Will Ethereum have the potential to one day overtake Bitcoin and become the number one cryptocurrency in terms of market cap and user adoption? Let’s do an access check!
Bitcoin was the first cryptocurrency to appear, and it is still #1 in the market. However, Ethereum is starting to gain traction, and many experts believe it could overtake Bitcoin in the coming years. In this article, we will see why Ethereum has so much potential and how it can dethrone Bitcoin.
Bitcoin (BTC) has ushered in a new era of decentralized technology and modern cryptography. However, the king of cryptocurrencies seems to be lagging behind as technology advances rapidly.
Bitcoin and Ethereum are major players in the blockchain spacebut each of them focus on different aspects.
ETH2 Status: Ethereum Network Update
The Merge (Ethereum The Merge) is the end result of a process that started on December 1, 2020 with the introduction of the Beacon Chain. The beacon chain is part of Ethereum 2.0 (Eth2), and its initial goal was to increase the number of transactions per second from 15 to tens of thousands.
From the start, the Beacon Chain has had an interesting function: instead of being validated by a proof-of-work system — which uses cryptographic solutions — it is validated by a proof-of-stake method, where a limited number of people validate it. You hold a certain amount of confirmed ETH transactions.
Consolidation has been updated in two phases and the execution date of each phase depends on reaching a certain hash difficulty called the Total Final Difficulty (TTD). The first phase of this major update, codenamed Bellatrix, took place on September 5, 2022.
Dubbed the final stage, Paris was scheduled to launch when the TTD reached 58 quadrillion — which will happen between September 10-20, 2022, according to the Ethereum blog. However, it was actually updated on Thursday, September 15th at 8:42:42 AM.
Since the merger, the price of Ethereum has lost more than 30% of its value. The rest of the market is also in the red. Since activating proof of stake on the Ethereum network with the merge, the price of ETH has fallen by more than 30% and is currently trading around $1,150, its lowest since July.
Implications of Migration: New Technology
The merger comes with many changes. Most importantly, it implemented a new technology called Sharding, which will be used to process transactions faster and more efficiently. It works by splitting the Ethereum blockchain into several shards that are connected together, like pieces of a puzzle. This will enable faster transaction processing, improve scalability, and increase security.
Ethereum requires less energy than Bitcoin to operate, which is a huge advantage!
Additionally, Ethereum’s transition from Proof of Work to a Proof of Stake system makes it more energy efficient than Bitcoin. In fact, the Ethereum network currently uses about a sixth of the energy used by Bitcoin on average. This could lead to lower transaction fees in the future and reduce your environmental footprint as well.
Interest of institutions and retailers
Institutional investors may be attracted to the higher-risk rewards, which can be as high as 15% annually. In comparison, US Treasury bonds offer investors a lower yield of 3.5%.
The report noted that institutional investors — portfolios that invest more than $1 million in ETH — have grown more than 5-fold in the past year. According to the report, the number of institutional investors grew to 1,100 in August 2022 from less than 250 in January 2021.
When a blockchain uses a proof-of-work consensus, as bitcoin does, the block validation process becomes more complex. The auditor’s “share” refers to the computing power and energy expended to perform these calculations. New blocks of information are validated and confirmed for inclusion in the shared proof-of-stake ledger that Ethereum has adopted relies on “validators.” Validators must have at least 32 ether stored (blocked or pooled) on the blockchain.
When the validator blocks this amount of ether, it is showing that he is interested in keeping the network running smoothly. In exchange for their help validating the blocks, they earn ether each time they contribute (in proportion to the number of ether involved). Validators are randomly selected for each verification process. If the auditor acted dishonestly, the withheld amount could be confiscated. In this system, an honest auditor who has exposed other dishonest behavior is also earning ether. The goal is to avoid the formation of cartels.
Users who come together to pool their ether are called “storage pools”, in order to reach the 32 ether threshold required to validate blocks, or to exceed it to increase their chances of being selected. If they succeed, they share the rewards. With $30 billion worth of ether stored on the new blockchain, these gains will remain inaccessible for 6-12 months according to updates from the Ethereum Foundation.
With the merger designed to reduce Ethereum’s energy consumption by 99%, Chainalysis said institutional investors with a commitment to sustainability will become more comfortable with the asset.
Benefits for enterprises and retailers include the ability to subscribe to and back up securely stored digital assets. This is an attractive option for institutional investors who want access to a wide range of digital assets without having to worry about security or liquidity issues. Traders will benefit from lower transaction fees, higher liquidity, and better scalability.
See Also: Which Little-Known Cryptocurrencies Have High Potential?
Current and ongoing use cases
Current and ongoing use cases for Ethereum range from financial applications to predictive markets, gaming, digital asset collecting, and more. The network is also used for its distributed computing capabilities, allowing users to host decentralized applications (DApps). Ethereum’s flexibility makes it well suited for a variety of other uses. Developers are actively working on new ideas and applications of this technology.
a challenge :
Dubbed “DeFi,” decentralized financial applications are among the most realistic potential uses for Ethereum.
DeFi includes lending backed by smart contracts, stablecoin production, and decentralized exchanges. One notable project in this group is “MakerDAO,” which uses complex Ethereum smart contracts to enable the development of a stablecoin (DAI) that is backed by Ether and has a fixed value of $1.
NFT’s:
Non-fungible tokens (NFTs) are digital assets that are not fungible and therefore have unique characteristics. These include collectibles, artwork, concert tickets, and in-game items such as weapons or characters. Ethereum provides the infrastructure for creating token standards such as ERC-721, which allows developers to create their own custom NFTs on the platform.
data storage :
Large amounts of data are stored in so-called server farms by companies like Dropbox and Microsoft. An information storage facility with hundreds of servers is known as a server farm. The problem with server farms is that they concentrate a large portion of a company’s storage capacity in one location. Therefore, if it is devastated by a natural disaster or terrorist attack, society may suffer great damage.
The solution is a decentralized storage facility. In this case, the information is not stored in a few server farms in the United States, but in hundreds (or even thousands!) Data centers around the world. Until now, this was not possible because it was a great technical challenge to build a network that would securely connect all these servers and allow for fast data transmission.
However, Ethereum is very likely to be the answer to this problem, as its Blockchain technology can be used to quickly and securely transfer data between millions of servers while it is encrypted.
conclusion
Data shows that Ethereum is likely to overtake Bitcoin in the near future!
Ethereum has come a long way since its inception in 2015. From a pilot project to one of the most popular cryptocurrencies, Ethereum seems poised to revolutionize the financial world as we know it. With its flexibility and scalability, it gives developers an unprecedented level of freedom when it comes to creating applications and use cases. In addition, its low power consumption can further enhance institutional adoption. It remains to be seen whether or not Ethereum will be able to overtake Bitcoin, but given its current trajectory, it may be possible in the coming years.
Bonus Ethereum vs Bitcoin: Expert Analysis Videos
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