The Grand Flippening of Ethereum in 2018
Despite appreciating by more than 12,500% in the last months, Ethereum still trails far behind bitcoin, whose market cap is now more than $200 billion as compared to Ethereum’s $120 billion. This was as a result of Bitcoin’s growing mainstream adoption, driven by the launch of Bitcoin futures contracts by CBOE and CME exchanges that provide a conduit to traditional investors to invest in cryptocurrencies. However, crypto thought leaders now believe that 2018 could be the year in which Ethereum will be able to challenge bitcoin’s long-established market leader status as the highest-valued cryptocurrency.
Below, we discuss the key milestones in 2018, if achieved, that could oust bitcoin from its #1 position.
Scalability: One of the biggest weapons used by crypto sceptics in criticising cryptocurrencies is the low transaction throughput as compared to traditional centralized institutions. Ethereum is currently processing about 1.3 million transactions per day — three-times as many as bitcoin — with much lower transaction fees. That said, credit card companies such as Visa and MasterCard are capable of processing more than 150 million transactions per day. For example. In November last year, the unexpected surge in interest in the Cryptokitties application caused the confirmation times and transaction fees to skyrocket — highlighting the urgency for scaling solutions that can accommodate significantly higher of transactions. Ethereum founder Vitalik Buterin has also noted that ‘Scaling’ is the biggest focus for the Ethereum developers in 2018. Several efforts such as Sharding, Plasma and Raiden Network are currently being looked at to improve the scalability of the Ethereum blockchain. If Ethereum’s scalability solutions come into effect before the long-awaited Lightning Network solution on the bitcoin blockchain, it could expedite Ethereum’s mainstream adoption and, therefore, result in a higher ether price.
More Dapps: Despite the growing regulatory scrutiny around ICOs, the number of projects coming online in 2018 is widely expected to be higher than in 2017 as increasing number of industries, including government entities and Oil & Gas companies, are looking at the benefits of adopting the blockchain technology and what the Ethereum protocol could offer in that respect. In addition to project building, faster transaction times and lower fees as compared to bitcoin could lead to greater network effects.
Even if Ethereum manages to go toe-to-toe on a market cap basis with BTC, we still believe bitcoin will continue to be the undisputed king of store-of-value due to the substantial hash power guarding the network and a supply limit of 21 million coins.
