Rushed into the top 100 in the world, can the market value of Ethereum replace Bitcoin?
The price of Bitcoin hit a new high of $40,000 today, while Ethereum also reached a peak of $1,288 today. Although it has not broken through the highest price of $1,422 in 2018, the total market value of Ethereum has now entered the top 100 in the world.
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Is it possible that the total market capitalization of Ethereum surpasses the total market capitalization of Bitcoin?
Raoul Pal, the founder of Real Vision, posted several tweets yesterday saying: ETH=BTC, which is the (conclusion) of Metcalfe's law. He explained on Twitter: After establishing a model of Bitcoin active addresses, prices, and market value, it was found that the growth trend of the number of Bitcoin active addresses and the price and market value growth trends are very similar, and Ethereum also reflects this feature. However, when both are at the position of 1 million active addresses, the market value of Ethereum is higher than that of Bitcoin.
He predicted that Ethereum will reach $20,000 in this cycle (exactly the same as the last cycle of Bitcoin, in terms of market value, the market value of Ethereum is higher), so in fact ETH=BTC, different assets, different ecosystems, the same adoption, the same behavioral economics ultimately equals much the same.
Metcalfe's Law (Metcalfe's Law) is a law about the value of the network and the development of network technology. It was proposed by computer pioneer George Metcalfe in 1993. The law means: the value of a network is equal to the The square of the number of nodes, and the value of the network is proportional to the square of the number of connected users.
According to the current global economic aggregate, if Ethereum wants to surpass Bitcoin in this market capitalization list, it must increase its price by at least five times to $6,100, while BTC remains unchanged (regardless of time and supply). change difference, etc.); and if it reaches the $20,000 price that Raoul Pal calls, the market value of Ethereum will even exceed that of gold.
Comparing the market value of different assets is actually not that simple. The market capitalization of companies on this list is determined by multiplying the price of a stock by its total number of shares, the market capitalization of precious metals is measured by multiplying its price by the total tonnage of supply, and the market capitalization of cryptocurrencies is also calculated by multiplying the It is determined by multiplying the price of a token by its total supply, but these are only valuation calculations after all, and the high volatility of cryptocurrencies makes them unsuitable for comparison with traditional assets.
But Ethereum and Bitcoin are indeed comparable. From the perspective of mining and application ecology, the development of Ethereum should not be underestimated, but it may not be easy for the market value of Ethereum to surpass Bitcoin.
First of all, unlike the constant total amount of Bitcoin, there is no fixed number of Ethereum’s issuance, and the possibility of over-issuance cannot be completely ruled out. This makes it impossible to have the scarcity of Bitcoin, so there is an upper limit to the value-added space.
Additionally, there is a possibility of fragmentation in the Ethereum community, which would negatively impact Ethereum’s market capitalization. Since DeFi broke out last year, the income of miners on Ethereum has skyrocketed, even surpassing that of Bitcoin miners at one point. Many companies in the industry have invested heavily in Ethereum mining, ignoring the coming of Ethereum 2.0. Where will the extra computing power go? I'm afraid it will be divisive for Ethereum's consensus and market cap.
