Ethereum (ETH) is a second-generation protocol that crosses blockchain with the ability to deploy simple on-chain programs. Where Bitcoin (BTC) allows for the peer-to-peer transfer of value, Ethereum enables this to be performed autonomously. The initial hype was that commercial relationships, and even entire organizations, could be transferred online, thereby solving the principal-agent problem by rendering intermediaries practically obsolete in the real world.
Its proponents believed Ethereum was an “improved” blockchain while Bitcoin maximalists point to the purity of Bitcoin’s implementation regarding Satoshi’s decentralized vision. So, is Ethereum better than Bitcoin?
- In terms of absolute returns over the last five years—yes—keeping in mind Ethereum and Bitcoin were at different growth stages at least until mid-2017, the comparison is not entirely valid
- For the period when they were directly comparable (beginning 19 May 2017), BTC wins by a wide margin with 31x vs. 18x
- When adjusted for risk, BTC is better
- BTC more closely aligns with the core blockchain tenets
- ETH is more commercial by enabling a multitude of business models that contribute to its popularity
A rational investor or technologist could easily make these points, but they hardly tell a coherent story.
The wisdom of the crowd can be drawn from pricing information to help better map out the relationship between BTC and ETH, and how it evolves over time, from a market perspective. In this case, the data seems to indicate the two projects have more in common than not.
From its inception in 2015, Ethereum went through three distinct stages on its path to global adoption:
- Early-stage contender—Characterized by high growth, high volatility, and no correlation to BTC, this period was marked by the DAO hard fork fiasco. It wasn’t until mid-2017 that the network found a niche in project crowd funding that sparked the ICO bubble
- Mature alternative to BTC—The short-lived ICO rally ended and Crypto Winter set in at the beginning of 2018. By this time, ETH had come into its own, rolling in the same ballpark as BTC. During this three-year lull, the market perception of ETH abruptly shifted until it resembled BTC with price correlation going from around 0% to 90% on average. The attributes many considered to be special about Bitcoin: monetary premium and store of value, were conveyed to Ethereum through the invisible hand of the market
- Innovation breakthrough—The current chapter in this story began with DeFi rising in early 2020. The popularity of DeFi projects drove demand for Ethereum services through the roof, causing users to bid up ETH in competition for scarce bandwidth. As such, price correlation with BTC eroded while ETH broke away and autonomous execution once again factored prominently in pricing
In this context, Ethereum is arguably better than Bitcoin for being conferred the best of both worlds by the market—it has the main features of Bitcoin and Ethereum.
However, forcing users to bid up the cost of network access is not a sustainable advantage for Ethereum where network utilization consistently exceeded 90% for the past year. When demand outstrips supply in the long run, there is no guarantee users will have unlimited patience for high fees and laggy service. This created an opening for Binance Smart Chain to gain a foothold, boosting BNB up 40x since January with perhaps 75% of these returns attributable to demand-side shocks resulting from project migration to the Binance protocol.
In order to maintain its best-of-both-worlds status, Ethereum 2.0 must successfully address the issues of high fees and poor service in the next chapter of this story. When the rollout is completed, network gas price should ease off bringing with it implications for ETH. At this stage, a return to ETH and BTC being a highly correlated asset pair is expected to resume until the next innovation breakthrough is discovered.
- No Deposit fees
BiKi will accept deposits only from the following cryptocurrencies (BTC and USDT) and will not charge any deposit fees.
2. Below than average trading fees
For each cryptocurrency coin, the BiKi platform uses a flat charge of 0.15 percent, which is very attractively competitive on the market and below the level of industry for similar cryptocurrency trading exchanges.
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