Original Author: Blue Fox Notes
In the difficult years of 2018/19 for Bitcoin and Ethereum, Blue Fox Notes translated or wrote some articles related to Bitcoin and Ethereum, always optimistic about the development of Bitcoin and Ethereum.
It is difficult to say which one is better because they originally took completely different paths. Bitcoin aims to become the most valuable store of value in the digital age, it is the most native digital asset, and it is the most primitive OG asset in the future digital age, with an irreplaceable consensus position. Ethereum focuses on the development of the digital asset ecosystem, exploring applications such as DeFi, NFT, and gaming, and driving the mass adoption of cryptocurrencies.
If we focus on simple market capitalization, who will be higher in the future? There are two key factors for determining the winner.
1. Who will reach the singularity first?
Bitcoin is getting closer and closer to its singularity, maybe three to five years later, its user base will reach a certain scale and undergo a mutation, entering a phase of rapid growth. Currently, BTC relies to some extent on external forces, including traditional institutions, to attract a large number of users.
In addition, it is worth noting that since this year, Bitcoin has seen some active community forces based on the ordinals protocol. Based on Bitcoin, there is a possibility of fostering a second-layer ecosystem different from Ethereum L2. If this develops, some unexpected things may emerge. This is where Bitcoin may score, and it is worth keeping an eye on. If a second-layer ecosystem emerges, it may compete with Ethereum to some extent.
The singularity of Ethereum relies on the widespread adoption of DeFi, NFT, Web3 games, and Web3 social. However, this singularity requires infrastructure support. Currently, smart contract wallets based on L2 and scalability based on Rollup are under construction, which may take three to five years to complete the overall infrastructure construction. Once the infrastructure is in place, it will greatly promote the arrival of the singularity.
In general, Bitcoin and Ethereum have different breakthrough logics. As the overall economic value on the Ethereum network increases, it will drive Ethereum, as a bottom-layer asset and security provider, to continuously improve its market value. Currently, a small portion of tokenized US dollars (approximately $100 billion) have been tokenized on Ethereum and applied to the DeFi ecosystem. If a larger range of tokenized US bonds and stocks in the future are based on Ethereum for circulation, the scale of Ethereum's DeFi will increase significantly.
Once Ethereum carries trillions or even hundreds of trillions of dollars in assets, its market value will increase accordingly, otherwise it cannot provide sufficient underlying security. Of course, it will take a long evolution to reach that day, and there will be many variables in this process. For example, the sudden emergence of some breakthrough technologies.
2. Who will give birth to the native stablecoin?
In one scenario, Bitcoin has the opportunity to consistently outperform Ethereum, and that is to build its own payment network ecosystem and have a native stablecoin within this network. From this perspective, the victory or defeat in the battle between Bitcoin and Ethereum, the kings of the crypto world, lies in the stablecoin war.
Temporarily speaking, there is a greater probability that it will be built on the Ethereum network, which is also an important reason why some people believe that Ethereum will eventually surpass Bitcoin. As for how it will evolve in the future, there is currently no consensus.
There is another possibility that with the progress of RWA, it may lead to the tokenization of traditional US dollars and US Treasury bonds, squeezing the early demand for native stablecoins of the crypto world (after all, people find it easier to understand stablecoins in the fiat world), which means that the demand for native stablecoins may remain niche in the next 5 to 10 years. Niche demand can create early bottlenecks for the development of native stablecoins. And major breakthroughs may take more than ten years, or even decades. If this happens, then native stablecoins will not necessarily have an advantage in the battle for the iron throne in the next five to ten years. Chains that carry traditional world stablecoin assets may gain a first-mover advantage, and in this regard, the probability of Ethereum is slightly higher than that of Bitcoin.
Who will eventually claim the iron throne?
In terms of the native cryptographic strength, degree of decentralization, and social consensus, Bitcoin currently has an advantage. In terms of security, flexibility, and ecosystem prosperity, Ethereum has an advantage.
When there are factors such as banking crises and geopolitics, the Bitcoin narrative has an opportunity to rise, and it is expected to achieve certain breakthroughs in terms of user scale. However, due to the complexities of governance for ordinary users, massive adoption can only be achieved with the help of traditional institutions.
If Bitcoin can reach the singularity moment faster than Ethereum in the next five years, then Bitcoin may have a leading advantage in the race for the iron throne due to its social consensus power.
If Ethereum can complete its infrastructure construction (completing rollup-centric scalability + L2-based smart contract wallets, etc.) within the next three to five years, and during this period, Bitcoin does not reach the singularity moment, then Ethereum may accelerate its entry into the singularity moment in 3-5 years and may have faster mass adoption than Bitcoin.
Once the infrastructure is built, Ethereum's L2-based multi-chain or L3 will achieve an interactive experience similar to traditional web2, which will remove barriers for massive user adoption. The exploration of NFT, DeFi, web3 games, and web3 social aspects will be greatly accelerated. If RWA enters the Ethereum DeFi field, it may drive a significant increase in its TVL, leading to exploration in a new level of composability.
Bitcoin has a window of about five years. If within these five years, it achieves the singularity moment with the joint promotion of traditional institutions and the community, then it won't be easy for Ethereum to catch up.
However, if the singularity moment is not reached within the next five years, then in about 10 years, Ethereum, carrying a large number of digital assets, will need significant improvement in security and may become a super underlying chain with a value of trillions or even tens of trillions of US dollars.
Based on the current situation, it is difficult to determine which one, Bitcoin or Ethereum, will claim the iron throne in the end. It all depends on the evolution of the next five years. The construction of the next five years for both will essentially determine their position as the leader in the crypto world for the next few decades. Before both reach their peaks, any rise or fall of each other is temporary. Everything is evolving, and no one has a crystal ball. Everyone will have their own preferred logical assumptions. Believe in what you believe.
If forced to give a probability, in my personal opinion, Ethereum has a slightly better chance of winning. However, this is just one person's opinion, and this probability will constantly adjust as time changes, it will not remain fixed. Let's see who will win after five years, these five years are the most critical construction phase, and the general pattern can basically be seen.
