usually completes transactions and makes blocks within seconds. Bitcoin, is older tech and may take some minutes to make a block or complete a transaction.
However, much awaited updates are in the pipeline for both the ETH and BTC Blockchains.
Ethereum 2.0 is on the way. It promises higher transaction speeds, less energy expenditure which will make Ethereum more desirable for widescale adoption.
Bitcoin developers have also recently agreed to an upgrade of the bitcoin blockchain to improve it DeFi compatibility and analysts agree this could help keep bitcoin on top for a long time to come.
Some analysts argue that Ethereum also has bigger range of uses when compared to Bitcoin and for that reason they believe it will eventually overtake Bitcoin.
Others say that although Bitcoin has a store value and that it has first mover benefits, Ethereum still has the utility to help it topple Bitcoin.
Will ETH topple BTC
Personally I cannot see that happening. With the Ethereum 2.0 upgrade its possible Ethereum usage may become more widespread for day to day usage and payments etc but BTC’s market cap has been almost triple that of ETH’s for years now and I cannot see that changing any time soon.
Going by current market caps, Ethereum’s market cap is only 39.6 % of Bitcoins. This would mean it would need to increase in value by 152.52 % just to equal the current BTC market cap and would put ETH at $5,511.22 per coin.
A 152.52% Bitcoin increase, on the other hand would value it at $86,653.50 and for me I think this is more likely. I’m not saying Ethereum wont get to 5k, It will but I don’t think it has much chance of flipping the King for top spot any time soon.