It is usual that in all markets some instruments have a very prominent weight. How the rest of the market behaves. But in the case of cryptocurrencies, this influence is concentrated in just two assets; bitcoin and Ethereum. Also not surprisingly, both cryptocurrencies account for well over fifty percent of the value of all cryptocurrencies. The third by price, which at the moment is Cardano, accounts for barely a quarter of the capitalization of Ethereum. Which in turn is not even half of the capitalization of bitcoin and Ethereum.
Two locomotives pulling the market
Although the first cryptocurrency to be born was bitcoin and it still has enormous weight in the cryptocurrency market, no doubt investing in Ethereum is becoming increasingly important (perhaps even in OTC markets such as cryptocurrency trading which so important is to predict the trend and take care of the risks of leverage) to such an extent that some analysts are already talking about a surprise for bitcoin, which even though it does not seem that it will happen in the short term is not far from being ruled out, since If Ethereum grows as the most optimistic expect it to, it may have Nakamoto’s cryptocurrency within a stone’s throw.
But regardless of which is the most valuable cryptocurrency, and without neglecting the importance of whether it is Ethereum or bitcoin, at the end of the day they have their technical differences, the truth is that it is a market that is still in an early development phase, and therefore their liquidity is low compared to other markets, which makes them more susceptible to being manipulated by movements of a few billion dollars, so being able to manipulate one of the two locomotives (preferably bitcoin, since may have more influence on other cryptocurrencies) means having a huge influence on other cryptocurrencies.
The differences between bitcoin and Ethereum
And is that despite being the favorites of investors (after all, the degree of interest they arouse can be measured based on the money they attract). Both cryptocurrencies are substantially different.
In the first place, bitcoin is finite and Ethereum is infinite. Such a way that there will never be more than twenty-one million bitcoin and Ethereum. Yet the monetary mass of Ethereum can grow without measure. Which can play in favor of bitcoin if this cryptocurrency aspires to become a kind of reserve of value. As if it were a kind of digital gold.
On the other hand, Ethereum uses the proof of participation for its validations. While Bitcoin uses the proof of work for its validations, the first proof having various advantages over the second.
Greater energy efficiency; given the high economic cost of energy and the high cost to the planet, lower energy consumption can be a definite advantage for a cryptocurrency, and in this case, Ethereum’s proof of stake can make all the difference.
Possibility of mining blocks with more modest hardware. One of the collateral effects of cryptocurrency mining has been making the price of graphics cards grow in parallel, something that is aggravated every time there is some kind of crisis in Southeast Asia, given that many computer components come from countries like Taiwan, so being able to use outdated hardware is a huge advantage when mining Ethereum.
Finally, it is worth highlighting the decentralization that the proof of participation promotes. Something very important if one takes into account that this decentralization is one of the most attractive characteristics of cryptocurrencies, or at least it was in its beginnings.
The next bullish period may be decisive in the balance of power of the cryptocurrency market, although if the most optimistic expectations for bitcoin and Ethereum are fulfilled, the total capitalization of this cryptocurrency may exceed one and a half billion dollars, something that would force Ethereum to multiply its value by four to be able to overcome it, which is not exactly little.