Why Ehtereum will Surpass Bitcoin

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Why Ehtereum will Surpass Bitcoin

In 2018 I wrote my first (heavily outdated) blog post on Bitcoin [1], reviewing the history of money that led to Bitcoin and the future potential of blockchain technologies. I made a few formal predictions at the end of my post. Let’s see how some of them fared. Regarding crypto I said:

1) Bitcoin will surpass $20,000 by 2025

Well, I guess I was technically right but was off by 4 years. 

The other prediction on crypto I said:

2) Ethereum will surpass Bitcoin in 2025.

So, I suppose I have till 2025 to look forward to that prediction.

But the reason I say this is because Ethereum, unlike Bitcoin, has many major benefits that I believe can make it sustainable as the major industry leader. And so this will primarily be the topic of discussion in this article, on the benefits and technological potential for Ethereum to be the way our future is shaped. And so, the reasons why Ethereum will outlast Bitcoin:

1) A Leader

I think it would be a mistake to downplay the effects of having strong leadership in any industry. When we think of the modern technology companies Big Five: Facebook, Amazon, Apple, Microsoft, Google, we have been able to easily associate these companies with a leader with a great vision: Zuckerberg, Bezos, Jobs, Gates, Page & Brin. I guess the Big Five is a bit outdated now that Facebook has become Meta and Tesla somehow recently surpassed Meta in market capitalization despite delivering 10 cars annually (November 2021). But Tesla might be the best and most extreme example of a company’s future aspects directly being tied to its founder – some people have speculated that Tesla’s valuation is heavily tied to investors investing in faith in Musk rather than the company itself, and those some people would be me.

Bitcoin has the allure of an unknown leader and founder in Satoshi Nakamoto. Some may say that is a benefit to Bitcoin in the industry that is pushing for a digitized, decentralized trust system. The major issue is that there is no formal leadership to then guide the progress of Bitcoin. Certainly, as the pioneer of the industry, Bitcoin is revolutionary and will hold that spot indefinitely for introducing blockchain and crypto. But there is inevitably a time where Bitcoin needs to adapt. Maybe not now, maybe not for many years. And that’s not to say there aren’t developers around the world who work on the technology side of Bitcoin. But lack of formal leadership can result in uncertainty with the direction of Bitcoin and its founder’s vision, which has resulted in forks like in 2017 Bitcoin Cash (in short, a “fork” is when a cryptocurrency splits off from the main blockchain). Bitcoin Cash itself forked again in 2018. So we can clearly see a lack of vision from Bitcoin, and even in researching for this article, it’s hard to dictate which people are directing the development of BTC.

Ethereum has the benefit of a bright young founder in Vitalik Buterin who leads teams to push for upgrades and technological progress to address specific modern problems such as scalability, environmental sustainability, and security. (See ETH 2.0 in 2021-2022). There is a clear founder’s vision and philosophy, with clear goals set. The responsibility of the team is tied with the community’s engagement and comments, and given that Ethereum is open-source, there is accountability on the part of Buterin and his team to do what’s best for the overall development of the technology.

2) Second-Mover Advantage

Remember in school when the teacher asked who wanted to go first on their oral presentation? Most people squirm at the idea of going first. Usually, one person might volunteer, the confident and brave one. But in reality, and strategically, it makes sense to present not first, and ideally, even on a separate day.

This is what I always strategically thought about in my acting & theatre classes. Performances were always spread throughout a few days. Performing first was usually a death sentence. Performing last has a lot of pressure as well, but might be desirable if you believe you can make a lasting impression, so generally should be avoided in case you make a bad lasting impression. Anywhere in the middle is a sweet spot because you have both the opportunity to review and adapt your presentation based on those who went before you.

Second-mover advantage occurs when a firm following the lead of the first-mover is actually able to capture greater market share, despite having entered late [2]. It makes a lot of historical sense in the technology world. Pioneers are revolutionary for pioneering a technological feat. Second movers “borrow” their ideas, adapt, and build onto it – avoiding the same mistakes the pioneer made which ultimately results in their downfall. Some examples:

  • Facebook > MySpace
  • TikTok > Vine
  • Netflix > Blockbuster / HBO / Cable Networks
  • Tesla > Ford
  • Uber > Taxi industry
  • AirBnB > Hotel industry

So, as MySpace pioneered social media, Facebook adapted and survived. Vine pioneered short video clips for entertainment, which has since died as well. Blockbuster was the industry leader in movie rentals until Netflix decided there had to be a better way, beginning with mailed DVDs before streaming. Tesla was founded a year after Ford recalled its EV project in 2002. Uber and Airbnb created P2P platforms for two major industries in travel and hospitality. Eventually, we might not even know of the first mover, and the most famous case might be Amazon.com. Amazon was not the first online bookstore — that belongs to books.com, which launched 3 years before Amazon. 

The second-mover advantage is real, and although we will (and should) always respect genuine pioneers in technological advancements, there will always be someone trailing behind, learning off every (costly) mistake. Being a second-mover means you don’t have to make the costly mistakes of venturing into new revolutionary technology.

3) Ethereum’s differential technology

On a technology aspect, Ethereum takes the cake as a second-mover. What Bitcoin has over Ethereum is primarily its market share. Bitcoin is more well known not for its practical applications, but mainly because it’s the first cryptocurrency on blockchain technology. Ethereum’s growth should sustain if its technological and practical applications in this space continue. Those applications are primarily being able to serve as [the best] open-source platform for 1) smart contracts and 2) decentralized applications, where anyone can create new applications on. The two best-known applications that utilize smart contracts on blockchain technology are decentralized finance (DeFi) and non-fungible tokens (NFTs). Ethereum is home to most of these applications. The former, DeFi, which might completely revolutionize how financial transactions can be dealt directly between two transacting partners without the need for an intermediary; the latter of which, NFT’s, has potential for digitizing virtual tokens but at its current state seems largely like a market clouded as a digital art bubble, like this JPEG of a pet rock sold for $2.6million Ether [3]. My fear of NFT’s is it becomes a digitized version of the physical art world, where money laundering is rampant and the majority of the market share and value held in the art world is 

Ethereum also processes transactions faster than Bitcoin and is theoretically less energy-intensive (and hopefully becomes even more sustainable in the environmental sustainability aspect, see Eth 2.0.)

Sources

[1] How we ended up in a world of Bitcoin 

[2] First-mover / Second-mover advantage

[3] From Pet Rocks to Digital Rocks: JPEG sold for $2.6 million.

Ethereum 2.0


This is not financial advice. All opinions are my own. Information in this article is not academic and should not be taken as evidence otherwise. The article may be inaccurate and may be updated. I may have a financial stake in assets discussed in the article.

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