Watch out, Bitcoin. Ether might be about to take over
With questions about how usable Bitcoin is and other coins offering more versatility, experts are predicting that Ethereum’s coin could be in the driving seat soon.
When it comes to crypto, it’s mind-boggling to comprehend how big Bitcoin is. As of 12th July, one Bitcoin can get you just over 16 ether, the second most valuable coin. The amount of Bitcoin in circulation (or market capital, if you want to get technical) is three times that of Ethereum. And just under half (46%) of all cryptocurrency by value is locked into Bitcoin. That is huge. It’s a dominance far beyond Harry Potter’s book sales, Drake’s streams and that Zara dress everyone had back in 2019. But there’s a chance Bitcoin’s reign could soon end. Ether is poised to take over, which would mean a big rise in its value and perhaps a decrease in Bitcoin’s.
Wait, what’s Ether?
Oh yeah, so Ether is the native cryptocurrency of the Ethereum network. Ethereum is the name you’ll have heard, but that’s the name of the blockchain technology itself, which people use to make NFTs, smart contracts and plenty more.
But Bitcoin is massive. Surely Ether won’t change that?
Well, it’s all speculation and forecasting at the moment. Nobody can really predict what will happen. However, reports say that Ethereum could be on the way to surpassing Bitcoin as the most valuable cryptocurrency, despite being way off that level at present. This could mean big gains for people who already have the coin in their wallet.
And these predictions aren’t solely backed by crypto bloggers and analysts. Big banks like Goldman Sachs are also backing Ethereum. “The cryptocurrency with the highest real use potential as Ethereum, the platform on which it is the native digital currency, is the most popular development platform for smart contract applications,” said the company in a recent note. Read: keep a close eye on Ether.
Okay, so why does Ethereum matter if it isn’t the coin? And what the hell is a smart contract?!
Essentially, the gear shift from crypto being used exclusively by Reddit bros and darknet users to having actual mainstream use is pretty dependent on the technology of blockchain (which the coin uses to transfer money) itself. Ethereum’s blockchain technology is open-source, meaning people can use it to develop new coins, smart contracts, NFTs and more. If (and when) this happens, the coins that have the most value are likely going to be those that have “real-world use”.
Smart contracts are like the average contracts you know and sign, but decentralised and hyper-secure. A basic example would be a crowdfunding campaign: you give your money to the crowdfunding company, which gives it to the businessperson if the goal is reached and back to you if it isn’t. A smart contract is essentially programmed to do this automatically, cutting out the crowdfunding company. Blockchain also makes the original contract impossible to change and distributes it in such a way that a single person, or set of people, cannot tamper with the details of the contract. Ethereum was created and designed to support smart contracts. Bitcoin can support smart contracts, but it’s limited to the point where it’s basically useless compared to Ethereum.
Right, but what does “real world use” even mean?
In terms of actual coins, it can mean a coin that does good for the planet, or a stable token like AidCoin, which is used to allow cryptocurrency donations to charities. But for Ether, the potential is much bigger – so much so that, if all goes to plan, people will probably end up calling it the Amazon of crypto. Given that Ether is the coin Ethereum uses, it’s only going to go up in value as more products rely on using the Ethereum network.
So what’s so special about this Ethereum network?
It’s a decentralised, open-source blockchain. In English, it has become the backbone for making NFTs, smart contracts, dApps (decentralised applications, almost all of them made on the Ethereum network), stable coins (AidCoin is an example, it was developed on the Ethereum network) and more. Essentially, most of the new technology that makes crypto exciting relies on Ethereum at the moment.
By contrast, Bitcoin is essentially just a cryptocurrency, meaning it is useful for transferring money in a decentralised way, but beyond having clout, doesn’t offer much that Ether (the coin) can’t do – let alone Ethereum itself.
The fact that a new and improved Ether 2.0 is on the way also suggests that the coin will continue to be an integral part of the network. Essentially an update on Ether that will make it more sustainable, scalable and secure, the introduction of Ether 2.0 won’t affect anything with regards to existing coins. Think of it like an auto-update. And why would it need to be updated if Ether wasn’t in their plans for the long-haul?
Right, let’s recap. Ether is a coin but it’s backed by a much bigger crypto thing, which Bitcoin doesn’t have. So it has legs. But is it really likely to actually surpass Bitcoin?
It has legs, yeah – good ones, like Jack Grealish. Signs of these predictions are beginning to manifest. At the back-end of June, Ethereum managed to overtake Bitcoin for “number of daily addresses”, a rough estimate for number of daily users. This marked the first time Bitcoin had been overtaken for anything. At the time of writing, Ether has had a higher number of daily addresses for four days running, its longest streak yet (previously it had beaten Bitcoin for a day or two here and there). Sure, it’s more people with a much smaller volume of money for now, but it seems that people-power is certainly behind the cryptocurrency. The value could soon follow.
This article contains reportage, not financial advice. Always do your own research before investing. Also, cryptocurrencies are a volatile and high-risk asset. As with all investments, you should never invest money that you can’t afford to potentially lose.