But, with the majority of the leading Decentralized Finance (DeFi) protocols, dApps (decentralized applications), and Non-Fungible Tokens (NFTs) — don't worry, I'll explain everything below — Ether, which is based on the Ethereum blockchain, is now rising at a higher rate than Bitcoin.Indeed, the currency touched an all-time high of just over $2,740 at the time of writing, following 260 percent increases for the year (compared to 87 percent for Bitcoin) and more than 15 percent advances this week. The rising value of Ether, combined with increased interest from large institutions such as Mastercard, JPMorgan, and UBS, is fueling anticipation for "Ethereum 2.0."
A major component of blockchain technology, as many readers are undoubtedly aware, is the distributed ledger, which stores a record of all past transactions over a global network of computers. The consensus method ensures that the whole network agrees with the ledger's contents, which is required for the distributed ledger to function.
Despite the fact that Ether is in the process of transitioning to a new consensus method, the top two cryptocurrencies still use proof-of-work (PoW) consensus. The likelihood of mining a block in PoW is governed by the miner's computational efforts, with a reward paid to the first miner to solve each block's cryptographic challenge.
Mining communities tend to become increasingly centralized over time as network miners compete with one another using computational power. Some people are concerned about this because control of blockchain networks is shifting from the general public to fewer and fewer hands. This reduces the security of the blockchain and goes against the decentralized principle of cryptocurrencies in general.
Developers on the Ethereum blockchain are in the midst of an ambitious shift to a consensus method dubbed proof-of-stake, wary of the disadvantages of PoW and facing increasing pressure to minimize the energy consumption of the underlying protocol (PoS). The change, dubbed Ethereum 2.0, aims to improve the blockchain's speed, efficiency, and scalability while also providing a more environmentally friendly environment.
The puzzle pieces are slowly coming together. The first phase of Ethereum 2.0, dubbed "Serenity," began on December 1, 2020. The so-called "Berlin" upgrade was successfully executed on April 15 of this year. While there is no stated timeline for the move to PoS (to to the chagrin of many), Ethereum founder Vitalik Buterin wrote a blog post last month describing how the network's transformation is progressing.
The key benefit of Ethereum 2.0, according to Charles Hoskinson, founder of the cryptocurrency Cardano, is that the network would no longer have “gargantuan overhead and energy expenditure” (for deciding who gets to generate a block), making protocols “much lighter and substantially more energy efficient.” All of these qualities, it goes without saying, only add to Ethereum's attraction to investors and traders.
Bitcoin, as a digital money, is intended for a narrower range of applications, serving as the asset of choice for investors seeking a store of value investment. Ethereum, on the other hand, is more than a cryptocurrency. It's a blockchain-based network that allows smart contracts, which are programs that can run automatically when specific circumstances are satisfied. In this regard, Ethereum also hosts D.
DeFi dApps allow users to create stablecoins (cryptocurrencies with a fixed value tied to the US dollar), lend money to earn interest on coins, and automate complicated investment methods. Crypto Kitties, a dApp that runs on the Ethereum blockchain, is a particularly entertaining and unique example of a dApp. Users can collect, breed, and sell digital cats. All of this implies that there is
DeFi projects on the blockchain now have at least $41 billion (and counting), compared to just $4 billion eight months ago. These distinct and advanced characteristics emphasize the Ethereum blockchain's growth and innovation, and are one of the reasons why some in the cryptosphere are becoming increasingly enthused about the possibilities that Ether has to offer.
As previously stated, Ethereum is generating a lot of buzz — recall, Ether recently touched all-time highs! However, until Ethereum 2.0 is a known quantity, there are concerns regarding its ability to handle the current substantial demand for transaction bandwidth. While the launch of this upgraded Ethereum network is a testament to the project's strength, it also signifies a turning point.
All things considered, it's highly likely that Ether will continue to exceed Bitcoin in 2021 in terms of price. Even if Ethereum has yet to completely reap the benefits of DeFi dApps and NFTs' growing popularity. “The rising NFT market will directly boost the value of ETH, and I believe that ETH has room to expand until its price reflects the current excitement,” writes the author.
Will more traditional investment giants turn their focus to Ethereum in the future, given how important institutional investors have been in driving up the value of Bitcoin over the last year? According to Haohan Xu, CEO of digital ad agency, if this happens, “it would signify that mainstream institutions validate not only the current value of ETH but also the Ethereum ecosystem as a whole.”
Finally, I'd like to remind readers that there's another way to look at the Bitcoin vs. Ethereum discussion; perhaps we might ask, "Why can't we all just get along?" While Bitcoin and Ethereum are automatically contrasted, Invictus Capital analyst Jason Peckham points out that it doesn't make much sense because both are striving for "different and mutually beneficial use-cases," and both invest.
Bitcoin is frequently referred to as a "currency token," while Ether is referred to as a "utility token." As a result, Ether is unlikely to overtake Bitcoin in terms of market valuation. The two heads belong to the same animal. While there is growing interest in what Ethereum has to offer, Bitcoin, the "digital gold," still reigns supreme, at least for now.,