Alpha Chasing: BTC vs ETH

2022年8月9日

When chatting with knowledgeable people about crypto it often stuns me to see Bitcoin Maxi and Ethereum Maxi ideological battles end in name calling, and temper tantrums.

Together mate, let’s swat away the emotion and get into the ZenMode. The goal here is alpha & gains, not philosophical hills to die on.

Within the content of this brief comparison we are going to explore logically ETH VS BTC.



Bitcoin Pros:

• Liquid
  
• Easily Accessible for new entrants
  
• Sovereign nations trade it (i.e. El Salvador)
  
• Gary Gensler (US Securities and Exchange Chairman) calls it a commodity
  
• Michael Saylor’s Insightful Clips (Love or hate him, the man is articulate and brilliant)
  
• Volatility (For traders & Speculators/others may say this is a weakness)
  
• Independence from Central Authority
  
• User Anonymity-ish
  
• Many online shops now accept it as a means of payment (Including my favorite bookstore now!)
  
• Irreversible (some may say this is a weakness)
  
• Limited Supply
  
• High return potential
  
• Reliable
  

Bitcoin Cons:

• Myth #1: Bitcoin is a protection against inflation.
  -We have decades high inflation and bitcoin not only poorly performed – it crashed.
  
• Myth #2: Bitcoin is deflationary. (Confusion is rooted in a fixed cap of incoming coins)
  -Bitcoin itself is inflationary. Every block rewards the miners with new minted coins. Bitcoin is fundamentally inflationary for another +100 years
  -Supply of bitcoin increases through block rewards
  -Miners use newly minted coins to cover (wasteful) energy cost, and equipment/maintenance cost. They then dump the coins ever selling into buyers thinking they are buying a 'store of value'. There is a constant selling pressure
  innate to bitcoin.
  -Just to chop into a static price, Bitcoin needs a constant supply of new buyers to absorb the newly minted coins (ideally at even more elevated prices)
  -Some argue that 'the price of all future coins is priced in right now', if this were the case there would not be massive volatility (another bad myth)
  
• Myth #3: Store of value
  -Its volatile
  -Its purchasing power has crashed
  -Good stores of value are scarce, bitcoin will be having new coin issuance for generations longer.
  
• Con #1: Proof of Work (POW)
  -ESG is all the rage, and Bitcoin is an energy vampire.
  “But Zen, ESG is a myth, eventually Volcano energy will power the network!!” – Even if this is true, the talking heads run the narrative and they are vehemently against the huge waste in energy.
  -POW encourages miners to mint new coins, who promptly sell continually driving down the value of the network. Aka a constant selling pressure is a negative feature of the tokenomics.
• Con#2: Lightning Network Fees
  -Yes the cost per transaction dropped, however the total transaction gains on the network have also dropped. Institutions are viewing collected fees as a benefit of network comparison between ETH/BTC.
  -Some argue this is great for mass adoption, and I would argue that, that is a great counter argument.
  
• Con #2: The network can be attacked by a state sponsor
  -A 51% attach happens when a malicious entity acquires control over the blockchains mining capabilities. The attackers can stop the confirmation and order of new transactions. Analysis states it would cost a nation $10-13 billion to bring Bitcoin to its knees.
  -One US Aircraft carrier cost $13 billion. No the suits in Washington are not ‘afraid’ of bitcoin.
  
• Con #3: When they try to go POS
  -Eventually a vocal group will realize the tokenomics are fundamentally flawed vs their peers. If they were to go POS however, you would see yet another hardfork of BTC splintering its value and market cap yet again.
  
• Con #4: Bitcoin continually underperforms ETH
  

Ethereum Pros:

• Network/Community
  -Has the largest amount of software engineers working on it (Higher probability of the next Facebook/Netflix arising from this network)
  -Many of the greatest minds working on alt projects such as Cardano and Polkadot were former ETH developers.
  - Since ETH is open source everyone has the ability to review code and an entire ecosystem has been built around it.
  
• DEXs
  -Popular Decentralized exchanges like UNI/SUSHI run on ETH
  
• Globalized Transactions, essentially performing the entire function of what Bitcoin does in a nutshell, without the risk of a 51% attack
  
• Easy onboarding for new Entrants
  
• Great support from institutions exploring ETH tech such as Visa, JP Morgan and Microsoft.
  -This will also make it more user friendly to the general public.
  
• Alt coin rewards.
  -Many unfortunately do not realize that many alts are simply rewards and are speculating on them – it would be like ‘going long’ your airline miles. Sorta silly. But regardless the vast majority of alt coins are built atop of eth, along with some MASSIVE tokens such as: SHIBA, USDC, DAI, Tether, BAT, LINK, MKR, UNI, BNT, OMG, ZRX, CVC - the list is endless
  
• NFTs
  -Many laugh at these risky products, but NFTs (valuable ones) largely run on ETH. Such as the friendly cryptopunk v1 your viewing in my PFP! 😊
  ***I am not advocating buying any NFTs or ALT Coins – as 99.9% will crash and burn, or are fraudulent to begin with.***
• Reliable Network
  
• Liquid
  
• Irreversible
  
• Independence from a Central Authority
  
• Patron Saint Vitalik ButerinEthereum Cons:
• It is expensive.
  -Fuel fees peaked around $200 and at one point during the BAYC NFT Land drop ETH fees were over $1,000 to procure the tokens for some willing to pay it.
  
• AS the token goes up in value the gas fees increased.
  - Right now they are about $1.70
• Speed of the network
  

We must remember that post MERGE we are getting Sharding. But we will save this precious gem for another idea.

I love BTC. In the last bull run, BTC gifted me with lifechanging wealth.

I do not own a SAT of last year's coin coin now however.
I am alpha chaser, not a maxi and those resources are now all long ETH.

We can see on the daily that the EMA ribbon has already flipped for ETH:


BTC however is attempting to slug along higher…


Let's also not ignore the plunge in BTC market dominance:


While fundamentally ETH continues to pick up market share:


No matter how you cut it, ETH is where the alpha is:



Ethereum Opportunities:
We are now a few weeks away from the merge where ETH will become ETH 2.0
Eth will fundamentally change from being POW to POS.

• BUT WHAT DOES ALL OF THIS MEAN TO ME ZEN!?
  (WEN MOON)
  
• Faster transactions, cheaper transaction costs
  
• Instead of miners continually selling newly minted bitcoins as it ever-inflates (+100 years) ETH will be fundamentally deflationary.
  Alpha is the goal and ETH Deflationary>BTC Inflationary
• When an ETH block is fulfilled new token issuance will drop by 90% (the equivalent of three BTC halving cycles) making the network DEFLATIONARY (ever scarcer as well due to the burn mechanism)
  
• There will be no miners dumping coins onto the market ever driving the price down like BTC, rather the ETH network will encourage HODLING through its staking mechanism which rewards new issuance through passive yield rewards. This benefit will likewise be very attractive to institutions, as investment banks latest drops are already updating their client.
  
• ESG Friendly!! Ethereum energy consumption will drop by 99.95%!
  
• More scalability!
  

2022年8月13日

注释

as suspected, HUGE breakout for ETH relative to the performance of Bitcoin

2022年8月13日

注释

Market dominance shows a trend that you can not un-see

2022年9月2日

注释

2022年9月6日

注释