Bitcoin vs Ethereum - What's going on?

Bitcoin vs Ethereum - What's going on?

I believe it is highly likely that $BTC and $ETH will reach parity sometime within the next 3 years, and $ETH will eventually overtake $BTC. Why?

BTC is a store of value, it is the equivalent of gold. There is no other use case for BTC apart from moving wealth out of deflationary fiat currencies. ETH however, is the equivalent of oil. People use ETH to "do" things. BTC is used to "hold" things. As web3 becomes more prevalent, ETH will be the more useful blockchain.

So why the value difference? BTC has a major headstart, we know that. But why is it valued at $60K USD? That is a tough question to answer. Let’s look at a similar example in the non-crypto world – a growth stock like $TSLA. Tesla has at least a forward projection of revenue and profit that can generate a share valuation. TSLA shares maybe considered overvalued TODAY but no one values a growth stock based on today’s earnings, they use earnings in the future, eg 2 to 5 years. Using that methodology, the current price of TSLA is actually very low based on the potential of the number of cars that can be sold in 2025.

How do you value Bitcoin? You actually can’t. You can say there is a limited supply so the price must keep going up due to scarcity . But that infers that DEMAND always outpaces SUPPLY. What if this is not the case in the future?

Let’s look at ETH. Ethereum now has thousands of software developers, thousands of use cases, and is the blockchain of choice for NFT’s, the most important invention since the wheel. This entire ecosystem is the foundation of web3. It is the “oil” of the new world, it powers NFT’s and it will power the upcoming Metaverse. What can you do on the bitcoin blockchain? Pretty much nothing. So why would anyone want Bitcoin in the future? When demand becomes less than supply the BTC chart will trend downwards to zero.

Obviously we are nowhere near that. The crypto industry is still in “1997” terms compared to the birth of the internet. BTC could easily go another 10x from here, demand will not stop anytime soon. But for those of you old enough to remember, Bankcard was there before Visa, Myspace before Facebook, Napster before Spotify.  As they say.. there is always a bigger fish. And sometimes they are rapidly growing right in front of your very eyes.

 

 


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