Will Ethereum Cryptocurrency Overturn Bitcoin at #1 | by Stephen Dalton | August 2022
CRYPTOCURRENCY | BLOCKCHAIN
Ethereum has announced that the Mainnet and Beacon chain will merge on September 15th or 16th. This will transform it from Proof-of-Work (PoW) to Proof-of-Stake (PoS). Is this transition enough to turn Bitcoin (BTC) around?
Important information about Ethereum’s upcoming merger
When the Ethereum (ETH) merger happens in September, it will mark the end of the PoW system and begin its status as a PoS coin.
Ethereum 2.0 will not create a new coin.
This merger will change the financial policy of the blockchain, allowing ETH to become more sustainable and reduce the total supply of ETH.
The flipping: Will it happen?? Everything you need to know!!
The merger will supposedly reduce ETH’s total supply. A reduced supply should help lift the price of ETH. This can help reach #1.
However, BTC will always be seen as “digital gold” within the digital universe, while Ethereum is known as “digital oil.”
A rapid increase in the price of ETH, a decrease in BTC’s price, or a combination of the two can lead to the flip.
The ETH merger will not reduce gas fees for transactions (at least not immediately), a primary sticking point that could prevent ETH from growing. On the other hand Solana (SOL) and Cardano (ADA) have cheaper fees mainly due to their PoS consensus mechanism. Can one of them take over ETH?
Many believe that fees on the Ethereum platform will decrease gradually.
According to a tweet by Vivek Raman:
“Ethereum’s merger will not reduce network fees as many expect. The high gas fees on Ethereum are to blame increased demand for block space rather than a function of the “consensus mechanism”.”
Instead, the ETH blockchain plans to scale users’ activity and secure the Mainnet through a decentralized layer. This method may allow cheaper transactions in the network (eventually).
Flipping Bitcoin with any Altcoin will be challenging
For those who are not aware, the market cap for cryptocurrencies works in the same way as the stock market.
Replace the word “share” with “coin or token” saw it “total number of outstanding shares multiplied by price per share“ total outstanding altcoins/tokens multiplied by the price per altcoin/token equals the market value of the assets.
Market cap is one of the vital indicators of an altcoin’s value. Many newcomers (myself included) to the cryptocurrency market only considered the price of an altcoin to determine its value without considering how many are circulating and how many will be produced.
However, scarcity is only part of the The law of supply and demand.
“The the law of supply and demand is the economic relationship between sellers and buyers of various goods. The supply and demand theory states that the price of a product depends on its availability and buyer demand. – Actually.
“The living one Bitcoin price today is $21,183.24 USD with a 24-hour trading volume of $26,969,206,664 USD. We update our BTC to USD price in real time. Bitcoin has risen 0.54% in the last 24 hours. The present The CoinMarketCap ranking is #1, with a market cap of $405,177,341,535 USD. It has one circulating supply of 19,127,256 BTC coins and a max. supply of 21,000,000 BTC coins. — Market value of coin.
ETH data current as of 20 AUG ’22
“The living one Ethereum price today is $1,578.20 USD with a 24-hour trading volume of $17,874,601,724 USD. We update our ETH to USD price in real time. Ethereum is down 2.90% in the last 24 hours. The present The CoinMarketCap ranking is #2, with a market cap of $192,613,364,071 USD. It has one circulating supply of 122,045,916 ETH coins and max. supply is not available.” — Market value of coin.
Between ETH and BTC, the value or market value gap is more than 200 billion dollars. BTC’s market value on 19 AUG is $408,567,909,013while ETH is $206,487,299,810.
That is more than double. However, many see it as “the glass is half full” or ETH is almost halfway to the Flippingen.
ETH is almost triple its next closest competitor, a “stablecoin”, Tether (USDT) appreciated to $67,554,732,043.
“…stablecoins are cryptocurrencies that are designed to offer stability in a cryptocurrency system. They often are attached (ie have a fixed exchange rate) to a fiat currency, such as the US dollar.” — Business Insider.
If you take out stablecoins, ETH is well ahead The XRP tokenat #3, produced by Ripple labs, which currently has a market cap of $16,623,331,697.
Actually own BTC more than 55% of the total value within the cryptocurrency industry. These valuations were real at the time of my research, although market values in the highly volatile cryptocurrency market change rapidly.
Conversely, ETH only owns a little more than 12% of the value. This gap may be difficult to close for ETH.
Additionally, other factors may make it challenging for ETH to top BTC in the near future. Let’s explore them so you can make up your own mind “freak.”
“The flippant is a term used to describe a potential “flip” in the largest cryptocurrency. In particular, it refers to the possibility that the second largest cryptocurrency, Ethereum (CRYPTO: ETH), could overtake Bitcoin. — The motley fool.
Asset liquidity
The liquidity of an item in the market refers to the ability to convert it into cash. Having a huge amount of liquidity has so far enabled BTC “hold the perch” at #1.
In response to, “Is Bitcoin Considered a Liquid Asset?” Crypto Vantage wrote:
“A liquid asset is defined as an asset that can be quickly converted into cash at a rate that is not far from the price quoted on the open market. The nature of Bitcoin makes it so that it can be turned into cash very quicklyhowever, those transferring extremely large amounts of Bitcoin may experience some slippage.” — Crypto Vantage.
Some “whales” believe ETH has presence in the crypto universe but not the asset liquidity of BTC, although some Ether watchers and owners will say “…we’re halfway there.”
Most crypto enthusiasts understand that the BTC halving is creating a bull run.
Imagine that times three. The merger will cut emissions by 90 percentdaily block replacement will decrease from 12800 to 1280 ETHand inflation will fall from 4.3% to 0.43%which can be seen as one 3X halving.
Circulating supply, total supply and maximum supply
Many investors do not understand the difference between circulating supply, total supply and maximum supply. It can be complicated. Of course, circulating supply refers to the number of coins in circulation.
But total supply does not necessarily refer to the total supply that will ever be produced; it is the maximum offer.
“The total offer of a cryptocurrency is the total number of coins currently in existence. This includes coins that are already in circulation with the public and other coins that are not in the market, such as newly mined coins and coins reserved or “locked” by the developers.“ — Crypto Definitions Dictionary.
“The maximum supply of a cryptocurrency refers to maximum number of coins or tokens that will ever be created. This means that once the maximum supply is reached, no new coins will be mined, minted or produced in any other way. Normally, the maximum supply is limited by the limits defined by the underlying protocol of each digital asset.” — O3 schools.
So how will these numbers affect the turnaround?
Unlike government-produced and regulated fiat currencies, the maximum supply of BTC is set at 21,000,000which it is predicted to reach by 2040.
Still, the price can move quickly due to the small number compared to ETH, which has an announced total/circulating supply of 122,027,066 coins. The maximum supply is not yet known.
Although the number of coins in circulation and price will drive the market value, inflation can dampen growth. While the merger will help fight inflation and curb the circulating supply, ETH has nearly 100 million more coins in circulation than BTC ever will.
Regardless of the number of coins in circulation, the demand for both will drive the price. BTC has always led the way, but it has no real project beyond its decentralized nature, limited anonymity, and stored value.
ETH, on the other hand, possesses those characteristics; plus, it was created and enhanced to facilitate many online transactions, such as executing smart contracts, powering decentralized applications (DApps) and decentralized autonomous organizations (DAOs) that support artists and entrepreneurs in creating non-fungible tokens (NFTs), and Play-to-Earn (P2E) games.
These features often lead to ETH being referred to as “digital oil” because it “lubricates the slides” for so many operations across the crypto universe.
Final thoughts on the flip
While ETH is set to complete its merger into PoS in September, many believe it will topple BTC and become number one.
However, we will have to wait and see how the ETH blockchain will work once the merge is complete.
Assume, as predicted, gas taxes remain high. What is the benefit beyond the apparent but not visible benefit to the environment? If developers and creators have to pay the same high fees, what’s to stop them from using another platform that performs the same function for less?
Plus, even an ETH flip does not guarantee that ETH will become an excellent investment value or that BTC will lose its value. We also have to consider that ETH could be the one dethroned at #2 by SOL or Cardano, especially if gas fees remain the same.
You must do your own research (DYOR), decide for yourself which is the best value if either, and never use money to invest that you cannot afford to lose.
#Bitcoin #Ethereum #Flippening
DISCLAIMER: This article is for entertainment and informational purposes only. It should not be considered financial or legal advice. Not all information will be accurate. I am not a financial advisor and you should consider everything I write informative and friendly rants to show you what is possible if you invest your money in these vehicles. However, there are no guarantees. Consult a financial professional before making any important financial decisions.
Note: This post contains affiliate links. Read mine disclosure statement for further information.
Stephen Dalton is a retired US Army First Sergeant with a degree in Journalism from the University of Maryland and a certified American English Chicago Manual of Style Editor. Also a top writer in nutrition, investing, travel, fiction, transportation, VR, NFL, design, creativity, and short stories.
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