Understanding Ethereum's Dominance in 2021
Ethereum has shown remarkable resilience and momentum in the cryptocurrency space, particularly in 2021. Several key factors have contributed to its standing, especially when compared to its more established counterpart, Bitcoin. While Bitcoin was initially seen as the king of digital currencies, the emergence of new technologies and use cases has shifted the focus towards Ethereum. In this article, we delve into three critical reasons why Ethereum is poised to outperform Bitcoin in 2022.
Ethereum's Greater Utility in the Future of Cryptocurrency
Ethereum's primary distinction lies in its utility beyond being merely a digital currency. Unlike Bitcoin, which has primarily been adopted as an investment vehicle, Ethereum has found itself at the forefront of new applications like the metaverse, non-fungible tokens (NFTs), and decentralized finance (DeFi).
1. Rewiring the Concept of Currency
Bitcoin's original promise was to be a decentralized currency uncontrolled by any central government or institution. While it has seen widespread adoption as an investment, its practical use as an alternative to traditional currencies remains limited. Currently, around 15000 businesses globally accept Bitcoin, which is less than 0.01% of the total number of businesses.
Ethereum, on the other hand, has demonstrated a more practical and diverse utility. It is the de facto medium for buying and selling NFTs, thanks to its support for smart contracts. This capability extends beyond just NFTs, offering a pathway for real estate transactions, concert tickets, and other authenticated purchases. Ethereum's blockchain enables automated and secure smart contracts without the need for intermediaries, setting a new standard for digital transactions.
Ethereum's Attraction to Developers
In the technology sector, developer interest often indicates the future direction of a technology or platform. A platform with a larger developer base tends to evolve faster, leading to continuous improvements and growth. Ethereum emerges as a clear leader in this regard.
2. A Robust Ecosystem of Developers
According to a report from venture firm Electric Capital, Ethereum had an average of nearly 2300 developers as of the third quarter of 2020, while Bitcoin had only about 400. Additionally, the report highlights that more than 300 new developers were joining Ethereum each month.
This larger developer base allows Ethereum to be more nimble and adaptable to new use cases compared to Bitcoin. For instance, Ethereum is currently working on the Eth2 upgrade, which aims to make the platform more sustainable, secure, and scalable, capable of supporting thousands of transactions per second. By contrast, Bitcoin's Lightning Network faces challenges and operates at a much slower pace.
The developer-driven ecosystem around Ethereum suggests a promising future, with continuous innovation and growth at the forefront.
The Future of Cryptocurrency and the Metaverse
The future of cryptocurrency is moving towards more decentralized and innovative applications, with Ethereum leading the way.
3. Beyond Bitcoin: The Rise of NFTs, DeFi, and the Metaverse
Throughout 2021, new applications like NFTs, decentralized autonomous organizations (DAOs), decentralized finance (DeFi), and the metaverse gained significant traction. These applications are heavily favored by Ethereum, and their popularity is likely to continue in 2022.
For instance, the virtual world Decentraland has seen its user base skyrocket, with 300000 monthly active users. The most popular tokens used in Decentraland, such as MANA and SAND, both built on the Ethereum blockchain, underscore Ethereum's foundational role in these technologies. As interest and adoption in NFTs, DeFi, and the metaverse continue to grow, Ethereum will reap the benefits.
By comparison, Bitcoin seems more frozen in its current state. While it has enjoyed significant advantages like early adoption and recognition, emerging technologies like NFTs and DeFi present new opportunities that Bitcoin is less likely to capture.
It is clear that Ethereum's future trends toward continued growth and innovation, making it a solid investment choice for 2022 and beyond.