After Ethereum’s strong gains in recent weeks, the voices are rising again that the cryptocurrency can soon attack Bitcoin’s top position. Investors and analysts have held this position very often in the past. But will Ethereum catch up with Bitcoin and when could the time come? In this article, we look at Ethereum’s potential in this cycle and consider if and when the cryptocurrency can overtake Bitcoin at the top.
What is Ethereum?
Ethereum is a blockchain network that has existed since 2015 and was the first network to offer smart contracts . With these smart contract functions, the Ethereum blockchain could become the basis of most decentralized applications over time.
The price of the Ether token rose rapidly and for years Ethereum has been number 2 on the crypto market in terms of market capitalization behind Bitcoin. For a long time, Ethereum used the proof-of-work consensus mechanism that Bitcoin also uses. With the Ethereum 2.0 upgrade comes a move to Proof-of-Stake, which is intended to increase the efficiency and scalability of the blockchain.
What problems does Ethereum solve?
Ethereum provides the basis for decentralized applications or dApps . These decentralized applications offer the advantages of the blockchain in different areas in the digital space. The basis for this are intelligent contracts, the smart contracts that use the Ethereum blockchain.
The best-known group of decentralized applications is probably DeFi . These are decentralized financial services that have grown in popularity in recent years. Furthermore, Ethereum is the basis of most non-fungible tokens (NFTs). NFTs are unique digital objects that cannot be duplicated and therefore can become extremely valuable.
Is Ethereum or Bitcoin the Better Blockchain?
Bitcoin is probably the largest and most important blockchain in 2022 as well. It experienced a transformation from a purely digital currency to a serious financial asset in recent years. Bitcoin is traded on financial markets either directly or in the form of financial products. Investors continue to use Bitcoin as a kind of “digital gold” as an alternative to FIAT currencies and other assets.
Ethereum has a much broader applicability than Bitcoin. In contrast to Bitcoin, Ethereum can be the basis for decentralized applications and has built up a huge ecosystem in recent years. Based on this, many analysts believe that Ethereum has a higher potential than Bitcoin in the next few years.
Is Ethereum supply infinite?
A big difference between Ethereum and Bitcoin is the possible number of coins or tokens that can be created. Both currencies are created by mining (Ethereum is switching the consensus mechanism at the moment). However, bitcoin is finite while ether tokens can be created infinitely.
Only 21 million bitcoins can be created in total. This means that the structure of bitcoin is deflationary . The situation is different with Ethereum, since the number of tokens has no limit. This could be one reason that Bitcoin should continue to rise in value and could be ahead of Ethereum, even though the Ethereum network will grow massively in the future.
Will Ethereum keep going up in 2022?
In the last few weeks, Ethereum has risen more strongly again after difficult months at the end of 2021 and in the first half of 2022. It went from under $1,000 to over $1,700 in August 2022. This surge came at a time when both Bitcoin and the overall market were recovering slightly.
It is quite probable that the Ether token could rise again in the coming months until the end of 2022. Two factors in particular play a role here:
- The Ethereum 2.0 upgrade should be complete and launched soon. It is intended to massively increase the scalability of Ethereum. This launch could give the Ether course a strong boost.
- The signs on the overall market are much more positive than a few weeks ago. With the recovery of the labor market and the fall in energy prices, the financial markets are reacting more positively overall. The crypto market could also see an uptick in the second half of 2022.
Does Ethereum have a good future ahead?
With Ethereum 2.0, the network is taking an extremely important step into the future. Low transaction speeds, low scalability and high gas fees have plagued the network over the past few months and years. As a result, modern blockchains such as Cardano, Solana or Avalanche became increasingly attractive for dApps. Ethereum threatened to lose its pioneering role in this area in the future.
With the update, Ethereum should increase significantly in scalability and could consolidate its supremacy in DeFi and NFTs. In this case, a golden future for Ethereum could follow and Bitcoin’s leading position among cryptocurrencies would also be in danger in the next few years.
However, question marks remain as to whether one of the networks mentioned or a completely new blockchain could displace Ethereum at the top in the future. Ethereum must continue to work intensively on itself in order to be able to replace Bitcoin in a few years.
How high will Ethereum go?
In the next few years, we could actually see five-figure prices for the Ether token . Many analysts already expected this in the last bull market. However, various reasons ensured that the crypto market was not quite able to meet expectations at the end of 2021.
In the next bull market, the price of ether should skyrocket again. The question will be whether Ethereum’s rise will again be significantly higher than Bitcoin’s rise. Ethereum has continued to narrow its lead over Bitcoin in recent cycles and Bitcoin dominance is decreasing. But Bitcoin’s lead in market capitalization is still massive.
Should you now invest in Ethereum instead of Bitcoin?
We always promote a balanced investment strategy . An investment in Ethereum as well as in Bitcoin is recommended in the long term. There continues to be a segment of crypto enthusiasts who see all altcoins as worthless and only believe in bitcoin. Others see Bitcoin as “obsolete”.
In a portfolio, Bitcoin and Ethereum should be the basis for long-term returns on the crypto market. Bitcoin offers a certain security and Ethereum has a high growth potential. There should also be other coins that match your personal taste and that you believe in.
Ethereum could rise again in the short term in 2022, but should gain massively in value again in the long term in the next bull market. Therefore, the currently low prices offer an excellent opportunity for an investment.
