Opinion: Will Ethereum 2.0 Overtake Bitcoin?

Editor's Note: This article comes fromCrypto Valley Live (ID: cryptovalley)Editor's Note: This article comes from

Crypto Valley Live (ID: cryptovalley)

, Author: Tim Denning, translation: Jeremy, reprinted with authorization by Odaily.

I got involved with Ethereum in 2016. It was one of the best decisions I've ever made. Not only has it brought me huge profits, but it has also given me a huge advantage in my business. Being able to explain Ethereum in simple language is a superpower. I want you to master this power so you can use it well.

Bitcoin is easy to understand: slow-moving digital gold. When people say bitcoin is a currency, or that it's not for shopping, they don't understand. Bitcoin is a long-term savings account, relying on scarcity (there are only 21 million Bitcoins), with code protecting it from inflation. That's it.

1. Ethereum is much more difficult to understand. It has thousands of use cases. That's why if you start learning about Ethereum and what it does, you can do well. Every day I learn something new about Ethereum. It is a beast.

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Why should you care about Ethereum?

• It is the second largest cryptocurrency and it was launched in 2015.

• Ethereum’s network effects are impressive. Network effects helped the previous generation of tech companies make a lot of money. The next generation of technology will be blockchain-powered, decentralized technologies like Ethereum.

• Some experts even say that Ethereum will surpass Bitcoin in size and price. This is why you need to pay attention to Ethereum.

• What is Ethereum? (for ordinary people)

• Vincent Tabora

Ethereum is a worldwide computing platform for decentralized applications.

Ethereum is becoming more of a transaction and settlement layer.

Ethereum introduced programmable money through smart contracts.

These are the three things Ethereum is famous for. It can do many things. Many cryptocurrencies are built on Ethereum, further increasing its utility and value. Ethereum helped enable DeFi (Decentralized Finance).

DeFi is also easy to understand. DeFi removes the middleman from the existing financial products we already use, thereby reducing costs.

Trust on the Internet is broken.

Ethereum is a way to fix ownership, using code for verification, not people who profit off the existing trust system.

Imagine a world where banks, stock exchanges, credit card companies (Visa, Mastercard, Amex) are all replaced. This is what Ethereum has slowly begun to achieve. The issue of trust is a bigger one than storing value and protecting it from inflation. This is why Ethereum has the potential to be worth a lot more than Bitcoin in the long run.

This is a signal to determine whether the price of Ethereum will surpass Bitcoin

Raoul came up with a simple way to gauge the potential future price of Bitcoin and Ethereum. Both cryptocurrencies have a concept called an address. An address is like a user's account.

Raoul has shown that as the number of user accounts increases - just like Facebook, Twitter, Uber, Netflix, etc. - the price per coin and the total value of the network also rises. (I say web because Ethereum and Bitcoin are not companies -- another cool feature of both technologies. Ethereum was built by thousands of developers all over the world who dedicated their lives to the project own time, and integrated their resources.)

This phenomenon is known as Metcalfe's Law. The financial world has used Metcalfe's Law for many years. All you need to know is that the law helps explain how a network grows, and it helps you value a network like Ethereum.

Screenshot taken by author via Twitter from GMI/Raoul Pal

From Raoul’s analysis, it can be seen that Ethereum is “more viral than Bitcoin.”

BTC=ETH. In fact. Different asset, different ecosystem, same application, same behavioral economics = same but different... -Raoul Pal

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Ethereum 2.0 increases opportunities

Ethereum is already getting exciting. Then Ethereum developers decided to announce Ethereum 2.0. This change is not easy to understand, especially if you don't work in a technical field.

Essentially, Ethereum 2.0 makes it more like Bitcoin. This should surprise you. Bitcoin is magical because of its scarcity and deflationary properties. Ethereum 2.0 introduces the following:

1. "Staking"

Anyone can verify Ethereum transactions. Most of you won't be doing that when you read this story. Transactions need to be verified by the Ethereum network to create trust. By using the Ethereum network to create trust, you don't need a middleman to do it.

The old method of validating Ethereum transactions is called "Proof of Work" (PoW). Computers owned by humans solve math problems and consume electricity in the process (similar to how Bitcoin works). With climate change becoming a hot topic, wasting electricity is seen as a bad thing.

With staking, all you need to do is deposit and lock 32 ETH if you want to verify transactions. You earn Ether when you help validate Ethereum transactions. What does it matter?

Staking means those who validate and secure the network must have skin in the game. In-game skins make the people connected to the network, as well as the network itself, more valuable.

Staking means that there will also be less Ethereum available, as part of the supply will be locked up by those who choose to stake. Less Ethereum means more scarcity. Scarcity is a feature that makes Bitcoin very valuable. It will have a similar effect on Ethereum over time.

2. "Sharding"

Sharding in Ethereum 2.0 is coming. For us regular folks, this means that the Ethereum network will be split into 18 smaller parts. This will help increase the speed of the network. Sharding will allow the network to process more transactions per second.

A faster Ethereum network would further increase its value.

3. The Magic of 'Token Burn' on Ethereum Price

Transaction fees on Ethereum have been high in recent times. Ethereum 2.0 made a fundamental shift. Previously, those validating transactions could set transaction fee prices. This enables greed and overcharging.

With the advent of Ethereum 2.0, the price of validating transactions is set by the network and adjusted according to network activity. This change prevents greedy people from taking advantage of these normal people.

Put simply: as network usage increases, the supply of ETH decreases.

This means that as Ethereum is adopted by more and more people, the amount of Ethereum will decrease. When the quantity of ETH decreases and the demand increases, the price per ETH increases.

• Token burning is deflationary, the opposite of inflationary. The value of the dollar decreases over time as more dollars are created out of thin air. Ethereum is programmed to be deflationary - meaning that the value rises rather than falls like the dollar.

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• Summary of Ethereum 2.0

• faster.

• Cheaper Ethereum transactions.

• safer.

• Use cases that can host more technical solutions (apps/software) that need to address trust issues (who to ask to fix social media).

• Easier to understand and use.

Provides an in-game skin for those who choose to validate Ethereum transactions.

Provide better ways for people to earn money from building and working on Ethereum.

Should you invest in Ethereum?

Only you can answer this question on your own terms. Stocks don't feel right to me right now. I don't like buying at all-time highs. So I definitely have and will buy more Ethereum. I use an 80/20 split rule for Bitcoin and Ethereum. If I invest $1,000, then $800 goes into Bitcoin and $200 goes into Ethereum.

There is no doubt that Ethereum will play a huge role in our lives. I think it's worth the small investment, but only if you have the money to take the risk.

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Ethereum is quietly changing the world

The current version of the internet is broken. It’s centralized, and it’s open and susceptible to manipulation, just as we’ve seen over the past two years with companies like Facebook abusing our trust.

The future of the Internet will not be owned by a few big technology companies, but the future of the Internet will be owned by users again. Users will own their own data and destiny.

Web 2.0 is a readable and writable platform.

Web 3.0 is a readable, writable, ownable platform.

Ethereum has realized Web 3.0, so it is valuable and will grow rapidly after Bitcoin. Ethereum has the potential to be the conduit for all future applications.

In the war against the early search engines, Google was the sleeping lion. In the war against rebuilding traditional finance, Ethereum looks like the sleeping lion. Bitcoin is an excellent idea that solved the problem of store of value and gave birth to digital gold.

Bitcoin is 12 years old and Ethereum is 5.5 years old. Ethereum still has a long way to go and is just getting started. Bitcoin is massive. Ethereum has even more potential. Let me tell you why in one sentence: