The amount of tokenized bitcoin, ERC-20 soared from 5,200 to 11,682 BTC throughout June. This sparked debate between Ethereum and Bitcoin users. While the Ethereum users said that it showed that even BTC hodlers believe Ethereum provide better off-chain transaction that Lightning, a Bitcoin-based platform and Blockstream’s Liquid. Bitcoiners are saying that people value oldest and the most valuable Bitcoin rather than Ethereum’s token, Ether.
The co-founder of Ethhub.io, Anthony Sassano argued that Bitcoin is becoming a “second-class” citizen to Ether as the BTC transactions on Ethereum deny miners fees they would otherwise receive on the bitcoin chain. As U.S benefits from the demand for dollars across the globe, Bitcoin holders benefit from the liquidity and collateral value in the Ethereum community.
Ether is viewed as a commodity that fuels the decentralized computing network organizing its smart contracts. The computing network takes a tokenized version of the currencies that hold the most value to the users and provides mechanisms for lending or borrowing. This helps to create decentralized derivative or insurance contracts. Still, to declare bitcoin the winner based on its appeal as a reserve asset is to compare apples to oranges. Ether is increasingly viewed not as a payment or store-of-value currency but for what it was intended: as a commodity that fuels the decentralized computing network orchestrating its smart contracts.
However there legitimate concerns that can give Ethereum the tough time. Ethereum has a complex system and can run different programs altogether. This can leave the security standards compromised. Also, the challenges the community face with migrating to Ethereum 2.0 can be overwhelming. Hence, Bitcoin is still chosen by most people as it delivers the best security.
Now, the inclusion of bitcoin in Ethereum smart contracts is strengthing the De-Fi system. Meanwhile, the recent move by leading DeFi platform MakerDAO to include WBTC in its accepted collateral has meant it has a bigger pool of value to generate loans against. People are concerned about the speculative activities such as yield farming and interconnected leverage could set off a systemic crisis. If it happens, Bitcoin might be able to offer an alternative and more stable architecture for it.
Keeping aside the argument of who is to win, the market is speculating that a transformative outcome is likely to happen. Whether it’s by Ethereum or other blockchains, the result will show more cross-protocol synergy.