Ethereum’s chance to take over Bitcoin and imminent transition to a proof-of-stake consensus mechanism will transform its monetary policy, potentially making ETH more scarce than Bitcoin.
Ethereum researcher, Vivek Raman, is convinced that Ethereum’s (ETH) upcoming transition to a proof-of-stake system will enable it to take over Bitcoin’s (BTC) position as the most prominent cryptocurrency.
“Ethereum’s chance to take over Bitcoin, just from an economic perspective and because of the effect of the supply shock, a chance to flip Bitcoin,” said Raman in an exclusive interview with Cointelegraph.
The Merge, a long-awaited upgrade that will complete Ethereum’s transition from a proof-of-work to a proof-of-stake system, is set to take place in September. In addition, The Merge will transform Ethereum’s monetary policy, making the network more environmentally sustainable and reducing ETH’s total supply by 90%.
Ethereums chance to take over Bitcoin
“After The Merge, Ethereum’s chance to take over Bitcoin and it will have lower inflation than Bitcoin. Especially with fee burns, Ethereum will be deflationary while Bitcoin will always be inflationary. Although, with every halving, the inflation rate goes down,” pointed out Raman.
While Bitcoin will retain its function as digital gold, according to Raman, Ethereum will still have “a larger adoption space” as the base layer of the decentralized finance (DeFi) economy.
The Merge won’t reduce Ethereums chance to take over Bitcoin high transaction fees, which is still the main issue preventing Ethereum from scaling. That is not an issue, according to Raman, as Ethereum will rely on layer2 scaling solutions to support most users’ activity and Ethereums chance to take over Bitcoin.
“Users need to learn that all of their activities should be on layer 2 and then layer 2s ultimately will use Ethereum as a base layer 1 for settlement and security and decentralization.” Ethereum’s chance to take over Bitcoin.
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