Bitcoin may currently be the most well-known and widely-traded cryptocurrency, but many experts believe that Ethereum could soon surpass it in terms of adoption and value. From its versatile blockchain platform to its growing list of partnerships and development projects, Ethereum has a lot going for it. Keep reading to learn more about the exciting future of this cryptocurrency.

Blockchain technology has recently bought the world’s attention by making it the top 100 most promising technologies of the century amidst Artificial Intelligence (AI) and Machine Learning Programming.

The technology is relatively new but has yet grown to a total market valuation of $873 billion, according to stats collected by CoinGecko, a blockchain analytics company. Although the figure looks pretty high, it is a decline from the highest market capitalization recorded during the recent bull run, which settled at over $3 trillion.

With the rise of the Bitcoin network, decentralization has revolutionized the finance industry. The network has posed massive utility in the monetary field by introducing cross-border payments, over-the-counter derivatives, and a good investment opportunity for the crypto army.

Although these advantages have made Bitcoin the ‘digital gold’, Ethereum is growing at a much more promising pace than Bitcoin. Soon, Ethereum will overrule Bitcoin to become the most valuable fungible digital asset and distributed ledger in the entire crypto sphere. Here is why.

Ethereum Tokenomics- A Brief Summary

Ethereum is an open-source smart contracting platform that allows users to develop Decentralized Applications via the utilization of smart contracts. The project was founded by a young computer scientist by the name of Vitalik Buterin and his colleagues, including Cardano founder Charles Hoskinson and other brilliant minds. 

The smart contracts on the platform are run by the Ethereum Virtual Machine and are used to relay financial information such as transactions and options contracts. The native cryptocurrency in the Ethereum ecology is ETH and is mainly used to settle the results relayed by the smart contracts in the ecosystem.

Why Ethereum is Bigger than Bitcoin

Proof of Work vs. Proof of Stake

Upon its development, Ethereum mimicked Bitcoin’s consensus mechanism known as Proof of Work to verify transactions. However, the technology behind Proof of Work was unsuitable for Ethereum’s expansion. 

Proof of Work validates transactions occurring in a particular blockchain by using miners. These miners compete to solve complex mathematical algorithms for a reward awarded to them in the blockchain’s native cryptocurrency.

For instance, miners validating Bitcoin transactions earn BTC, while miners validating Ethereum transactions earn ETH. Sophisticated computers conduct mining activities to solve complex computational puzzles. Once the mathematical algorithm has been solved, the block is verified and hashed to the network.

This technology has various downsides. First, the difficulty of mining increases as more miners join the network. As a result, miners are obliged to invest in more sophisticated mining hardware and software that costs more. Secondly, the electricity consumption involved in mining is very high, making the mining process even more expensive. PoW is also very slow and less scalable than its counterpart, PoS. 

These reasons made Ethereum transform from a Proof of Work to a Proof of Stake technology to validate its transaction in the process dubbed ‘The Merge’ by crypto fanatics. Proof of Stake involves staking the network’s native digital assets; in return, validators get the rights to approve transactions on the network. The Merge took place on 6th September 2022, a historical moment that has untapped the true power of Ethereum.

Ethereum scalability-The Underlying Blockchain of Innovation

Decentralization is the top objective for the Ethereum ecology in preserving the ecosystem, and any endeavor that helps to increase a distinct market share will positively impact the ecosystem overall. Due to this attribute, Ethereum has opened up blockchain technology to developers. As a result, the smart contracting platform has risen to become the largest NFT network in the entire cryptosphere, supporting significant NFT marketplaces such as OpenSea.

In addition, the network has also given birth to Decentralized Finance. Ethereum has provided a platform that allows developers to build and improve DeFi protocols. The platform’s expansion is more comprehensive compared to Bitcoin’s rigidity, making it the most used open-source platform in the ecology.

Through its innovation and technological abilities, Ethereum has inspired the growth of other innovative contracting media, such as Solana and Polygon. These projects have risen to fame through supporting secondary crypto derivatives. Solana, for instance, houses a large ecosystem of Non-Fungible Tokens.

Ethereum has massive utility

Bitcoin was initially designed to replace fiat currencies by bringing decentralization into finance. It was developed to facilitate Peer to Peer transfer and store of value and was constantly optimized for that specific function. On the other hand, Ethereum is not designed to be a digital ‘gold’ or virtual dollar like Bitcoin. The network’s development team had bigger plans. Ether was developed to fuel a broader range of transactions and functionality.

Although Bitcoin may have achieved its target of being a valuable digital asset that threatens the existence of fiat, Ethereum seems to be only getting started. The platform aims to distribute decentralization through products and services by running nodes on the network. The platform allows the development of ERC-20 tokens that may possess different use cases and functionality within and outside ETH’s ecosystem. Ethereum developers pay fees to run codes on the network, whereas Bitcoin relies on transaction fees charged as users transfer value amongst themselves.

In addition to its massive utility, Ethereum’s digital currency, Ether, has also been used as a currency. A perfect example portrays itself in the world of NFTs, where the actual value and rarity of a Non-Fungible Token is determined by the amount of ETH it sells for. Some of the most expensive digital art NFTs have sold for thousands of ETH which have equated to millions of dollars upon conversion.

Conclusion

While Bitcoin and Ethereum continue to storm the crypto market, their tokenomics reveal that Ethereum will beat Bitcoin’s Dominance in the crypto sphere. Ethereum’s scalability and running of smart contracts have continuously opened up blockchain technology to traditional finance. For instance, Barclays, a centralized financial and banking institution, is currently using Ethereum’s smart contracts as a method of trading derivatives. The rise of DeFi protocols has also made Ethereum’s growth exponential in a way that the platform serves as a direct competitor of Bitcoin. The future is Bright for Ethereum.