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While Bitcoin is currently trading at close to its all-time high, its dominance in terms of proportion of total cryptocurrency market cap is rapidly decreasing — ground largely given up to Ethereum.
This shift is probably being driven by a few factors.
Despite its recent appreciation in value, as a technology, Bitcoin has stagnated over the last three years. Two rival factions have emerged with violently opposing views on what should be done to allow the Bitcoin network to handle more transactions than it can right now. While Bitcoin has been paralysed by indecision, Ethereum has raced ahead with technology that not only does everything Bitcoin can do faster, in higher volume, and at lower cost — it does a lot more besides.As a “hard fork” looms, which looks set to split Bitcoin into two separate currencies that will have to fight for custody of the Bitcoin moniker, anxious Bitcoin holders are increasingly divesting themselves of Bitcoin to acquire Ether — the cryptocurrency that fuels the Ethereum network.
The other side of it is that Bitcoin is really only useful as a store of value. Even then, its usefulness for actually transacting value is limited. In a world where people are used to online payments being confirmed instantly, Bitcoin transactions can take anywhere from tens of minutes to several hours, depending on how busy the network is. It’s also expensive — especially if you’re only sending small amounts. The average transaction currently costs about $1.50.
Ethereum, on the other hand, was never intended as a Bitcoin competitor. Ethereum is actually a platform for new kinds of decentralized (often financial) applications (dApps) that run on a peer-to-peer network of computers. These dApps are designed to disintermediate the…
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