Bitcoin and Ethereum Battle for Crypto Supremacy
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Bitcoin and Ethereum Battle for Crypto Supremacy

Lately, some investors have taken the side of ETH as the next king of crypto. Here’s how it matches up with BTC.
Neither the author, Charlie Perkins, nor this website, The Tokenist, provide financial advice. Please consult our website policy prior to making financial decisions.

Currently, Bitcoin and Ethereum make up nearly 65% of the cryptocurrency industry. Ethereum has gone up over 800% over the past year, attracting many investors and developers alike—even with the recent progress surrounding Bitcoin integration into traditional finance, Ethereum continues to gain momentum due to its second-generation blockchain. 

There is now a large divide in the digital asset community – Ethereum lovers vs Bitcoiners. Each side has voiced their reasoning behind the success of their coin, in addition to various banks and nations recently taking sides. How do the two sides’ arguments match up?

BTC Gaining Worldwide Traction

While barely acknowledged for years, Bitcoin has now led to the creation of a whole new industry. BTC has a strong following from developers, entrepreneurs, and politicians—many large companies such as Tesla and Microstrategy are also bullish on BTC. With various institutional investors buying the asset, the price has more backing and support from the traditional economy.

With 47% of millennial millionaires having 25% of their wealth in crypto, financial institutions are keen on offering exposure to BTC in various funds. Traditional asset managers are now beginning to explore the new class of assets. Even after previously claiming that crypto is a bubble, George Soro’s family office has reportedly started trading BTC. This trend is being followed by various influential individuals across the globe.

On a larger scale, entire countries are also beginning to see the opportunities that Bitcoin offers. Earlier this month, El Salvador was the first country to announce BTC to become a legal tender in the country. Now there is a massive wave of countries integrating Bitcoin into their economy. 

Just today, Germany announced 4,000 investment funds can invest up to 20% of holdings in BTC and Australia said BTC is “likely to satisfy” standards for an ETF. With news like this coming nearly every day from countries all around the world, BTC is gaining far more political acceptance than ETH.

Major consumer companies are also taking part in the BTC revolution by allowing customers to buy products with Bitcoin. This gives the coin even more value, as it is showing the prospect of being used as an exchange for goods. 

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ETH Recognized for Revolutionary Technology

Ethereum is a second-generation blockchain, introducing smart contracts, faster transactions, and open source development. The protocol is especially exciting because it enables developers to build applications on the blockchain, as well as the introduction of a whole new internet: web 3.0. Contrary to this, the Bitcoin network can only be used to transact BTC and store basic data.

Ethereum is only 4 years old and still seen by many to be picking up steam. Seeing that ETH is growing much faster than BTC, large banks have recently shown deepened interest in the number two crypto. For example, Morgan Stanely has explained their reasoning behind why ETH has greater opportunities for growth than BTC.

In addition, Goldman Sachs has offered various ETH investments for clients. The recent interest from institutional investors shows great potential for the expanding network. Below shows the possible ‘flippening’, with Ethereum growing crypto dominance.

Chart showing the rate of growth of ETH and BTC
The growth of Ethereum (orange) has far outpaced Bitcoin (blue) in the past few months.

ETH has recently seen high trading volumes and congestion resulting in sky-high gas fees and leading many to question the network’s scalability. While the current network is not highly scalable, a new improvement, EIP-1559, will radically change the fee breakdown, providing lower gas prices for users. After going live on the Goerli test network yesterday, the highly anticipated EIP-1559 is projected to be implemented towards the end of the summer.

Additionally, Ethereum 2.0 will completely change the protocol, implementing data sharding and the Proof of Stake consensus model. The ability for open source developers to implement these changes gives ETH a great advantage over BTC.

Overall, Ethereum is extremely technologically advanced, allowing companies to build on top of the blockchain. All fees for dapps on the network are required to be paid in ETH, giving the token more value. While Ethereum does not have even half the market cap of Bitcoin, the majority of days the trading volume is higher than that of Bitcoin. With the ability to host an entirely decentralized financial system, Ethereum is praised by a large group of crypto developers and investors.

Bitcoin and Ethereum both provide exposure to the success of blockchain technology, but have completely different qualities. Are you more bullish on Ethereum or Bitcoin? Let us know in the comments.