According to CoinShares’ weekly digital asset fund flow report, Ethereum reached its highest market share last week. It peaked at nearly 27% of all investment products, with institutions adding over 63% of entries in Ether products. This is $ 46.8 million of the total. The report also noted that May is the first month in which the volume of institutional investors’ investment in Ether surpassed that of Bitcoin. This then begs the question, why are investors dumping bitcoin for ether?
Ether (ETH), the native cryptocurrency of the Ethereum network, is arguably the second most popular digital token after bitcoin (BTC). In terms of market capitalization, Ether comes in second with a total market capitalization of 278,684,525,124. In terms of market dominance, Ether also comes in second with a market dominance of 18%. Ether and Bitcoin are very similar when looking at the general properties of coins. For example, these are both digital currencies traded through online exchanges and stored in various types of cryptocurrency wallets. They are both decentralized tokens, which means that they are not issued or regulated by a central bank or other authority and they both use distributed ledger technology known as blockchain.
With all the similarities mentioned, the main difference between the top 2 cryptocurrencies is their use cases. Bitcoin was considered a store of value due to its limited supply. Bitcoin has a maximum supply of 21 million units and investors consider it “digital gold,” but aside from the functionality to facilitate cross-border payments, there aren’t many use cases for Bitcoin. In fact, there are many cryptocurrencies that facilitate cross-border payments more efficiently than Bitcoin.
Ethereum’s network, on the other hand, opens up possibilities beyond cross-border payments. Ethereum enables the creation and execution of smart contract and decentralized application (DApps) deployment without downtime, fraud, control, or third-party interference. Ethereum comes with its programming language that runs on a blockchain, allowing developers to build and run distributed applications. The native Ether cryptocurrency is primarily used for two purposes; it is traded as a digital currency on exchanges in the same way as other cryptocurrencies and it is used on the Ethereum network to run applications.
Due to the endless possibilities that go beyond anonymous cross-border payments, investors are starting to realize that Ethereum is worth holding onto in the longer term.
Other differences that make Ethereum more valuable than Bitcoin
While bitcoin was created as an alternative to national currencies and thus aspires to be a medium of exchange and a store of value, Ethereum was designed as a platform to facilitate immutable, programmatic contracts and applications through its change. With the current crackdown on Bitcoin by regulators around the world, it is becoming very difficult to see Bitcoin as an alternative to national currencies. Although El Salvador, home to 6.5 million people, has adopted Bitcoin as legal tender, making the small Latin American country the first country to do so, other countries are unlikely to follow suit. not.
Ethereum is moving from a Proof of Work (PoW) consensus mechanism to a more environmentally friendly Proof of Stake (PoS) consensus mechanism. Recent actions by Tesla boss Elon Musk, who stopped Bitcoin as a payment method for Tesla cars due to environmental concerns, have made Bitcoin less attractive to institutional investors. This is because the PoW consumes a lot of energy and the type of energy consumed is not renewable which is harmful to the environment.
Finally, in terms of transaction processing speed, Ethereum beats Bitcoin. An Ethereum-based transaction is confirmed within seconds of its execution, while a Bitcoin-based transaction takes a few minutes to confirm.
It’s no surprise that investors are finally seeing the light when it comes to actual cryptocurrency use cases. As with businesses, an investor would invest in a well-performing business with room for growth. This is what is happening with Bitcoin which is now considered the king of coins even by many analysts.
Bitcoin is trading at $ 37,150, up 4% for the day while Ethereum is down 0.63%, trading at $ 2,400 for the day, at the time of writing.