With news of the flippening – ether supplanting bitcoin as the top cryptocurrency – becoming a regular part of daily crypto chatter, the question that has to be posed is what the distinctions between ether and bitcoin entail for the future development of blockchain and crypto applications. With a market capitalization of more than $1 trillion, significant purchases by household brands such as Tesla TSLA 0.0 percent, and significant payment processors enabling crypto payments, it seems natural to assume that bitcoin supremacy is all but inevitable.
On the other hand, ether and the Ethereum blockchain have skyrocketed in terms of crypto worth and the various apps built on top of it. Taking a step back and putting aside the day-to-day price tracking that captivates market experts and participants, ether and Ethereum were indeed the dominant narratives in the second half of 2020 and 2021. Apart from the current increase in ether prices, many of the blockchain applications that have captured the attention and interest of the mass market have been developed on the Ethereum blockchain and run on it.
In other words, for the first time in the history of financial markets, it appears as though there will be an open competition to select which protocols and cryptocurrencies will drive the sector forward. Let’s look at some of the underlying issues that the market will have to evaluate in the following months.
Applications in Comparison to Transactions
One of the most contentious discussions over the last several years has been whether crypto can be used for commerce or is better off being held as a speculative investment. Application will be very beneficial in numerous ways. These applications will help to transfer cash in a matter of seconds without us having to go to different ATMs and places.
Apart from the fact that many cryptos, particularly stablecoins meant to serve as a medium of exchange, do not accurately reflect their functionality or use cases, the reporting and potential tax liabilities continue to dissuade crypto from being utilized as a transactional medium. In other words, any crypto transaction may be subject to taxation, which is bad news for bitcoin maximalists expecting the immediate abolition of fiat currencies.
Price Diversification and Diversification
The number of cryptocurrencies, coins, tokens, and the broader assortment of crypto assets continues to grow on a near-daily basis. While many of these new iterations of crypto lack many characteristics that make them more well-known crypto so appealing to investors, the sector is still booming. How can this be related to the exchange of the two cryptocurrencies?
The discussion surrounding the expanding number of crypto assets encompasses much more than merely recognizing an expanding number of investable possibilities. Referring back to the previous point, the Ethereum blockchain supports a wide variety of applications; stablecoins, DeFi, and NFTs are all related to this non-bitcoin platform.
Contrast Platform with Asset
Another aspect in the battle between bitcoin and ether is what the marketplace will ultimately value more — the ecosystem or a specific crypto asset. To put this in more concrete words, what is the actual value of a company such as Apple AAPL +1 percent, the product itself, or the network effects (and information) enabled by those devices? While there may be some disagreement regarding the proximate cause, the consensus usually is that a significant portion of the success of corporations like Apple is due to the network effects associated with serving as a robust platform.
Is it logical to believe that blockchain and crypto applications will have a different outcome?
There will undoubtedly be considerable discussion and debate about what the recent Bull Run in ether signifies for the crypto and blockchain space’s longer-term growth. And putting aside the continued price volatility in the crypto world, there are a few basic questions that are beginning to drive the larger discourse forward. It is simply too early to predict where cryptocurrency values will eventually settle, how new applications will evolve, or which solutions will gain traction. Whatever the case may be, the range of imagination and ingenuity should be lauded. These applications will have numerous outcomes and those will be beneficial to us in many ways.