ETH vs. BTC: Is the Flippening possible? (EIP-1559 impact)

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ETH vs. BTC: Is the Flippening possible? (EIP-1559 impact)

A common argument for Bitcoin's advantage over Ether is that it has a predictable, limited maximum supply of 21 million. Although EIP-1559 isn't expected to make Ether deflationary any time soon, it does start to reduce its emission as ETH will start to be burned because of the base fee. (More about Ethereum Improvement Proposal 1559 here). This fundamentally restructures Ether's monetary policy and raises several questions about Bitcoin's superiority over Ethereum.
BTC's fixed decreasing inflation is possibly a major aspect leading to its higher valuation. In theory, Bitcoin's controlled supply sets it up to be a store of value. Also, Bitcoin has been around for a longer period than Ethereum. Because of this, investors are confident that it will continue to be successful in the future even after much time has passed. These two attributes put Bitcoin in favor of Ethereum. The other aspects like the number of transactions are less important when it comes to valuing the network than in Ethereum's case, where utility is more of a factor.
Will Ethereum develop a strong monetary advantage as ETH supply starts being burned? Would this be a threat to Bitcoin? Let's dive into curated points of view of crypto passionates - part of Experty users that shared their opinions based on data and their own experience.

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article avatarVictor Osibajo

IT Consultant / Certified Crypto Trader

Will Ethereum develop a strong monetary advantage as ETH supply starts being burned? Would this be a threat to Bitcoin?

We have seen several projects to be targeting both BTC (such as BTG, BCH, BSV) and ETH (EOS, QCK, BNB, eGLD, ZIL etc) with new innovations such as speed, scalability, and user's experience but none is really coming close except BNB which is widely adopted when developer want to sacrifice cost as against seamless user experience and ETH is about to get that resolved. I cannot see ETH threatening on BTC to have a huge impact both now and in the near future. BTC is limited in supply and it is argued severally that BTC might not be more than 16 Million as against 21 Million of total supply as many has been lost during the early stage when BTC worth less than a penny to addresses that private keys was not properly kept. Additionally, the deceased person that got in early and did not pass the private key to anybody is also inclusive, such addresses have no transaction for over a decade. ETH was not created to compete with BTC but as a platform for dApp. BTC is a store of value and poss to replace the traditional mode of currencies. When any thought comes about cryptocurrency, Bitcoin is the first to reckon with, the dominance is huge and most investors feel comfortable with BTC despite its volatility. While ETH keeps on to evolve is the platform that many people see as the future of blockchain, as of now, the platform holds over 70% of DeFi (Decentralized Finance) projects and the ETH 2.0 and EIP-1559 that may likely happen in this quarter, a lot of issues will be addressed which will make it retain its relevancy and gain more dominance in the crypto market share index but I don't see it competing with BTC anytime soon with the huge supply despite the approach of strategically burning the total supply.

article avatarKarthikeyan Ramachandran

Business Analyst /Blockchain Enthusiast

Will Ethereum develop a strong monetary advantage as ETH supply starts being burned? Would this be a threat to Bitcoin?

Ethereum will introduce a burn function as part of EIP-1559. But will it challenge Bitcoin Marketcap? I don't think so. 1. Ethereum burn will not compensate for its inflation of ether emission so there is inflation but not high as before whereas Bitcoin is deflationary which is a major selling point as the store of value. 2. The number of transactions on Ethereum is about to go down with the advent of layer 2 systems such as zk rollups, polygon etc. So the fall in transactions will mean in fall in Ethereum prices as well. On other hand with Taproot expected on bitcoin, the transactions are about to go high on the Bitcoin network which is expected to push the Bitcoin prices even higher. 3. Also Ethereum faces a challenge from its competitors such as Binance Smart Chain, Cardano, Tezos etc for its smart contract platform that are copying/ stealing dapps and providing to their users at fraction of the cost of what Ethereum is providing. Also even existing dapps are moving to polygon or layer 2 chains which is going to reduce transactions even more on the Ethereum mainnet. On other hand, Bitcoin doesn't face a similar threat from its competitors. So Bitcoin will continue to be crypto gold and Ethereum may continue as crypto oil facing competition other crypto energy producers

article avatarBruno Marques

Editor

Will Ethereum develop a strong monetary advantage as ETH supply starts being burned? Would this be a threat to Bitcoin?

I Strongly believe that EIP-1559 will be a major upgrade to the Ethereum Blockchain as it will make sure it will be competing directly with Bitcoin and maybe it could make the price surpass Bitcoin as well its adoption.

article avatarKerem Doğan

Student

Will Ethereum develop a strong monetary advantage as ETH supply starts being burned? Would this be a threat to Bitcoin?

I do not think ETH will beat bitcoin in value anytime, especially soon. The main reason for this in my opinion is the fact that ETH has so many great alternatives like ZIL, SOL, TZX, EOS, DOT, BSC, ALGO which are way better blockchain with way more potential but way less user for now. Indeed bitcoin also has alternatives but it has pioneered the blockchain industry and accumulated an extreme amount of value and image over the years which is tough to lose.

article avatarJeffrey Paquin

Compliance Engineer

Will Ethereum develop a strong monetary advantage as ETH supply starts being burned? Would this be a threat to Bitcoin?

For me quite simply this is a matter of apples and oranges. Bitcoin is a store value item. The problem is just like every other bit of wealth in the world bitcoin will soon be owned and controlled by the 1%. And at that point its value will be determined by them and how they choose to play the market. Ethereum on the other hand, is a utility. It is a proxy mechanism for enabling smart contract interaction. Just like every other alt coin that runs on Ethereum. By design they are not meant to be valued the same as a store of value like bitcoin. Ethereum and every coin that runs on it is by design a proxy mechanism for interacting with a smart contract associated with that project. I can’t understand why people say that the market determines the value of these alt coins. By design value of the token should be determined by the value of the service or product you are receiving from your interaction with that project smart contract. For example, let’s look at the decentraland project and it’s native token Mana. In order to purchase land or wearables or anything else within the project you will need a proxy Mechanism to interact with that smart contract to facilitate your transaction. That proxy mechanism happens to be an alt coin called mana. Without that token you cannot facilitate your transaction. So what is it that gives Mana It’s value? Supply and demand from the market? Supply and demand for Virtual property? Ethereum in my opinion gets its value from the projects that are built on its platform and the ease with which these projects interact with Ethereum. Is this reason I feel that bitcoin should not be compared to Ethereum at all. Apples and oranges. When all of the bitcoin has been mined it will be owned and controlled by the super wealthy. Ethereum will provide more opportunities to gain wealth too more people across the world. The burning of Ethereum in my opinion is not the proper course to follow to gain wealth or value. Lowering the transactions fees and developing Ethereum into a more agnostic Platform Will increase its value and desirability. These opinions are my own based on observations study and research over five years. Most will say that my opinions are way outside the box and don’t conform to typical consensus in the communities. Take it as you will.

article avatarDahiru Ahmed

Civil Engineer

Will Ethereum develop a strong monetary advantage as ETH supply starts being burned? Would this be a threat to Bitcoin?

Ethereum will develop a strong monetary advantage as ETH supply starts being burned, EIP 1559 will increase transactions on the Ethereum network and raise the use of ether, which will likely help bring a wave of institutional investors into the market. This will be a threat to Bitcoin as investors will likely go for ethereum considering it's cheaper and has a high level of bringing return on investment.

article avatarRyan Munn

Technology - Finance - Operations - Sales - Marketing - Business Development - Leadership - Coaching - Non-stop Achiever

Will Ethereum develop a strong monetary advantage as ETH supply starts being burned? Would this be a threat to Bitcoin?

Ethereum will struggle to overtake bitcoin because of the relationship between their market values and the cost competition for decentralized compute which is Ethereum's primary advantage. It is not advantageous to the Ethereum virtual machine economics to have a deflationary policy on Ethereum as it will stifle development as competition experiments with various monetary policies, and uncovers more productive models of monetization. ETH may still become a threat to BTC if the community chooses to treat it more as store of value and reprioritized away from the scalability and economic viability of compute (blockchain 2.0) cababilities.

article avatarMashell Chapeyama

Crypto researcher and writer- Copywriter

Will Ethereum develop a strong monetary advantage as ETH supply starts being burned? Would this be a threat to Bitcoin?

ETH has the potential to outcompete BTC. There are several factors for that. 1. ETH has more utility than BTC. This is because many DAPPS exist on ethereum network. Currently, the popularity of NFTs push the price of ETH up. 2. Yes, the issue of the introduced deflationary nature of Ethereum will come in. However, assessing this against the BTC is not the best predictor of which will perform better. It is unlikely that the circulating supply of ETH will decrease from over 100 million to less than 21 million. I do not think this factor in so much. If the London upgrade brings down the transaction cost of ETH, that will be a turning point for its price. This is because more people will adopt it.

article avatarR F

Engineer

Will Ethereum develop a strong monetary advantage as ETH supply starts being burned? Would this be a threat to Bitcoin?

I think Ethereum will develop a strong monetary advantage and will be a threat to Bitcoin, not because starts being burned but because Ethereum is developing a stronger ecosystem than Bitcoin. Due to scarcity, Bitcoin is going to be used as store of value. However, due to the potential use cases of smart contracts and the success of ETH 2.0 (this is something to be checked), Ethereum has a brilliant future ahead. From my point of view, Ethereum is giving the right steps to be the world decentralized computing platform that envisioned at its birth.

article avatarBhijan Neupane

Full Stack Developer / Crypto / Blockchain

Will Ethereum develop a strong monetary advantage as ETH supply starts being burned? Would this be a threat to Bitcoin?

Nowadays, investors and traders are also checking the use-cases of cryptocurrency. If we are talking about Bitcoin and ETH (After EIP-1559 implementation), definitely Ethereum will have more use-cases over Bitcoin as ETH will be approaching ETH 2.0 after implementation of the hybrid system (TIP+ Basefee burning feature). Basefee burning feature will be inspiring to create more scarcity for ETH and it will get more expensive over time. In the case of Bitcoin, it is hard to integrate the blockchain-based applications due to some complexities on the Bitcoin blockchain itself and the disputable energy consumption is becoming another major issue for BTC. IMHO, ETH is not a threat to Bitcoin but it is going to be a dependable alternative of BTC itself.

Summary

In the time of Ethereum's London Hard Fork and network upgrade, we can observe a whole crypto world transformation. As most of us know what changes Ethereum Improvement Proposals offer, it's pretty hard to predict how it will impact the future of the whole crypto world. How would it impact other ether coins? How does base fees burning affect gas fees and transaction fees?
The opinions of Experty users about BTC vs. ETH flippening are divided, but the overwhelming majority share thoughts that the London Hard Fork (including the network upgrade) links to increasing the network efficiency, and hopefully the gas price and transaction fees would be predictable because of base fee getting burned.

This is not a financial advice. Please do your own research and consider the risks of trading cryptocurrencies.

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