Can Ether overtake Bitcoin as the world's top cryptocurrency?
Ethereum, the network that underpins ether, the world’s second-largest cryptocurrency by market capitalization, completed a significant upgrade in August that analysts say could challenge Bitcoin’s dominance and chart the course for the emergence of Ethereum 2.0 (Eth2).
Ethereum’s London Upgrade narrows the technological and utility limits between the two cryptocurrencies by increasing Ethereum’s speed while reducing its transaction fees. However, it’s the prospect of the long-planned Ethereum 2.0’s impact on sustainability that is exciting.
Major cryptocurrencies have faced criticisms for consuming huge amounts of electricity during their mining processes.
Each cryptocurrency use proof-of-work to validate the transactions by solving complex mathematical problems as part of their mining processes.
When Ethereum eventually shifts to a proof-of-stake consensus mechanism, it reportedly could see the energy demands fall by more than 99%. Proof-of-stake uses algorithms to validate transactions much more quickly and efficiently, and at a fraction of the cost.
Still, there may be a few phases left before Ethereum finally fulfills its migration, sometime in 2022. The achievement could be a watershed moment amid the Bitcoin community’s inability to agree on a strategy.
“Bitcoin is not the best when it comes to making critical decisions. Remember how the community struggled to decide on a standard block size for years, which led to the community splitting between Bitcoin and Bitcoin Cash,” says Marie Tatibouet, chief marketing officer at Bitcoinexchange operator Gate.io.
Bitcoin is relatively successful in deploying proof-of-work as its base layer, but that won’t alleviate criticism over its vast energy requirements, which will provide Eth2 an advantage.
The London upgrade also reduced the number of ether coins circulating, resulting in a tighter supply. But there are risks, not the least of which is a long list of technical issues, says to Doug Schwenk, CEO of Digital Asset Research.
“The balance of incentives which has kept Ethereum secure for these past years will be upset, and transactions in decentralized finance and other Eth ecosystems could be at risk.”