Ethereum Could Overtake Bitcoin Through DeFi, Lower GAS Prices: Bitcoin's Countermoves

Ethereum Could Overtake Bitcoin Through DeFi, Lower GAS Prices: Bitcoin's Countermoves

By toledotrips | doingitdodson | 11 Sep 2020

Ethereum has always been the silver medal to Bitcoin's gold standard in the cryptocurrency space/industry. However, ETH could soon pull even with Bitcoin in the race to long term dominance. ERC-20 Tokens being used for gaming purposes and DeFi projects are boosting the practical use value of Ethereum. Ethereum is up 105% on the US Dollar from where it was 365 days ago, according to Coinbase pricing. 

However, the mere price to buy a token/coin is not everything. Bitcoin is above $10,000 and Ethereum is only $370 but ETH has more use cases coming in the short term, and more projects working towards long term sustainability. Also, the number of bitcoin tokens "wrapped" into Ethereum has more than doubled since July.

Bitcoin is 'wrapped' into Ethereum blockchain projects using a number of Ethereum-based tokens. Wrapping bitcoin into these projects has become more popular as well. According to Forbes, there were periods in August where more bitcoin was wrapped into Ethereum than actually created through bitcoin mining.

For instance, Bitcoin wrapped to Ethereum using WBTC is backed 1:1 by bitcoin. It is minted by locking an amount of bitcoin on the blockchain. The idea behind freezing the bitcoin essentially, and sending it to Ethereum, is that it connects the technologies and makes them two-way compatible with smart contracts. Now users of Bitcoin can also tap into other markets and those using the technology will have the ability to use access lending tools, liquidity provisions, and decentralized exchanges.

This also exposes Bitcoin to a problem in adoption on a mass scale. it could be argued that Bitcoin has more utility after being converted onto the Ethereum blockchain, so why not just buy ETH? Bitcoin's underlying value is derived from the 68 terawatt-hours of power that go into securing the bitcoin blockchain but those miners could benefit more by devoting resources to Ethereum investments. There must be a breaking point when the amount of bitcoin migrating to Ethereum brings in to question Bitcoin's existence. At that time, the essential elements of bitcoin's blockchain come into question.

Not that this is a chess match, but how will Bitcoin evolve to maintain the position as the top dog in the cryptocurrency yard. The whole market took a slight downturn but Ethereum is recovering like most other cryptocurrencies. It is aiding by the emergence of decentralized finance (DeFi) projects on the Ethereum network. If this trend continues, bitcoin may longer be the first crypto purchase of the majority. Most DeFi networks are built with Ethereum applications in mind. This trend is similar to the Initial Coin Offering boom but with a bit more scrutiny and therefore merit behind the projects that are actually booming, like Tezos and Chainlink. 

Bitcoin has to answer the question: Will there be an authentic use case for Bitcoin and a DeFi project. Also, will there be a DeFi project that can find a legitimate use case, meeting the Bitcoin community halfway? If that happens Bitcoin will truly solidify its position as the best long-term investment. If Bitcoin found a way to capitalize on the lending and liquidity markets, it really could reach $500,000. The benefits from siphoning off that business and profiting from the same DeFi run as Ethereum could boost Bitcoin into the stratosphere. Having that utility would add so much to BItcoin beyond its current store of value utilization.



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Christopher Dodson, Journalist, Gulf Coast Sports, Politics, CryptoCurrency

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