Bitcoin and Ethereum: Who Will Ultimately Ascend the Iron Throne of the Encryption World?

In the world of cryptocurrency, Bitcoin and Ethereum are undoubtedly the two giants. They each follow different paths of development, yet both are vying for the supreme position in the crypto world. Bitcoin is gradually becoming the most valuable store of value in the digital age, being the most primitive digital asset with an irreplaceable consensus position. Meanwhile, Ethereum is dedicated to building a rich ecosystem of digital assets, promoting large-scale applications in the crypto field through the development of decentralized finance, non-fungible tokens, gaming, and other application scenarios.

So, who will ultimately occupy a higher market value in the future? There are mainly two key factors in this competition.

Who can reach the critical point faster?

Bitcoin is approaching its critical point. It is expected that in the next three to five years, with the expansion of the user base, Bitcoin may experience a mutation and enter a phase of rapid growth. Currently, Bitcoin relies to some extent on external factors, including the participation of traditional financial institutions, to attract more users.

It is worth noting that this year, there have been some active community forces on the Bitcoin network based on the Ordinals protocol. This may give rise to a unique second-layer ecosystem, distinct from Ethereum's L2 solutions. If this ecosystem develops, it could bring about some unexpected innovations. This is an area where Bitcoin might gain additional advantages in the future, although the extent of its eventual development is still uncertain, it is worth keeping an eye on.

The key to Ethereum reaching a critical point lies in the mass adoption of decentralized finance, non-fungible tokens, Web3 games, and social applications. However, this requires strong infrastructure support. Currently, L2-based smart contract wallets and Rollup-centric scaling solutions are under construction, which may take three to five years to complete the overall infrastructure build-out. Once the infrastructure is ready, it will greatly drive explosive growth in the Ethereum ecosystem.

In general, the breakthrough logic of Bitcoin and Ethereum is different. With the overall increase of economic value on the Ethereum network, Ethereum, as a underlying asset and security provider, will continue to grow in market capitalization. Currently, nearly 100 billion dollars worth of tokenized dollars are circulating on Ethereum and are being applied in the decentralized finance ecosystem. If a portion of U.S. bonds and stocks are tokenized and widely circulated on Ethereum in the future, the scale of decentralized finance on Ethereum will significantly increase.

If Ethereum ultimately carries assets worth tens of trillions or even hundreds of billions of dollars, its market value will rise significantly to provide sufficient underlying security. Of course, achieving this level will require a long evolution process, during which many variables may arise, such as the emergence of a breakthrough technology.

Who will own the native stablecoin?

In certain circumstances, Bitcoin has the opportunity to continue to outperform Ethereum, specifically if it can build its own payment network ecosystem and possess an encryption-native stablecoin within that network. From this perspective, the key to the battle between Bitcoin and Ethereum lies in the war of stablecoins.

Currently, stablecoins are more likely to be built on the Ethereum network, which is one of the important reasons why some people believe that Ethereum will eventually surpass Bitcoin. However, there are still variables in future development.

Another possibility is that, with the development of Real World Assets (RWA), traditional US dollars and US bonds may be tokenized, which could squeeze early demand for crypto-native stablecoins. In the next 5 to 10 years, the demand for crypto-native stablecoins may still be a niche demand. This niche demand could lead to the development of crypto-native stablecoins encountering bottlenecks in the early stages. A large-scale breakthrough may take ten years or even several decades. If this happens, then native stablecoins may not become a decisive factor in the "Game of Thrones" within the next five to ten years. Blockchain carrying traditional world stablecoin assets may gain a first-mover advantage, from this perspective, Ethereum's advantage is slightly higher than Bitcoin's.

Who will ultimately sit on the Iron Throne?

From the perspective of the native spirit of encryption, the level of decentralization, and social consensus, Bitcoin currently has the advantage. However, in terms of security, flexibility, and the prosperity of the ecosystem, Ethereum excels.

When a banking crisis or geopolitical factors arise, the narrative of Bitcoin may become more appealing, with the potential to achieve breakthroughs in user scale. However, for ordinary users, the management of Bitcoin is relatively complex and may require the assistance of traditional institutions to achieve widespread adoption.

If Bitcoin reaches a critical point faster than Ethereum in the next five years, then with its strong social consensus, Bitcoin may have a leading advantage in the battle for the "Iron Throne."

If Ethereum completes its infrastructure construction (including Rollup-centered scaling and L2-based smart contract wallets, etc.) within the next three to five years, and during this period Bitcoin has not reached the critical point, then Ethereum may accelerate into the critical point in 3-5 years, potentially entering the mass adoption phase faster than Bitcoin.

Once the infrastructure is completed, Ethereum's L2-based multichain or L3 technology will achieve an interaction experience close to traditional Web2, significantly lowering the threshold for mass user entry. The exploration of non-fungible tokens, decentralized finance, Web3 gaming, and social fields will be greatly accelerated. If real-world assets enter the decentralized finance field of Ethereum, it could significantly boost its Total Value Locked (TVL) and lead to new levels of composability exploration.

Bitcoin has a time window of about five years. If a critical point is reached within these five years, driven by both traditional institutions and communities, then it won't be easy for Ethereum to catch up.

However, if the critical point is not reached within five years, then after five years, due to Ethereum carrying a large amount of digital assets, its security will need to be greatly enhanced, and it may become a super underlying chain worth ten trillion dollars or even several tens of trillions of dollars in about ten years.

As for the current situation, it is still difficult to conclude who between Bitcoin and Ethereum will ultimately sit on the "Iron Throne". Everything depends on the developments in the next five years. The construction during these five years basically determines the position of the leader in the encryption world for the coming decades. Any fluctuations in market value before both reach their peak are merely temporary phenomena. Everything is constantly evolving, and no one can accurately predict the future. Everyone will have their own preferred logical assumptions; just trust your own judgment.

If I had to give a probability, it seems that Ethereum has a slightly better chance of winning. But this is just a personal opinion, and this probability will constantly adjust over time, it will not be fixed. Who will ultimately win will have to wait until five years from now to see. These five years are the most critical construction phase, and we can basically see the signs of the pattern.