Ether is the crypto of the Ethereum network. Today, each coin is worth R $ 10,000.00. And it is also the 2nd crypto in market capitalization with 1 trillion reais. The 1st place in the ranking is Bitcoin. Today, each BTC unit is worth R $ 300,000.00. Its market capitalization is R $ 5 trillion. In 2020, both BTC and ETH broke records. Bitcoin rose more than 430% And Ethereum appreciated an absurd 650% in reais too This appreciation of ETH that surpassed BTC was driven by the fever of the Decentralized Finance protocols, or De-Fi. With all this growth of the Ethereum ecosystem, the question remains: will it overtake Bitcoin? This video is to answer this question! Subscribe to the channel and activate the bell to follow whenever we post new content and don’t miss out on crypto news. [SOUNDTRACK] Comparing Bitcoin to Ethereum is the same as buying gold with electricity: both are valuable but have different uses. The debate between ‘Bitcoiners’ and ‘Ethereums’ is getting more and more caught up! [SOUND EFFECT] That’s because there is a cultural divide between those who believe in Bitcoin and those who believe in Ethereum. Bitcoin emerged to be digital money, from person to person and without intermediaries.
Since 2009, its characteristics as solid money are making it start to be considered, in fact, an alternative value reserve for the traditional market, a digital gold! He connects very well with the ‘Geekies’, who love technology, but also with those who study Austrian economics and who are fans of freedom. Bitcoin lovers are proud to be able to run their own ‘node’ on their computer, to be able to audit the processing of each block and being able to audit and check whether the Blockchain consensus rules are being followed. ‘Bitcoiners’ fill their mouths to say, “Don’t trust, check!” Bitcoin is much slower than the crypts out there. This is because preserving the basic protocol is extremely important. And you can’t have everything on a Blockchain, to maintain security and decentralization it is necessary to sacrifice stability and agility of the network.
And financial institutions are starting to take an interest in Bitcoin precisely because of the security it offers. The protocol and ecosystem around Bitcoin is robust and it’s being tested all the time, has been running for 12 years non-stop and is the strongest Blockchain. Ethereum, on the other hand, is infrastructure, it is a Blockchain that is just beginning and it can revolutionize finance and technology. It is a platform for creating smart contracts and decentralized applications. This means that it is a Blockchain where several contracts can be written and executed automatically. Ethereum is also open source, just like Bitcoin Which means that anyone can use the Ethereum Blockchain to create their own decentralized products and applications. In addition, it is possible to create an infinite number of Tokens. Several of the AltCoins that exist were created on the Ethereum Blockchain.
It is a network that allows a lot of experimentation, but you need to be careful with that. Many of these altcoins created on the Ethereum Blockchain have a high failure rate. And it is not because it was created in the Ethereum protocol that it is a good project. It depends on who is involved and responsible for the project. Ethereum is also more complex than Bitcoin in its base layer and the protocol keeps making changes to it. In addition, Ethereum has a creator present in the protocol decisions a guy named Vitalik Buterin And unlike Bitcoin, which until today nobody knows who Satoshi Nakamoto is, this creature that invented Bitcoin, Vitalik’s presence on the Ethereum front line can be good or bad.
Many people may find it good to have Vitalik there always ahead of them but on the other hand, it can bring hints of centralization to Ethereum when compared to Bitcoin. Ethereum’s De-Fi protocols were the sensation of 2020 and turned the fever a lot faster than the secondary layers of Bitcoin like “Lightning” or “Liquid”, for example If in the 2017 cycle Ethereum contributed to the flood of ICOs, in this cycle, it is De-Fi that is arousing the curiosity and euphoria of the crypto world. Many Bitcoin maximalists consider any other crypto a waste of time and money. The point is that most people who buy altcoins end up losing money in the low cycle that comes after the “Bull Market” Many of these small, smaller crypts hitch a ride on the rise of Bitcoin without adding value in the long run. Maximalists also argue that if it is to develop layers, protocols and decentralized applications, that this be done on the Bitcoin Blockchain instead of creating a separate protocol. That’s because Bitcoin has the most secure and attack-resistant Blockchain.
This speed and this ability to get scale for payments, applications, could indeed be created in Bitcoin but in a ‘layer 2’ of the protocol, just like the Internet works, it is a protocol sandwich that makes everything work. There’s a post on our Instagram where we explain how the Internet works and how Bitcoin can be the 5th layer, follow it there! ‘Ethereum Lovers’, on the other hand, see a lot of value in the Ethereum network. And, in fact, it is a Blockchain that has built a very strong network effect.
Ethereum is growing because of the Metcalfe Act that speaks of the power of network effects: as more users join and start participating in the network it means that it is getting more valuable. This is very evident when we realize what Google, Facebook and Uber have done there over the years, the more users, the more valuable and greater the network effect and the Metcalfe effect. And when it comes to financial performance and risk-adjusted returns, both Bitcoin and Ethereum have done really well! As in this graph: Bitcoin performed better over the 2 to 8 year period, while Ethereum has done better in periods of 1 to 4 years. So, in the long run, since Ethereum was created, the two have valued themselves a lot they have been taking turns in the positions of “best crypto investment of the year” But at the same time Bitcoin and Ethereum are highly correlated the 1-month correlation was almost never below 50% since the “Bear Maket” of 2018.
Now, in February 2021, this correlation is close to 65%. From a financial asset point of view, Ethereum is mainly driven by the Bitcoin cycle just like all altcoins. Ethereum may even outperform Bitcoin in the short term if De-Fi becomes the new ICO in that Bitcoin cycle. But so far the De-Fi movement has not been so strong enough to decouple Ethereum from Bitcoin. From a technological point of view, Ethereum is a great springboard for launching decentralized applications, digital products and things that we don’t even know exist. As Camila Russo’s book says: “it is an infinite machine”.
Ethereum’s experiments even help Bitcoin developers. and other crypts there, to learn what went right and what went wrong in each protocol and they could try it on their Blockchains. But as a long-term asset Bitcoin has a 12-year history, and consistent monetary policy, built around adjustments of difficulty that happen every 2 weeks and supply reductions, halvings, which take place every 4 years. These are the characteristics that drove through the algorithm the price and adoption of Bitcoin. Bitcoin has not had major changes in its base layer since 2017 and have been operating with the same general structure since the beginning of 2009. The biggest changes in the Bitcoin ecosystem are happening in “layer 2” for payment methods such as ‘Lightining’ and ‘Liquid’ and in the development of software and hardware. Ethereum, on the other hand is still working and changing its base layer, going from “Proof of Work” to “Proof of Stake” That means that computers will no longer perform verification calculations constant to close each block of information.
With “Proof of Stake” who has more volume of Ethereum on the network has an advantage in block processing. So there is still a lot of doubt and speculation about how this key turnaround in the Ethereum network will be. from “Proof of Work” to “Proof of Stake”. From Ethereum to Ethereum 2.0. And those who invest in Ethereum need to be aware that these changes in the base layer need to consolidate. Everything is still very experimental and all those changes need to be tested. [Insert: “Ready?” (Ready?)] Bitcoin, on the other hand, has been verified and tested every day for 12 years.
So the risk of Bitcoin is less. Another interesting point of Ethereum is that many of the Stablecoins run on the Ethereum Blockchain. And they are responsible for a large part of the liquidity of the crypto market. In addition, De-Fi protocols started to emerge precisely from the creation of Stablecoins, without them, De-Fi would be much more difficult. Some people in the crypto community also refer to Bitcoin as digital gold and Ethereum as digital oil, that is, one is a store of value and the other is a work facilitator. something that serves as a basis to create the rest of the ecosystem. Just like we use oil to make fuel, plastic, clothes … Ethereum can indeed become that basis for the decentralization of the future, but that will depend, again, on him solidifying his foundations first in the base layer. So, changes are still happening there and it is difficult to evaluate which security model and monetary policy and future acceptance of Ethereum in the global market through Ethereum 2.0. Even more so now with other Blockchains focusing on smart contracts.
The upward competition from Ethereum is increasing. Bitcoin is the cryptocurrency with the highest degree of security, scarcity and solidity Blockchain records. And that leaves him light years ahead of other crypts. In order to overtake Bitcoin, crypts will have to eat a lot of digital beans. And Bitcoin and Ethereum are different assets and with different risks and returns. Both can be in your crypto wallet, it is only important that you establish your investor profile and scale the proportion of each according to the risk tolerance you accept to take. You find Bitcoin and Ethereum on the Bitcoin Market platform. The link is here in the video for you to open your account for free.
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