Which coin can beat Bitcoin

Bitcoin has become the most popular cryptocurrency in existence and as such has attracted a lot of competitors attempting to overtake it. In fact, it is a common marketing tactic for Bitcoin competitors to brand themselves as “Bitcoin killers.” 

So, what cryptocurrencies have a chance of beating Bitcoin? 

The only cryptocurrency that has a real chance of beating Bitcoin is Ethereum or an Ethereum competitor (Solana or Cardano). Even then, we find it unlikely that Ethereum will actually be able to overtake Bitcoin. 

Here’s Why Ethereum Can Overtake Bitcoin

There are a few reasons that one could make a compelling argument for Ethereum beating Bitcoin. Here are a few of those reasons:

Smart Contracts

Smart contracts are basically lines of code that automatically execute when certain conditions are met. Ethereum allows developers to program smart contracts directly onto the blockchain, which allows for some very nifty applications. 

The major benefit with smart contracts is that they are trustless. We will use an example of sports betting because that is the easiest to understand, but the use case for smart contracts goes far beyond something fairly simple like sports betting. 

Here’s how a sports betting smart contract would work: 

User A bets 1 ETH that Team X will win. They deposit this 1 ETH bet onto a smart contract application where User B can take the other side of the bet.  

In this sense, the smart contract serves as an escrow between User A and User B placing a bet on the outcome of a sporting event. 

The smart contract receives the outcome of the sporting event from an oracle (a program that transmits real world information onto the blockchain). This information is then used to determine whether User A or User B receives a winning payment from the smart contract. 

It’s a relatively easy process. 

Anyway, the use for smart contracts goes far beyond sports contracts. The most common use for them at the moment is something called decentralized finance (DeFi), which is essentially the decentralization of all centralized finance instruments. There are DeFi protocols for lending crypto, borrowing crypto, trading crypto, and even creating stablecoins. 

All those protocols use smart contracts to operate. And the DeFi protocols have the added advantage of not having a centralized authority that can revoke transactions for any reason.

Smart contract capability is really the main difference between Ethereum and Bitcoin. Bitcoin is rather primitive in that it does not have any smart contract compatibility, which is why Vitalik Buterin started Ethereum in the first place. 

NFTs

Ethereum also has non-fungible tokens, which are one-of-a-kind tokens that can have different types of media files attached to it. 

Artists like to attach artwork to an NFT as a form of proof of ownership. This is actually the primary use case of NFTs at the moment. 

It’s also an immensely popular use case for NFTs with a few billion USD tied up in artwork NFTs. 

The best part about this for Ethereum?

Artwork NFTs are not even the primary use case for NFTs. 

NFTs can be used in a variety of different ways from real estate to music to authorized login credentials. 

NFTs simply are another use case for Ethereum over Bitcoin. For those that do not know, Bitcoin does not have anything that remotely resembles an NFT. 

It’s simply not something that Bitcoin offers on its blockchain. 

Decentralized Autonomous Organizations (DAOs)

DAOs are another feature found on Ethereum not found on Bitcoin. These are decentralized organizations that uses rules enforced by computer code to operate. A DAO is controlled by voting members and not a centralized authority. 

The DAO will have funds that the voting members control as they see fit. A DAO will typically have a stated goal that the voting members of the DAO work to accomplish. These goals could be purchasing carbon credits (KlimaDAO), ensuring the stability of a stablecoin (MakerDAO), attempting to create a stablecoin (OlympusDAO), buy an original copy of the Constitution of the United States (ConstitutionDAO) or launching a blockchain game (Wonderland). 

The possibilities are endless with a DAO. If you can find enough people to unite behind a cause, then you can form a DAO to accomplish the goal of that cause assuming you generate enough capital. 

You should view a DAO as a sort of online nation-state. 

Anyway, DAOs are something only found on smart contract enabled blockchains. They are somewhat popular at the moment, but the true potential for just how influential a DAO can be is only just now being understood after ConstitutionDAO nearly purchased an original copy of the US Constitution in January 2022. 

Fees Will Drop… Eventually

The biggest complaint people have about Ethereum is that the gas fees on it are far too high. 

We will not deny that – Ethereum has insanely high gas fees that make it impractical for average investors to use. No one wants to pay $100 in gas fees for a $500 trade. 

It’s really quite ridiculous when you think about it. A blockchain that wants to overthrow the banking system has fees that no one in the centralized finance world would ever pay. 

The good news is that these high fees have not discouraged people from using DeFi on Ethereum. The current total value locked on DeFi protocols on Ethereum is ~$123 billion. 

The even better news is that the gas fees on Ethereum are expected to decrease with the rollout of Ethereum 2.0 sometime in 2022. The fees will further decrease when sharding is added to the blockchain. 

Now, imagine how popular Ethereum will become when the gas fees on it decrease to something more reasonable for cryptocurrency ($0.01/transaction)?

Ethereum will become extraordinarily popular at that time. Suddenly, all the DeFi protocols that were reserved only for those willing to invest tens of thousands of dollars are viable for the average person. 

It is reasonable to assume that Ethereum could surpass Bitcoin at that point. 

The Chances of a Cryptocurrency Beating Bitcoin 

The chances of a cryptocurrency – Ethereum – beating Bitcoin is low. We know this sounds a little ridiculous because Bitcoin does not have nearly as much usability as something like Ethereum. 

However, Bitcoin has a first mover advantage, which is huge in cryptocurrency. Bitcoin is already legal tender in one country (El Salvador) and has the highest hashrate of any cryptocurrency by a very wide margin. 

The hashrate also continues to increase. A new all-time high on Bitcoin’s hashrate was reached just last week. 

Due to that, we do not see Bitcoin slowing down enough for a competitor (Ethereum) to catch it. 

That is not to say that Ethereum will die because it won’t. Bitcoin will just grow a lot faster than Ethereum.

What Does Bitcoin Even Offer?

Ethereum (or competitors like Solana and Cardano) offer NFTs, smart contracts, DeFi protocols, decentralized autonomous organizations (DAOs), and the ability to transfer value over the blockchain using the native cryptocurrency. 

Bitcoin offers not much in comparison. It has a way to send value across the blockchain for what is essentially no cost if using the Lightning Network. It is also an asset that has experienced tremendous growth over the past decade. 

Nothing has actually beat Bitcoin when it comes to return on investment over the past decade. Yes, one can make the argument for Shiba Inu, but will Shiba Inu even exist in 10 years?

It will probably not exist in 10 years. Bitcoin has already existed for 10+ years and will almost certainly exist for another 10 years.

Anyway, that’s about it for what Bitcoin has to offer. It’s an investment that has experienced tremendous growth over the past decade (beating inflation and the stock market) and has very low transfer fees when using a layer 2 solution (Lightning Network). 

This leaves many wondering why Bitcoin even exists when Ethereum appears to have far more uses. 

It mostly comes down to Bitcoin having an extremely large first mover advantage, which is something that cannot be underestimated in the world of cryptocurrency. 

First mover advantage is absolutely critical in this industry. When people think of cryptocurrency, they think of Bitcoin. 

It’s why El Salvador made Bitcoin legal tender rather than making Ethereum or Litecoin legal tender. 

We can just call it brand awareness – Bitcoin has it and the competitors don’t. 

Will a Cryptocurrency Beat Ethereum?

Ethereum has a few competitors like Solana and Cardano. 

However, this article is about Bitcoin competitors and not Ethereum competitors. Just keep in mind that the above mentioned points (smart contracts and low fees) also applies to Ethereum competitors. 

We find it unlikely that any of the “Ethereum killers” will actually overtake Ethereum any time soon, but it is worth mentioning because if they do overtake Ethereum, then it is likely that they can overtake Bitcoin. 

Final Thoughts

The only coin that has any chance of beating Bitcoin is Ethereum. But that is still a few years away as the high gas fees scare many would-be users away from the many useful features of the Ethereum ecosystem. 

It’s unfortunate for Ethereum because the ecosystem they offer does have some very appealing uses (DeFi, smart contracts, NFTs, DAOs, etc.). It just seems very unlikely that Ethereum will ever be able to overcome the massive gap in brand recognition it has between its larger, older competitor.