2 cryptocurrencies that can overtake Bitcoin

While Bitcoin (BTC -1.73%) is still the #1 cryptocurrency in the world by market capitalization, there are many reasons to believe that other cryptocurrencies may eventually surpass it. Before this year’s pullback in the crypto market, the conventional wisdom was that Bitcoin was a hedge against inflation and a long-term store of value. Some even called it “digital gold”. But these assumptions are now very much in doubt.

So which cryptos could displace Bitcoin at the top of the crypto heap? Right now are the two best prospects Ethereum (ETH -7.80%) and Solana (SUN -3.28%). Both cryptos offer more utility than Bitcoin, and both are innovation leaders in the blockchain industry, with promising growth prospects.

Ethereum

Ethereum stands out as an innovation leader. The most recognizable developments in recent years – including smart contracts, decentralized applications (dApps) and non-fungible tokens (NFTs) – stem from the Ethereum blockchain.

By almost any metric, Ethereum is the dominant force in the blockchain industry. For example, Ethereum is the No. 1 player in the NFT market, with an estimated share of 80%. In areas such as decentralized finance (DeFi), blockchain gaming and the metaverse, Ethereum overshadows all other blockchains in the world.

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And with The Merge, a system-wide upgrade, Ethereum will only get stronger. The current complaint about Ethereum is that it is too slow and too expensive. That’s largely because it’s been based on a proof-of-work consensus mechanism. With The Merge, Ethereum will move to a proof-of-stake consensus mechanism, reducing transaction fees and increasing transaction processing speeds. Finally, when Ethereum 2.0 is finished, it should be able to handle 100,000 transactions per second. In contrast, Bitcoin can currently only process five to 10 transactions per second.

Solana

The road to market dominance is more complicated for Solana because it is a direct rival to Ethereum. Both are Layer 1 blockchains that offer users the same functionality and utility. Ethereum has smart contracts and so does Solana. Ethereum enables the creation of NFTs and so does Solana. The main selling point is that Solana can do everything Ethereum can do, only faster and cheaper. Solana already offers the ability to process 65,000 transactions per second, and transaction fees are close to zero.

While Ethereum has been stuck in all the technical steps needed to become a proof-of-stake blockchain, Solana has been on an innovation tear. Solana has launched everything from a new payment network (Solana Pay) to a completely new mobile crypto platform (Solana Mobile). In 2023, Solana plans to debut Saga, the first “crypto phone”.

At the same time, Solana is making serious inroads into both blockchain games and Web3. More than any other crypto, Solana is taking steps to build a recognizable brand for early crypto adopters. When you can layer this brand experience on top of a super-fast, super-cheap blockchain, it’s a very powerful value proposition.

How Fast Can Ethereum or Solana Topple Bitcoin?

This may be an imprecise analogy, but you can think of what’s happening in the crypto industry as similar to what happened in the tech industry a generation ago. Until the 1980s, IBM was the biggest name in the technology industry, and then came Microsoft and apple. The rest, as they say, is history.

In many ways, Bitcoin is today’s crypto IBM, Ethereum is the new Microsoft, and Solana is the new Apple. There is definitely room for all three to coexist. The only real question is who gets to sit on top. Large institutional investors may prefer Bitcoin, while everyday investors may prefer Ethereum and Solana.

Right now, Ethereum is about half the size of Bitcoin based on market cap and Solana’s equals only 3%. So much has to change for any of them to take over Bitcoin. But again, look at what happened to IBM, Microsoft and Apple in the tech industry. Microsoft was launched in 1975, and it took almost two decades for Microsoft to overtake IBM in market value. Then, after that happened, it took nearly two more decades for Apple to overtake Microsoft in market capitalization. So obviously this isn’t going to happen overnight and there will be a lot of twists and turns along the way.

But Ethereum and Solana now offer too much utility to ignore. And they are both innovation leaders, making them both long-term plays if you believe in the future of the crypto industry. If you can handle the volatility of cryptos, you can put these two cryptos in your portfolio and hold them forever.