Ethereum’s major upgrade, code-named London, went live earlier today—helping the ethereum price record gains of 20% over the last week and sending bitcoin back over $40,000.
The ethereum price boost, pushing ether tokens toward $3,000, has caused the combined crypto market to climb to almost $1.7 trillion, up from recent lows of $1.2 trillion in July (subscribe now to Forbes’ CryptoAsset & Blockchain Advisor and discover crypto blockbusters poised for 1,000% gains).
As ethereum’s rally accelerates, leaving the bitcoin price in the dust, some in the crypto industry are predicting ethereum could overtake bitcoin as the world’s biggest cryptocurrency by value.
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“Ethereum could flip bitcoin as the world’s number one cryptocurrency,” Tim Sabanov, the chief technology officer at Scotland-based bitcoin and crypto platform Zumo, said in emailed comments ahead of ethereum’s scheduled upgrade.
Ethereum’s London upgrade aims to help the blockchain scale and make surging transaction fees more manageable. The upgrade is part of ethereum’s long-awaited move away from the energy-intensive proof-of-work model used by bitcoin to proof-of-stake—allowing users to generate new ether tokens via their existing holdings—and known as ethereum 2.0. The entire upgrade isn’t expected to be fully realized until well into 2022.
“What ethereum has done is look at something that already exists—bitcoin—and made it better,” said Sabanov. “It has an extremely vibrant developer community and that means that the ecosystem is growing at astonishing speed.”
Ethereum bulls point to the network recently overtaking bitcoin in a number of closely-watched metrics and its price performance relative to bitcoin over the last year as justification of their predictions. Ethereum has soared 600% over the last 12 months, compared to bitcoin’s 250% increase.
“The crypto giant recently surpassed bitcoin in the total number of active daily addresses, and that momentum shows no signs of slowing as the network continues to power key DeFi and NFT trends,” Sabanov added.
Decentralized finance (DeFi), using crypto technology to reinvent traditional financial products like loans and insurance without the need for banks, and non-fungible tokens (NFTs), unique digital crypto tokens tied to online media, have both become multi-billion dollar markets over the last couple of years. Almost all DeFi funds and NFTs are currently based and traded on ethereum’s blockchain.
Ethereum’s upgrade will also see some ethereum tokens destroyed, or “burned”—limiting new tokens coming onto the market and, in theory, making the tokens more scarce.
Earlier this week, Dan Morehead, the founder of $2.8 billion crypto-focused investment fund Pantera Capital, reportedly predicted ethereum would eventually flip bitcoin—despite expecting the bitcoin price to hit a whopping $700,000 per bitcoin in just ten years.
“You’ll see a transition of people who want to store wealth, doing it in ether rather than just bitcoin,” Morehead told the Reuters Global Markets Forum on Monday, it was reported by Cointelegraph.
In June, the chief investment officer at $100 million digital asset investment manager Two Prime, Nathan Cox forecast ethereum will eventually “flip” bitcoin.
“In the long, long, multi-year timeline, yes, ethereum will flip bitcoin,” said Two Prime’s Nathan Cox. “It’s just now starting to be understood by the second-tier adopters. Ethereum’s utility alone will outstrip anything else.”
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Earlier this year, long-time cryptocurrency bull Mike Novogratz, the chief executive of crypto investor Galaxy Digital, also predicted ethereum could one day become the “biggest cryptocurrency.”
Meanwhile, many in the cryptocurrency space have expressed their support of ethereum’s upgrade, claiming it will be broadly beneficial to the crypto industry and market.
“For the many cryptocurrencies and DeFi applications tied to it, this is a large boost to better efficiency, so good for the overall crypto ecosystem,” Diogo Monica, the cofounder and president of crypto bank Anchorage Digital, said via email.
“We are confident that [ethereum’s] network upgrade will succeed in an overhaul of the network’s transaction fee market and other parameters such as gas refunds,” Paolo Ardoino, the chief technology officer at both crypto exchange Bitfinex and stablecoin issuer Tether Limited, said in emailed comments. “This will have a positive impact on DeFi usage on ethereum and help the network to realize its huge potential.”
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