Compare Bitcoin to Ethereum
A new publication from the analysis firm IntoTheBlock reveals the areas in which Ethereum now clearly exceeds Bitcoin, and those where the second cryptocurrency is still largely dominated. According to the analysis, the question arises because the arrival of the EIP-1559 update – expected in two days – could well have a major effect on the functioning of Ethereum.
As the publication reminds us, the introduction of the EIP-1559 will not reduce the costs of the Ethereum network in the long term, nor make the network deflationary in the short term. But the update does restructure Ethereum’s monetary policy, by introducing base fees, with part of the ETH that will now be burned. Will this then allow Ethereum to overtake Bitcoin on new indicators?
👉 Learn more about Ethereum update EIP-1559
Number of transactions and fees: Ethereum advantage
The first and most immediately relevant indicator is the number of transactions. From this point of view, Ethereum has been leading for a long time: its transactions have exceeded those of Bitcoin since the summer of 2017:
The trend has only been confirmed since 2017, thanks to the emergence of new sectors which are increasing the number of transactions: decentralized finance (DeFi) and more widely the use of decentralized applications. For Bitcoin, it is rather the opposite: the number of transactions has fallen by -20% since January 2020.
If we look at the transaction fees, we can also get an idea of the demand for a blockchain. After several breakthroughs over Bitcoin, Ethereum’s fees now appear to be sustainably higher. In any case, this has been the case since the end of 2020:
And the trend is expected to last, according to the analysis:
“While the EIP-1559 shouldn’t reduce fees, it better aligns fees for Ethereum users and Ether owners. “
More and more ETH holders and a volume that is comparable
IntoTheBlock also looks at the number of BTC and ETH holders. The analysis reminds that it is difficult to estimate the number of users of a cryptocurrency, the number of wallets is therefore generally used. The number of ETH addresses now far exceeds the number of BTC addresses, the trend having started in 2019:
This is particularly noticeable because of the antiquity of Bitcoin:
“Despite coming in first, Bitcoin has lagged behind Ethereum in terms of growing the number of non-empty addresses. There are currently 20 million more Ether holders than Bitcoin holders. “
Beyond the entities holding cryptocurrencies, it is of course also necessary to look at the volume of transactions taken into account by the networks, which indicates their magnitude. If we only consider ETH, and not the other assets on Ethereum, it is still the BTC that wins, even if the two curves have come very close since the start of 2021:
In total, however, the Bitcoin network processes between $ 2 billion and $ 4 billion more daily. The analysis cites two reasons for this: the greater liquidity of BTC, as well as a more predictable issuance.
👉 To read – Documentary on the history of Ethereum raises $ 1.9 million in three days
A market cap that tends to get closer?
If we look at the capitalization of the two cryptocurrencies, however, Bitcoin still has the advantage. This morning it posted a market cap of 745 billion dollars, against 298 billion for Ether. That said, the gap has tended to narrow this year: ETH capitalization briefly hit 50% of BTC capitalization last spring:
A market cap “Flippening” is not to be expected soon, however. But the EIP-1559 could help change that, according to the analysis:
” [L’EIP-1559] being the first step in reducing Ethereum inflation, it is possible to think that more and more investors will start to see [l’ETH] as a store of value. […] In the end, this could increase the chances of a Flippening. “
It will also be recalled that by nature, Ethereum is not simply a payment network for ETH. It takes into account the ERC-20, as well as the non-fungible tokens (NFT), which together carry colossal value. It is therefore difficult to reduce this “Flippening” to a battle of market caps.
👉 On the same theme – According to Goldman Sachs, Ether (ETH) could surpass Bitcoin (BTC) as a store of value
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About the author: Marine Debelloir
Deputy Editor-in-Chief on Cryptoast, I fell into the pot of cryptocurrencies a few years ago. I am passionate about the innovative technologies that arise from the blockchain and I like to find the most delicious information to share with you.
All articles by Marine Debelloir.