Is Ethereum becoming digital oil?
This is a concept that appears to be picking up some steam within the crypto realm. Most are aware of the idea of Bitcoin as "Digital Gold". However, Ethereum is also being framed as a global asset that could have reserve value.
In other words, it has similar properties to digital gold with added benefit.
Of course, this is all theoretical at this point. Many are looking for stores of value, something that is difficult when the business cycle is included in the thought process.
That said, over the long term, we saw both Bitcoin and Ethereum move significantly higher. If this trend continues in the future, we could be looking at a transformation in global assets. Bitcoin might be very close as treasuries are starting to accumulate that asset.
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Is Ethereum next?
In many ways, Ethereum has greater market (non-financial) that Bitcoin. This is not to say the market cap will be higher. When we look into the marketplace, we can see Ethereum affecting more areas.
To start, real world assets are already finding their way to that network. The computation power of Ethereum is something to consider.
The thought is that we could see a market cap of near $100 trillion.
Here is some of the thinking regarding markets that could be affected:
Such an insane upsurge will be driven by ETH accruing the functions of a global reserve macro asset. For instance, the report says, Ethereum (ETH) works not unlike digital oil, being the "fuel for computations" that can be stored and traded by reserve operators.
Just like Bitcoin (BTC), Ethereum (ETH) demonstrates all features of digital gold, but with sustainable yield rates and "productivity" while deposited to DeFi mechanisms.
Also, Ether would be a digital replacement for the global bonds market as it can function as non-sovereign universal collateral that can be easily integrated into each and every financial system.
Last but not least, Ethereum's (ETH) volume surges step-by-step, increasing together with its activity and ecosystem growth.
As we can see, the potential is there. Of course, scalability and transaction cost are still critical components that require addressing. Vitalik is on record saying that Ethereum can 10x its scalability in the next year. This would go a long way to fending off alternative chains that process transactions faster and for less money.
If that should occur, institutions could flood the network with products. My guess is that a lack of regulatory clarity is only one piece of the puzzle. Scaling is a concern to anyone who looks at this network.
We are referring to a complete reworking of the global financial system. Bitcoin got a lot of attention, especially from Wall Street. Could Ethereum be next? The Spot ETFs have lagged behind the leading crypto but is showing signs of demand.
If these forecast for the market cap of Ethereum is correct, we would be looking at roughly $700K per ETH. That is a life-changer for much of the planet.
Priced at around $2,500, this means we would be looking at a major increase in value. For this reason alone, it is worthwhile (albeit not financial advice) for one to consider have some ETH in one's wallet.
Bitcoin comes down to confidence. The utility, an asset, is limited. However, we are seeing a multitude of products built, incorporating Bitcoin. These are valid as long as people are confident in the properties of BTC.
It is what sets off the discussion of digital gold.
Ethereum, as shown, is similar yet does provide other properties. The entire DeFi world could have this as a centerpiece. This is where Ethereum could separate itself from Bitcoin. Markets will drive BTC, with little fundamental input. It is a HODLer coin, sating the needs of speculators.
Treasuries falls into this same category. Governments, sovereign wealth funds, and companies are looking for the same outcome: price go up. Again, if the confidence of markets is there long-term, it should especially as HODLers grow. This will affect the supply-demand part of the equation.
That said, few care what transactions are taking place. We know the Bitcoin network is rather primitive. The idea of this being a network of compute is not even considered.
Ethereum could take on this role. That means a host of other products could use ETH as the basis, coupling it with the network operations. As Wall Street starts to expand upon this idea, development could actually outpace that of Bitcoin.
A lot has to fall into place for this to become a reality. Nevertheless, it is worthwhile to consider, even if it is a remote chance.
