Will Ethereum Overtake Bitcoin? The logic of Ethereum's continued rise?

In the past few days, more and more people seem to be discussing the possibility of Ethereum surpassing Bitcoin.

The reason for this phenomenon, I think, may be related to two factors:

One is that the ecology on Ethereum is getting bigger and bigger; the other is that the price increase of Ethereum will have mechanism factors.

Let's first look at the ecological factors, which mainly include the application level and the technical level.

From the application level, the two largest application areas at present are DeFi and NFT.

Among them, the locked-up value of Ethereum DeFi has reached 85 billion US dollars as of the time of writing, and breaking through 100 billion US dollars will be within reach, which shows that DeFi has become more and more established.

Ethereum whale trading volume hits 4-month high: Jinse Finance reported that according to Santiment data, Ethereum whales began to actively accumulate ETH after four months of inactivity. The past few days have seen a sharp increase in the activity of Ethereum whales, with nearly 2,600 transactions worth over $1 million each yesterday alone. It was the highest amount of such trading activity in a single day since January. The firm noted that this increase in activity comes amid a market-wide pullback that sent shockwaves throughout the cryptocurrency space. On May 2, entities holding between 1,000 and 10,000 ETH suddenly added 142,000 ETH, worth about $407,415,040 at the time. (cryptopotato) [2022/5/14 3:15:29]

Based on this, we can say that Ethereum has officially developed its own unique and complete application scenarios vertically from a platform that only had the functions of issuing coins and speculating coins in 2017.

The cumulative number of Ethereum DeFi users has exceeded 2 million: According to statistics on the Ethereum chain and Dune Analytics, the number of independent addresses that have participated in DeFi applications has exceeded 2 million. This statistic includes some of the most mainstream applications, namely Uniswap, Compound, 1inch, Balancer, Kyber, SushiSwap, MakerDAO, dYdX, Aave, Curve, Yearn, Tornado Cash, InstaDApp, 0x, Bancor, PoolTogether, Synthetix, BadgerDAO, Ren , Harvest, CREAM, Set Protocol, Nexus Mutual, KeeperDAO, Hegic, and Alpha Homora. Among them, Uniswap has the largest number of independent addresses, exceeding 1.4 million. [2021/4/25 20:56:06]

Although DeFi is developing in full swing, it is still limited to a certain small circle, and NFT is more influential than DeFi. We have seen a large number of people from different fields outside the circle (such as artists, sports stars, entertainers, auction houses, etc.) actively active-zce in this field, and the activity of these people will drive their fans into this field. The ecology of Ethereum is entering the lives of more and more people horizontally.

Report: The transaction volume of Ethereum in Q3 2020 reached US$119.5 billion, an increase of nearly 1200% compared to Q2: DappRadar 2020 Q3 Dapp report pointed out that the transaction volume of Ethereum soared to US$119.5 billion in the third quarter of 2020, the same as in the second quarter. ratio, an increase of nearly 1200%. This massive growth is largely attributable to the ongoing decentralized finance (DeFi) boom, the report said. Of the 13 blockchains listed on DappRadar, Ethereum accounts for 96% of the total transaction volume, maintaining its position as the largest network by far. Meanwhile, DeFi applications account for 99% of Ethereum transaction volume. [2020/10/3]

This vertical and horizontal expansion made Ethereum finally "connected to the ground" and became a platform for the encrypted world, becoming more and more three-dimensional and more tense.

News | The Hyperledger project announced a cooperation agreement with the Enterprise Ethereum Alliance (EEA): According to CoinDesk, IBM's Hyperledger project announced that it has reached a cooperation agreement with the Enterprise Ethereum Alliance (EEA), which will provide a common standard for the blockchain space and provide The broader open source community provides cross-licensing. [2018/10/2]

The above is from the application level. If we look at the technical level, various ecological chains that support EVM (such as Fantom, Binance’s BSC, and Huobi’s HECO), and various second-layer extensions (such as Matic) are sharing Ethereum. The burden of Ethereum prevents the development of its own ecology from being stifled by the high fees. Although they have temporarily diverted the traffic of Ethereum, it is conceivable that once the fee problem of Ethereum is alleviated, the applications and users in these ecosystems will still return to Ethereum or revolve around Ethereum in some form.

Therefore, the development of these related ecology actually resonates with the Ethereum ecology, and to some extent, they are also expanding the Ethereum ecology.

It can be said that looking at the ecology alone, there is currently no other chain that has the scale and vitality of Ethereum. It can be said that the direction of Ethereum is also the direction of the entire cryptocurrency. It represents the future, the trend, the value orientation, and a new consensus.

In this sense, it is certain that the development of Ethereum ecology and Ethereum itself surpasses Bitcoin.

In fact, I shared this point of view in an article last year. If we think of Bitcoin as gold, Ethereum as oil. The future development trend of Ethereum is not difficult to understand: the volume of oil must be greater than that of gold, because oil carries human industrial civilization and carries the operation of the world every minute and every second. Without oil, we cannot see today's industrial civilization; without Ethereum, we cannot see the future of the encrypted world.

These are comparing Bitcoin and Ethereum in terms of ecological development, but I think another thing that has attracted people's attention is price. What provokes this nerve is the upcoming EIP1559. I have shared this topic many times. Its most important impact is to change Ethereum from the current inflation state to the future deflation state. The most conservative point of view is that even if there is no deflation, the total amount of Ethereum will remain at 100 million Between one and 130 million.

If Ethereum was in a deflationary state 4 years ago, we would immediately think that once the price of Ethereum in a deflationary state rises, the ecology will be over, so Ethereum at that time did not have such room for price imagination. But today is different. We have various related ecological chains and a second layer of expansion. In those ecological chains and extensions, the ecological applications of Ethereum can run unimpeded, and the transaction fee is close to 0. Therefore, today’s Ethereum is freed from the shackles of prices to some extent, and 1559 has provided a fundamental mechanism for price increases.

So far, the upside of the price of Ethereum has been fully opened up.

The development of the ecology is vigorous and the price rise is not restrained. This kind of Ethereum naturally gives people a lot of room for imagination.

So will the market value of Ethereum exceed that of Bitcoin? I think it will. Of course, this is not to say that I look down on Bitcoin. The position of Bitcoin will never be shaken, but if we look at the future and look at it with an open and inclusive mind, if the market value of Ethereum cannot surpass Bitcoin, where is the future of the encrypted world?

If you look at today's price, Bitcoin is $50,000, and the market value of Ethereum exceeds Bitcoin, then its price should reach at least $10,000.

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