/https://specials-images.forbesimg.com/imageserve/1214132428/0x0.jpg "Fed and ECB ‘kryptonite’ may break Bitcoin despite strong price hikes – but this is where Ethereum can triumph")
Bitcoin has skyrocketed nearly 1,000% in the past 12 months – a rise that has been surpassed by the second most valuable cryptocurrency ether.
The price of bitcoin rose from less than $ 10,000 last year to around $ 60,000 per bitcoin, while ethereum increased by 1,200%, rising from just over $ 100 per ether token to almost $ 2,000.
However, despite bitcoin’s recent success, some fear that central bank digital currencies (CBDCs) may be “kryptonite” for bitcoin and similar cryptocurrencies – while ethereum apps and updates help it stay ahead.
Bitcoin and ethereum, the two most valuable cryptocurrencies, have increased even more in the past … [+]
Getty Images
“Bitcoin is the most talked about cryptocurrency, but ethereum has more features, including being more flexible,” Bank of America analysts wrote in a report this week, titled Bitcoin’s dirty little secrets.
“Bitcoin has also correlated with risky assets, is not linked to inflation and remains exceptionally volatile, making it impractical as a wealth deposit or payment mechanism,” wrote the researchers, adding that “there is no good reason to own bitcoin. unless you see prices going up. “
The report went on to call CBDCs “kryptonite for cryptography”, but said that the rise of decentralized finance (DeFi) – designed to replace the role of banks with blockchain-based protocols that are built primarily on top of the ethereum blockchain – is “intriguing”.
The European Central Bank (ECB) is currently evaluating the possibility of creating a digital euro, while Federal Reserve Chairman Jerome Powell said that 2021 will be a crucial year in consulting the public about a future digital dollar.
DeFi is “potentially more harmful than bitcoin,” according to Bank of America analysts, who found that DeFi’s growth “shows the strength of ethereum; its computing power is vital for DeFi applications.”
With many of the biggest DeFi projects built on top of the ethereum blockchain, an influx of users last year increased the price of ethereum as users flood the network.
Meanwhile, Ryan Watkins, an analyst at cryptocurrency research firm Messari, said this week that he thinks ethereum can outperform bitcoin – if not in price, in network security.
The price of ethereum has risen more than 1,200% in the last year, surpassing even bitcoin in the midst of a … [+]
Coinbase
“I think the move to ethereum 2.0 and proof of bet [means] Ethereum can actually be more secure than bitcoin, “Watkins said in an interview with Fintech Today.
Bitcoin’s proof of work algorithm, which requires so-called miners to solve complex calculations to unlock new bitcoins and protect the network, has been criticized for consuming too much energy. Some think that betting proof algorithms, which allow cryptocurrency holders to help protect a blockchain, could improve this, but it remains to be seen whether betting proof algorithms will be staggered enough.
As part of a move to ethereum 2.0 that started late last year, a July update will see some ether tokens destroyed (or “burned”), with users sending a fee to the network itself instead of the miners who maintain it. the net.
“The way in which ethereum turns into money is not really because it is adopted by countries as currency; the way in which it becomes money is in fact by building their own economy,” added Watkins, pointing to the growing DeFi space.