Ethereum and Bitcoin are the two kings of the cryptocurrency industry, with Bitcoin — the first and largest crypto in the world — holding the top spot, but Ethereum — the first project to bring focus to the blockchain and its capabilities — being the second.
Projects at Odds with Each Other
However, while the two focus on completely different things and are seemingly not in competition with one another, some members of the community do see them as rivals. This has created countless debates and discussions about whether or not Ethereum could overtake Bitcoin, or if BTC will forever remain the leading project.
Of course, anything is possible. This is the crypto industry after all, and strange and unforeseen things keep happening all the time. Bitcoin is the first cryptocurrency — the one that started it all some 12 and a half years ago now. Its brand is so well-known that it is almost a synonym for cryptocurrencies.
However, Ethereum’s shift from crypto to blockchain uses has given birth to countless trends and blockchain products. Thanks to Ethereum, we now have smart contracts, dApps, the entire DeFi sector, NFTs, stablecoins, ERC-20 and other token models that allow for easy creation of new crypto projects, and that’s only in the first six years of its existence.
There is also the fact that a lot of new investors who are entering the crypto industry are going towards Ethereum, as they saw Bitcoin at $64.8k earlier this year and thought that they have missed their opportunity. We have already seen that Ethereum outperformed Bitcoin in multiple areas, including the price performance itself. While Bitcoin grew by 245% in one year, Ethereum outperformed it by going up by 730% — almost three times more compared to starting price than Bitcoin.
Of course, the size of cryptos is typically measured by their market cap, and in this regard, Bitcoin is still far above Ethereum. While its current market cap is $657 billion, BTC went into trillions earlier this year, being the first individual crypto to ever become so massive, and so quickly after the total crypto market cap crossed its first trillion.
With all that said, Bitcoin does fall short when compared to Ethereum in a number of different areas, which is why many believe that Ethereum could eventually become the superior project and even outperform Bitcoin’s price.
Chain vs Chain
One example of this is Ethereum’s blockchain. When we compare ETH and BTC chains side by side, it is easy to see that Ethereum offers a lot more use cases. As mentioned earlier, Ethereum offers countless possibilities, and this is likely still only scratching the surface of what it is capable of producing. Bitcoin, on the other hand, is pretty much just a database of accounts — a simple and straightforward ledger, and that’s where its sophistication ends.
This is not Bitcoin’s fault or the fault of its community or developers. It was simply created that way by its founder, Satoshi Nakamoto. Many view this as the spark that started the crypto industry — which it is — but that Ethereum is the second step in blockchain evolution, and that this makes it better than Bitcoin by default. Of course, another point of view is that these are two chains on equal footing, just evolving in different directions.
But, even if that is the case, Ethereum is still advancing and evolving, while Bitcoin is not seeing massive changes that would make it better. Some do blame its community and developers for this, claiming that they are too intimidated by changes in order to do Bitcoin a favor and improve it. Meanwhile, Ethereum is constantly upgrading itself, both because it wants to and because it needs to.
The impact of Ethereum 2.0
We mentioned DeFi and NFTs as some of the biggest and also most recent trends on Ethereum. The thing is — Ethereum is faster than Bitcoin, but only by a little. It already struggled with transaction processing before DeFi and NFTs exploded, while people simply trading, investing, and using its smart contracts and dApps.
Now that DeFi is offering methods of earning money passively and with significantly reduced risk, wave upon wave of new investors entered it, putting a massive strain on the ETH network. This caused transaction fees, also known as gas fees, to skyrocket, and that became a problem.
Ethereum was forced to seek out solutions, and the most promising one is its shift to Proof-of-Stake consensus algorithm, which will come with Ethereum 2.0. The launch of ETH 2.0 will improve Ethereum in other ways, such as bringing staking, reducing the amount of power that it uses, and more.
As a result, many expect that this will significantly destabilize Bitcoin, as Ethereum will simply become a more attractive, useful project. If you can invest in a coin that has massive potential to grow, earn a passive income by HODLing, and at the same time enjoy all other benefits that it has to offer, then why even bother with slow, unchanging Bitcoin?
That’s the idea behind that way of thinking, at least. In the end, it is still all just speculation. Ethereum might overtake Bitcoin if things happen in the right way and Bitcoin starts losing its popularity. However, a single significant update could drive people back to it very quickly. There is no clear answer, especially when it comes to forecasts and predictions, so we will simply have to wait and see what happens.