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Don’t Fret: Ethereum’s Not Dead

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Why Ethereum’s Not Dead

Cardano and Polkadot have emerged as ‘Ethereum Killers’. Vitalik acknowledges that Ethereum has problems. People (including me) are averse to using MetaMask and Trust Wallets with ERC-20 tokens because the fees are insane. Ethereum can only handle 30 transactions per second.

But Ethereum has made it past the tipping point for adoption. After implementation of Ethereum 2.0 in early 2022, transaction speed will allegedly be up to 100,000 transactions per second. Ethereum is the platform of choice for all the top NFT makers. Despite all its flaws, Ethereum has far more going for it than against it.


Ethereum


Ethereum (ETH) is the second-most widely known cryptocurrency after Bitcoin. Ethereum is also the second largest currency by market cap after Bitcoin. Ethereum fans frequently refer to “the flippening”, when Ethereum will overtake Bitcoin in market cap. This will probably happen some day, although we’re not sure when. If you’re visiting family or talking with people not your age, there’s a chance they’ve heard of Ethereum alongside Bitcoin.


Ethereum’s story


Ethereum was founded in 2014 by Vitalik Buterin (current head of the project), Charles Hoskinson (who went on to be Cardano founder), and Gavin Wood (who went on to be Polkadot founder). Ethereum was one of the first big cryptos to offer many of the things Bitcoin couldn’t: smart contracts, faster transaction speeds, and now a reliable, safe proof of stake network. ETH has outperformed Bitcoin for the last five years by several multiples.

Ethereum’s competition


Crypto experts often overlook an important aspect of coins- is there competition? What’s stopping another crypto from coming along and doing the same thing and stealing another crypto’s adoption and user base? Using this lens, many cryptos are susceptible to being knocked off their podiums by other coins.

The future is multi-chain. No one coin will rule everything- this is especially true for smart contract cryptos like Ethereum, Cardano, Solana, and Polkadot. If anyone tries to tell you that ‘Cardano is going to kill Ethereum’ they’re thinking too one-sided. There are so many real-world use cases for blockchain technology that hundreds of cryptos will flourish in the future.

Ethereum is a platform

Platforms are tougher to compete against than regular technologies. This is because they own networks- and Ethereum is a network. Competing against a platform is hard because it takes so much work to get to a critical mass. Just look how many cryptos already run on the ETH network. Most are ERC-20 tokens.

Many of the top coins by market cap run on the Ethereum network


Like Facebook and Instagram, the more users that join, the more you’re likely to join too. Platforms can expand with demand, too- Uber can add more drivers and AirBnB can add more properties if demand increases. Hotels and cab companies have fixed supply- they can’t compete.


So many crypto investors have Metamask and Trust wallets and ERC-20 exchanges like Uniswap are so prolific. If you’re the developer for a new crypto, you’d want as many people as possible to buy your coin, right? Making your token an Ethereum ERC-20 token would be a great move. This gives Ethereum a strong competitive advantage.

By comparison, Cardano only has a handful of tokens on its platform in the top 1,000 cryptos. This will likely change drastically soon, but it still shows how incredibly dominant Ethereum is. Polkadot and several other cryptos will have their own networks with coins, too.


The top NFTs are on Ethereum


If you think crypto gains in 2021 have been high, then NFT gains have been absolutely parabolic. The space is younger than crypto and less understood. Many in the crypto space are technically-minded computer science, engineering, and finance types. These same people and many others have trouble understanding the value proposition of NFTs. NFTs are art and art has outperformed nearly every other asset class over the last 30 years. NFTs are different in that they exist in the metaverse and not the physical universe, but many of the same values that apply to traditional art have shown to apply to NFTs.

Many people pay the equivalent of an average American family’s retirement savings for these pictures

Recently, Twitter allowed NFTs to be set as your profile picture with a verification badge. If people are huge Lebron James fans and they see Lebron has a verified NFT that’s on the Ethereum network as his picture, the platform is going to gain interest. Most people don’t understand crypto or NFTs and quite frankly don’t care. They don’t need to to want to have and get a verified NFT as your Twitter picture!


OpenSea.io, the most popular NFT trading platform, sees billions in sales in every month. The most popular 100 or so NFTs on OpenSea are on the Ethereum network, including CryptoKitties, CryptoPunks and others. Every celebrity from Eminem to Tiger Woods to Katy Perry is minting NFTs now. Right now, do a quick search of your favorite athlete or artist + ‘NFT’ and you’re likely to find something. I’m personally big on NHL NFTs.


Ethereum is greener than Bitcoin


With Ethereum 2.0 in early 2022, Ethereum will be transitioning from a proof of work crypto to a proof of stake crypto. Proof of stake cryptocurrencies require far less computing effort to maintain and thus use minimal power. Bitcoin haters often cite that Bitcoin mining takes more power than (insert country: Norway, Ireland, etc.) consumes in one year. They’re not wrong. But while the Bitcoin proof of work network uses a lot of power, it’d also be the most likely to survive any type of doomsday attack on cryptocurrencies.


Ethereum is a far ‘greener’ alternative for a crypto network and is next in line to the throne. This has a lot of companies turning to Ethereum for crypto and payment solutions. One of the reasons for the May 2021 crypto crash was Tesla’s announcement to postpone its accepting Bitcoin as payment due to environmental concerns with Bitcoin mining and energy consumption.


Ethereum has strong partnerships


In April of 2021, an executive at Mastercard told Business Insider that Mastercard was creating applications on the Ethereum blockchain for future commerce. Ethereum also has the Ethereum Enterprise Alliance, a partnership with top firms. This list includes Microsoft, Cisco, Accenture, Intel, J.P. Morgan, and more. The Ethereum Foundation oversees blockchain best practices with any crypto projects that these organizations are developing.


The one thing that raises a crypto’s price long term sustainably is adoption- and these companies have sizable market positions and clout. If even 10% of these companies launch projects on the Ethereum network Ethereum could grow and even overtake Bitcoin in market cap. The impressive list of Ethereum’s partnership is only going to grow.


Ethereum Pulled Through in the May 2021 Crash


If you’ve been through 2021 in the crypto space, you know it’s been a hell of a ride! Parabolic gains in the first quarter of the year were all but erased in the May 2021 correction. Many of the smaller cap coins I owned lost at least 80%- forcing me to rethink my portfolio allocation. The crash is attributed to three things:

  • Tesla suspended its ability to accept Bitcoin for cars
  • China banned all crypto mining within its borders
  • The crypto market was overleveraged and short positions cascaded

The coins with the strongest fundamentals are the most likely to survive the rough seas when they come. The cryptos that have real world adoption, solid technology, and passionate investors will perform the best. Ethereum is one of those coins, and it ‘only’ had a price decrease of 42% during the 2021 crash. Another coin that did well during the downturn was another smart contract crypto, Cardano. Cardano dropped 23%, less than half that of the crypto market cap as a whole. It’s not a coincidence that ADA and ETH didn’t fall as much as the others.

It may surprise you that Bitcoin fell more than the market cap average fall. Bitcoin fell more than the average since both headlines with Tesla and China directly concerned Bitcoin.


Will Ethereum’s price collapse?


The cryptocurrency space is volatile, and it seems the only thing that’s been constant is that there will be drama in the markets. Regardless of the amount of adoption that happens, Ethereum’s price will continue to experience big gains and big corrections. Other cryptos can cause market crashes too, especially Bitcoin. The May 2021 crash saw a 40% correction- I don’t think future drops like this are out of the question. I can see Ethereum easily making it to the $10,000 or even $20,000 mark by 2025.


Don’t just do something, stand there!


Although Warren Buffett hates crypto, I love his financial wisdom and apply his principles to crypto trading and life in general. The truth is that most crypto day traders end up losing money. I can’t stress the importance of stoicism in crypto- you’ve got to buy and hold. Not financial advice, or course! The drama will come and you will feel the feelings. If you hold Ethereum, keep holding. I’ll leave you with this: Ethereum isn’t dead. Don’t give in to the FUD and HODL on. Warren Buffett wisely once said that “the stock market serves as a relocation center at which money Is moved from the active to the patient.” I promise you the crypto market is no different.

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