Citadel hedge fund owner explains why Bitcoin should be replaced by an Etherium-based cryptocurrency
Billionaire and Citadel hedge fund CEO Kenneth Griffin has said that for the foreseeable future, Bitcoin will lose its first place in the cryptocurrency industry in terms of market capitalisation, which is the product of the exchange rate times the number of coins in circulation. It will be overtaken by the Etherium-based token, or most likely even by Etherium itself. The problem with the current first coin is that the “Bitcoin concept is too outdated”, while the new Eth-based solutions offer a much more innovative approach. We tell you more about what’s going on.
It should be noted that Etherium is indeed in high demand compared to Bitcoin, with several pieces of evidence to support this. In late September, JPMorgan bank experts noted that ETH futures are attracting more attention than similar instrument on BTC. And the case also concerns large investors wishing to invest in digital assets.
Coinbase also disclosed its third-quarter results the day before. As it turned out, the trading volumes of Etherium also surpassed the corresponding indicator of Bitcoin, and did it for the second quarter in a row.
Share of various cryptocurrencies in Coinbase trading volumes
A Citadel spokesperson believes that this trend will intensify and Bitcoin will eventually cease to be the market leader.
Who will surpass Bitcoin in the cryptocurrency rankings?
Griffin voiced his thoughts at the DealBook Summit, which was held on November 10 with the support of the New York Times. Here’s one of his quotes where he talked about his vision for the market. The replica was published by representatives of Cointelegraph.
The Bitcoin-based concept will be replaced by an Etherium-based concept in the next generation of cryptocurrencies. In addition, Eth-based coins will get a boost from high throughput and relatively low fees.
Billionaire Ken Griffin
It’s worth noting that the second part of the quote doesn’t have much to do with reality yet. In terms of the number of transactions processed per second, Etherium is only slightly ahead of Bitcoin, which also slows down the development of projects based on it. In addition, transaction fees on the cryptocurrency network are very high.
We checked the current data: this morning, the base value of ETH is at 124 gwei. Accordingly, one ETH transfer will cost around $10, while sending ERC20 tokens will cost $32. Finally, an exchange transaction on a decentralised exchange like Uniswap would cost around $100.
The cost of transactions on the Etherium network
However, with the transition to the second version of the protocol and the Proof-of-Stake algorithm, Etherium will enter a new era of its development. As a reminder, once the current PoW network is merged with the new generation of PoS blockchain, the network’s throughput will grow by at least 64 times. Accordingly, it will be able to handle a much larger number of transactions, which will offload the blockchain, at which point the benefits of Eth will really become apparent. Read more about the subject in a separate article.
Griffin himself has long been a sceptic about cryptocurrencies, as he believes they still lack a wide commercial application in real life. Although he noted that cryptocurrencies and their underlying blockchain technology is “a really interesting innovation” and “a powerful way to support a decentralised registry of transactions around the world”. The expert continues.
People are very focused on the world of new ideas and new creations. I worry that some of this passion is “misplaced” when it comes to cryptocurrencies.
The billionaire didn’t miss a chance to point out the main problems of the cryptosphere – the risks of hacking and fraud, the relatively high cost of transactions, and the huge energy consumption of mining.
The Bitcoin network is very expensive to operate with payments. In addition, the cryptocurrency is far more damaging to the environment than any currently known payment system.
Energy consumption of the Bitcoin network compared to some countries
Bitcoin’s annual carbon footprint is about 90.48 tons of carbon dioxide. According to the energy consumption index, each BTC transaction has an equivalent carbon footprint of 2,008,657 transactions. In the context of environmental protection, this is a big issue, and if global regulators decide to start campaigning against Bitcoin again because of its environmental damage, it could have an impact on the coin market.
We believe that Bitcoin's impact on the cryptocurrency industry will indeed diminish in the long run. Still, it is much harder to update the BTC blockchain because of the much greater popularity of the coin and the relative age of its technology. Consequently, the advantages of modern projects over digital gold will become more and more apparent with each passing day. Therefore, there is a possibility that ETH will indeed end up ahead of Bitcoin.
That said, the market does not necessarily have to be led by Etherium or a cryptocurrency based on its blockchain. Still, there are enough next-generation PoS blockchains in the niche today that can handle thousands of transactions per second without threatening decentralisation. Examples include Avalanche, Solana, Fantom and others.
What do you think about it? Share your opinion in our Millionaire Crypto Chat. There we will discuss other important news related to blockchain and decentralisation.
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