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Crypto was meant to be a cheaper way to bank. It was going to cost nearly nothing to do transactions and when DeFi (decentralized finance) rolled along the implication was that financial transactions were going to be almost infinitesimally cheap, too. That was meant to be a key to the crypto revolution. Banking the “unbanked,”—a nice way of saying banking the extremely poor—was the dream and driver and it is still a mantra, even now, when the reality is far away.
The reality of crypto is that it is expensive to use and a preserve of the rich and liquid not the poor and broke. Right now, to send your ether using that blockchain it’s $3.50, and $8 to send a stablecoin and around $100 to get wrapped bitcoin from ether to polygon using the polygon generic bridge. You have to go get scammed at an airport “bureau de change” to get that financially violated on a simple transaction. The crypto dream also contained the promise of instant transactions, and it delivered, but the legacy banks got their game on and now banks are just as fast, yet more secure, user-friendly and importantly free. What is left of the selling points apart from the dubious benefits of “self-custody?”
So what is Ethereum good for? You might say it’s good for lots of applications, like any solid blockchain with an EVM (a virtual computer embedded in the blockchain) but the problem is now almost overwhelmed by the cost. You can’t use ether for any practical purpose unless it carries a high ticket transaction; only then are the considerable fees diluted to a small percentage. This means you have to be moving at least hundreds of dollars to make even the simplest of transactions on Ethereum make sense. That is not a mainstream proposition. What is more, there is no way Ethereum is going to fix this, at least not this cycle, and it will have to do something radical to even do it at all.
This is where the competition is fitting in. For me the key Etherrum contenders are Polygon, Solana, Optimism, Avalanche, Arbitrum and Binance smart chain. While BitcoinBTC simply grinds along on its decentralized way, being the “it is what it is” blockchain, devoid of new ideas to fix the last lot of new ideas, these upstarts are jostling for Ethereum’s crown and with Ethereum in such a transaction cost malfunction, they all have a shot.
Ethereum, however, has a huge defensive moat and that is simply its brand, and that is a function of many aspects and one in particular, the crypto hero figure of Vitalik Buterin. Brand is a huge deal in crypto where the meme is everything. The other chains struggle when it comes to brand, most suffering from all the instabilities of a new tech businesses coupled with many of the unique problems created by the Lambo culture that bedevils the blockchain, mashed up with having no dog, frog or skinny genius to set social media ablaze.
From my perspective the major contender is Binance smart chain, which has become the front runner purely because it has completed the SEC gauntlet, paid a vast fine and by implication been admitted into the U.S. regulatory fold. Polygon is close behind and Arbitrum is the plucky outsider. Then there is Solana. To say Solana has a checkered history is generous, but that history certainly is pure crypto vibe; it’s the nearest to a brand amongst the also rans. Even now its “dead duck” mobile is reportedly selling out because it contains an airdrop of a token called bonk. Solana comes with the full Miami bad boy attitude that the crypto space laps up.
This is the recent chart of all the contenders and their price performance:
The six chains competing for ethereum’s crown
Credit: ADVFN
Ethereum $264 billion (market cap); Binance $40 billion; Solana $31 billion; Avalanche $14 billion; Polygon $7 billion; Optimism, $2 billion; Arbitrum $1 billion.
It’s a stark comparison and perhaps an indication of what is at stake. It is of course all down to the almost unknowable, who has the magic and who doesn’t. Who are the good, bad and ugly. Who will throw in some new code and blow themselves up or suddenly take over the space. This market cap list is not ‘pareto distributed’ so one of the also rans will make it big or should we say bigger, so it’s worth watching their progress to try to crack the code.
My head says Binance smart chain, my heart says arbitrum and my gut says solana (but we all know what your gut is connected to.)
Ethereum should run to $8,000 if bitcoin runs to $120,000 and you can rough scale that to eth at $4,000 with bitcoin at $60,000 and so on. The second liners will run a lot further in percentage terms.
The race is on to dethrone ethereum but whether that occurs or not, the pretenders will have a wild run and in the end that is all a trader can wish for. Anything that happens to bitcoin will be magnified at this end of the spectrum and for those with the constitution the weeks ahead will be another crypto epic.
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This news is republished from another source.
