Bloom of bitcoin’s younger brother
Only three years ago, in 2018 BTC and ETH had a significant difference in the level of their reliability for investors.
Back then, the U.S. Securities and Exchange Commission (SEC) was deciding whether to approve two bitcoin exchange-traded funds proposed by ProShares making traders and investors committed to cryptocurrencies set sights on BTC.
At the same time Ethereum’s decentralized gaming applications reminded heavily of Ponzi schemes. One of these gambling dapps (FOMO 3D) managed to gather $7 million from its users in as short as one week exploiting one-third of Ethereum’s hashrate. Therefore, ETH was mostly adopted by those who were happy to make some fast bank.
In time, regulation and market infrastructure for BTC have developed blazing a trail for other cryptocurrencies, including ETH. For instance, for regulation purposes SEC started to classify BTC as a commodity (rather than a security) in 2018 — only to be followed by ETH in 2019. Similarly in Canada exchange-traded funds were first approved for BTC, then — for ETH.
However, progress does not stand still, and ETH demonstrates its parity, if not superiority over BTC upon some of the key metrics.
First of all, as of August 2021, total value of ETH transferred on Ethereum blockchain equaled to $185 billion whereas for BTC the corresponding value amounted to $180 billion. The last time a similar situation took place was in May 2021.
For the last year total amount of transactional fees in dollars for operations on Ethereum have exceeded four times those on Bitcoin which suggest higher demand for block space on the former.
Besides that, the Puell Multiple metric is higher for ETH than BTC meaning investors holding ETH have better chances to make profit.
For this reason, aggregated trade volume for ETH in the spot market is almost equal to the one for BTC signaling for high market interest in both cryptocurrencies.
Therefore, it is safe to say that institutional and private investors are not only acknowledging ETH but also start to regard it as a self-consistent investing option.
Nevertheless, there certainly are several smart contract blockchain competitors nipping at Ethereum’s heels.
For instance, Cardano that was barely known for many people at the beginning of the year has become the third-largest cryptocurrency on the market by the end of this summer. Such platforms as Solana and Binance Smart Chain are also making their way. Just like that, in August 2021, the overall volume of native tokens of all three blockchain platforms surpassed half the daily trade volume for ETH.
However, when it comes to estimating the value of decentralized apps, Ethereum dapps are more advanced than those of Binance Smart Chain and Solana. As for Cardano networks, they still have room for development of smart contract functionality.
To sum up, the example of ETH rapid development in the footsteps of BTC stimulates investment in up-and-coming competing assets.
This spurs innovation in smart contract blockchain technology giving an opportunity for other cryptocurrencies to steal the limelight on the market.
All in all, these cases show that in a span of 6 years huge institutional interest to new currencies can emerge calling into question incumbent technologies.