Did Ethereum abandon us?

Did Ethereum abandon us? Should you sell your Ether? In this article, I will tell you why you shouldn’t do that.

Ethereum is lagging behind…

Crypto is in a bull market. Bitcoin is about to hit $100k. The party is in fullswing. But at this crypto party, there is one guest that doesn’t look as happy as others. Ethereum. And that’s a big issue, because Ethereum is the crypto of developers. Should we be worried? Let’s look at the numbers. In 1 year:

• Ether increased 70% and reached a 400b market cap
• Bitcoin increased 170% and reached 2T market cap
• Solana increased 382% and reached a 124b market cap

If you look at the Bitcoin dominance chart, which tells you how much bigger BTC is compared to Ethereum, you will see that in 1y, BTC dominance grew by 14%.

Ethereum vs Bitcoin

Let’s focus first on whey Ethereum is lagging behind Bitcoin.

The number one reason is that Bitcoin is much more talked about that Ethereum. In the news and on social media, Bitcoin is much more mentioned than Ethereum. For most retail investors, when they think about crypto, the first name that pops up is Bitcoin, not Ethereum.

Most people know the name Ethereum, but in general, they are more familiar with the term Bitcoin. So if they want to buy crypto, they just buy the first name associated to that, Bitcoin.

The second reason why people buy Bitcoin and not Ethereum is the narrative. There are 2 crypto ETFs: Bitcoin and Ethereum. Financial companies wanted a simple story for investors:

• That’s why Bitcoin has been described as a digital gold.
• And Ethereum as digital silver.

Silver is less valuable than gold, so investors prefer to buy Bitcoin.

But it’s just a narrative, and when you know crypto, it’s pretty stupid. There is nothing that makes Ethereum less valuable.

Let’s look at the number:

• Bitcoin’s current inflation rate: 1.7% per year
• Ethereum’s current inflation rate: 0.15% per year

What about the technology?

Bitcoin can only do basic transactions. There was some attempts to do more, like ordinals. But we are very limited by the basic capabilities of Bitcoin.

And it’s not going to change any time soon. Core developers don’t want to make any change to the Bitcoin protocol. Bitcoin will never improve.

Ethereum, on the other hand, can do much more. On top of basic transactions, Ethereum can run complex computations, with smart contracts.

Ethereum is not just a crypto currency. It’s also an app platform:

• There a whole ecosystem built on top of Ethereum. Take DeFi. Take NFT, this happened on Ethereum, not Bitcoin.
• Take apps, like Uniswap, or Polymarket, there are on the Ethereum ecosystem, not Bitcoin.

A lot of assets are being tokenized on Ethereum. For example, in Traditional Finance, you have:

• JPMorgan is tokenizing gold bars worth billions through their Onyx platform
• HSBC handled $10 billion in real estate deals on Ethereum last year alone
• The European Investment Bank issued $100 million in digital bonds
• Visa is settling stablecoin payments on Ethereum
• Mastercard is building their entire blockchain infrastructure on Ethereum technology

Government also planned a lot of project on Ethereum:

• The European Union is building their blockchain on Ethereum technology
• Japan’s central bank is exploring digital yen experiments on Ethereum
• Singapore’s Project Guardian for wholesale banking runs on Ethereum
• The UAE is digitizing government services using Ethereum
• Australia is testing carbon credit trading on Ethereum

By 2025, experts predict $16 trillion worth of real-world assets will be tokenized. That’s bigger than China’s GDP. Every major consulting firm is betting on this future:

• McKinsey estimates 50% of traditional assets will be tokenized by 2030
• Deloitte projects $3.1 trillion in tokenized manufacturing assets by 2026
• BCG predicts tokenization will be a $16 trillion market by 2030
• PwC expects 25% of global GDP to be tokenized by 2027

What specific assets are we talking about? Any types of assets:

• Stocks and bonds
• Commodities and precious metals
• Real estate titles and fractional ownership
• Insurance contracts and claims
• Carbon credits and environmental assets
• Private equity shares
• Venture capital investments
• Intellectual property rights

There is a direct correlation between the value of assets locked on Ethereum, and the price of Ether:

• The more assets, the more transactions
• The more transactions, the more the demand for Ether, since we have to pay transaction fees.

And Ethereum keeps innovating. Recently, Justin Drake, a top researcher of Ethereum, announced the next evolution of Ethereum, called the Beam Chains. The Beam Chains will make Ethereum even more scalable by using a cutting-edge echnology called ZeroKnowledge.

Ethereum vs Solana

Ethereum is also lagging behind Solana – at least for price action. Why is that?

• Ethereum and Solana have similar capabilities.
• They can both support basic transactions but also smart contracts.
• However, Solana is more scalable than Ethereum.

But there is a catch: Solana compromises on decentralization. It’s just a glorified database.

Thanks to its very low transaction fees, Solana is attractive for small traders. The one reason why Solana is pumping more than Ethereum is meme coins. Solana established itself as the center of meme coin tradings, with platforms like pump.dotfun.

But long-term, it doesn’t really matter. Meme coins are just a joke.

What matters is where the tokenized assets will go. And they will go to robust decentralized platform. They will go to Ethereum.

Ethereum vs L2s

Ok, so let’s say the Ethereum ecosystem wins. What about Ethereum vs L2s?

All these secondary Blockchain connected to Ethereum, that have cheaper transaction fees. Won’t these L2s make Ethereum less valuable since they compete with it?

No.

Think of these L2s as the B2C chains. And Ethereum as the B2B Chain. Lower value transactions go to L2s. And higher value trasnactions go to Ethereum.

But Ethereum still benefit from L2 transactions because Ethereum is the chain that secure these L2s:

• These L2s regularly post transaction proof to Ethereum.
• More transactions on L2s = more transactions on Ethereum = Ether goes up.

What you should focus on

If you are a Blockchain developer, don’t be sidetracked by crypto markets:

• We don’t care if Ethereum is at the center of crypto news.
• We don’t care if the performance of Ether is more or less than Bitcoin.

The good question is: Did any of the fundamentals changed? No.

Ethereum stays the most advanced development platforms for crypto apps. This is where you have the most opportunities as a Blockchain developer. So stay focused on that.

Black Friday

On November 29th, I am launching a brand new Blockchain academy, the 30 Day Academy. This is going to a course platform based on challenges. You will have one challenge per day, for 30 day.

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All right, that’s it for today, bye!