Why is Ethereum the best choice?

By DeFi Surfer

Compile: Block unicorn

Ethereum has won the most frequently used cryptocurrency in the market, not just the hardest money.

One of the most important issues that must be raised by new capital entering the crypto ecosystem is where to bet the funds. As the two largest cryptocurrencies with a market value of more than 50%, the relative issue between Bitcoin and Ethereum may be the most important issue raised by institutions and high net worth individuals who want to exceed asset categories.

Bitcoin is a crypto asset that has always ranked first. Since the first crypto currency was born 13 years ago, Bitcoin has always dominated the crypto asset category.

OG (senior level) cryptocurrency is currently worth $420 billion, accounting for about 38% of the market value of all cryptocurrencies. Bitcoin has the highest brand awareness, and its search volume is about 3 times that of Ethereum, which ranks second. It also received the most institutional investment. Bitcoin is the only cryptocurrency invested by MicroStrategy, a listed company, and El Salvador, a country.

Bitcoin grew out of nothing in a little over 10 years and became an asset of more than 1 trillion dollars, which is perhaps the most incredible technology story ever. However, despite its high status today, Bitcoin is likely to lose its dominant position over time. Bitcoin may even become irrelevant in the near future, and it will only become" The hardest currency", The most decentralized and secure is not enough.

These are the ideal attributes of Internet native currency, but they are unlikely to be defined as successful Internet currency, and ultimately successful Internet native currency will be the currency most used.

From this most important indicator, Ethereum, as the largest and most lasting cryptocurrency in the future, is the best bet.

The cryptocurrency used by the most people will be successful

Fiat currency is a monetary tool that cryptocurrency attempts to subvert, especially the king of fiat currency, the dollar (USD), which is the best example of how it was adopted, but is not the factor that other possible "definitions" make cryptocurrency successful.

In terms of assets alone, the US dollar has serious defects. A core attribute of the dollar is that it will depreciate forever. In the past century, the dollar has depreciated by more than 96%. Economist Amos estimates that the annual currency depreciation may be as high as 8%.

In addition, the dollar was used as an instrument of aggression by its creator, the United States Government. The status of the US dollar as the global reserve currency enables the United States to finance continuous wars and force other countries to yield to the US policy under the threat of sanctions, even aggression and violence.

The defining attribute of the dollar is the financing medium of devaluation and hostile hegemony, which is not ideal for its users - American citizens or American trading partners, but these are not the focus.

Although it has accumulated a trade deficit of more than 10 trillion dollars and recently tried to erase a country from the global financial system, 59% of global foreign exchange transactions are conducted in dollars. The second and third most common currencies are the euro, accounting for 21%, a basket of "other" currencies accounting for 10%, and the dollar dominates.

Why is that? Because the dollar is the most common currency. The United States of America has the largest economy and army in the world. After decades of trade and military strength growth, the US dollar has become the most used currency in the world.As the largest consumer market and military power, the terms of trade dominated by the United States far exceeded its share of 24% of global GDP.

Although the dollar is depreciating every year, and the United States has a history of foreign aggression. In other words, what determines the success of the dollar is not its attributes, but its acceptability.

Bitcoin is unlikely to become the most popular cryptocurrency

Compared with Bitcoin, Ethereum has significant advantages in terms of potential wide adoption.This advantage spans two universal and interrelated areas - technology and culture. The technology and culture of Ethereum promote innovation and encourage adoption, but Bitcoin does not.

The key feature of Bitcoin is its immutability. Among all cryptocurrencies, Bitcoin is the least affected by changes. The ultimate limit is always only 21 million, "the hardest money in the world". Since Bitcoin is the least affected by change, it is touted as the ultimate value store (SoV).

It is commendable that SoV MEME (Ultimate Value Storage Meme) opened the first use case of cryptocurrency worth more than 1 trillion dollars. However, the core SoV use case of Bitcoin brings several problems to Cryptocurrency # 1 that have not been paid attention to.

What are you going to do with value storage? Hold it, accumulate it, and hoard it for consumption at an uncertain point in the future. In other words, it does not play a very important role.

This value proposition sounds much like other existing stores of value, namely gold. Although gold is still the largest asset in the world in terms of market value, about $11 trillion, the share of this yellow metal in global assets is decreasing.

Gold has no utility and no income (i.e. cash flow). On the other hand, stocks, bonds, real estate and other competitive value storage methods pay rewards to those who hold them through income. In addition, stocks and real estate usually appreciate at a faster rate than gold, and provide increasing returns on the basis of investors' costs through growing cash flows.

More capital appreciation plus growing cash flow? What's the point of holding gold for savers? This is a good question, and with better understanding of Ethereum and other cryptographic assets that generate revenue, this question may become more relevant to Bitcoin.

Although Bitcoin improves some of the weaknesses of gold, such as transportability and divisibility, the biggest value proposition of a static technology is to actually do nothing. In market competition, Bitcoin may be replaced by outstanding competitors, just like gold is losing to assets that generate revenue. Similarly, the Bitcoin community has not paid enough attention to this. As a kind of; "Just sit back and talk " The value proposition of the asset, which advocates transforming more and more of its influence into future value storage.

The long-term security model of Bitcoin depends on a powerful charging market "mining incentive", which today accounts for 98% of Bitcoin's security budget (about 18 million dollars, while the daily fee is 300000 dollars), and the mining incentive is halved every four years. The halving reward of Bitcoin determines that the reward of Bitcoin is declining rapidly and needs to be replaced by strong expense generation in the near future.

The use cases of value storage are inconsistent with a large number of activities, so are the costs. From one cycle to another, the cost of the Bitcoin network has decreased by more than 60% in Bitcoin terms:

Over time, the problem may get worse. The uncertainty about whether Bitcoin can generate enough costs to support the network for a long time has raised doubts about the attractiveness of this cryptocurrency as a value storage asset.

In other words, if users cannot say with 100% certainty whether the Bitcoin network will exist in 100, 50 or even 20 years, can Bitcoin really become a way to store value?

Ethereum encourages adoption and innovation

In contrast, the way Ethereum encourages is fundamentally different from Bitcoin. The most important feature of Ethereum is the smart contract function, which realizes a virtuous circle of development and user acquisition that Bitcoin does not have.

The ability to develop applications on Etherum and issue tokens to developers and early users at critical times in order to benefit from their work may be the most important difference between the two chains.

For most of its history, even today, the United States has provided desirable resources, such as cheap land, education and strong property rights, to encourage entrepreneurs to establish companies, promote economic growth in the United States, and constantly improve the living standards of citizens.

Similarly, Ether provides developers with the opportunity to build innovative applications that release great value for users, who have enough courage to explore the frontier of cryptocurrency and public blockchain.

firstThe breakthrough application was the first token issue (ICO) in 2017.the secondIt is a decentralized financial (DeFi) application in 2020, such as Uniswap and Aave. The latest breakthrough application is the heterogeneous token NFT in 2021.

All these applications have attracted new users to Ethereum and encouraged the use of blockchain.In fact, Ethereum has attracted twice as many users as Bitcoin, measured by addresses with a balance of more than $0 (Ethereum 86 million/Bitcoin 43 million), and generated 47 times the cost in the past 12 months (Ethereum 9 billion/Bitcoin 200 million), although Ethereum is 6 years younger than Bitcoin.

Ethereum has made thousands of individuals rich, not just holding Ethereum. The cumulative value of applications built on Ethereum is tens of billions of dollars.

As long as it is possible to build new applications and reap rewards from the adventure, Ethereum will continue to attract talented developers and early adopters to create the next frontier of applications, thus attracting the next billion users of Ethereum.

This technology reflects the culture of Ethereum. Bitcoin culture is extremely conservative and resistant to change, while Ethereum culture is open, self-conscious and risk seeking.

The most prominent example of Ethereum's innovative culture is the merger of Ethereum, which is a highly risky behavior for an already successful chain. However, the merger will undoubtedly make Ethereum more powerful and provide more security with less cost and energy consumption.

Perhaps most importantly, the merger provides Ethereum token holders with the opportunity to earn income. According to the pledge rate and activity percentage on Ethereum, the yield of Ethereum pledgers may be 5-10%.

Since Bitcoin cannot generate original income, the merged Ethereum may gradually attract more capital, just as the share of gold in global assets continues to be replaced by income generating alternatives such as stocks, bonds and real estate.

However, the merger is only one part of a longer development roadmap. In the next ten years, after the merger of Ethereum:

  • The Surge (introducing shards to realize large-scale expansion of Ethereum blockchain).

  • The Verge (introduces the Verkle tree and further expands it).

  • The Purge (thin storage and bad debt).

  • The Splulge (a series of minor upgrades to ensure the smooth operation of Ethereum).

A strong charging market will be crucial for any cryptocurrency that aspires to become the No. 1 cryptocurrency for a long time. For Ethereum, you know that there is a strong charging market today, and developers may continue to be strongly encouraged to develop on the chain and attract more users to develop the charging market in the coming decades.

Every new US dollar investor investing in cryptocurrency assets will constantly ask themselves, since Ethereum has surpassed Bitcoin, why should they risk betting on Bitcoin? They will figure out the problem.

Everything is about adoption. Ethereum encourages innovation and adoption

to make a long story short:

  • Adoption and universality determine the success of existing currencies (such as the U.S. dollar), rather than currency attributes, such as" Soundness;.

  • Compared with Bitcoin, Ethereum has established a superior system to encourage adoption. Compared with Bitcoin without application and revenue, a strong application ecosystem and revenue generating attributes may attract more and more users and capital.

  • Without a vibrant charging market, cryptocurrencies cannot prosper for a long time. The Ethereum model maximizes the possibility of generating strong costs in the future. Bitcoin mode is not the case.

Just as gold is surpassed by fiat coins and value storage assets that generate income, Bitcoin is likely to be surpassed by technologies with stronger value proposition such as Ethereum.

The Ethereum community has the ability to promote innovation and plan a remarkable way to build an increasingly powerful public blockchain in the coming decades, which shows that Ethereum is more likely to become the most widely used and largest cryptocurrency in the medium and long term. In addition, Ethereum's culture of adventure and innovation shows that the risk of Ethereum being surpassed by alternative technologies in the future is low.

Therefore, Ethereum is the best choice.