Bitcoin’s blockchain, the decentralized ledger that underpins the currency, is only used to record transactions in the currency. Ethereum, the “programmable” blockchain underpinning the Ether currency, is home to at least $100 billion of software applications and non-fungible tokens in addition to Ether transactions.
“Ethereum is very similar to an ‘app store’ where any entrepreneur in the world can develop applications in anything: financial services — DeFi — but also art, gaming and music that we see with NFTs…the potential market cap is a lot bigger,’” said Eli Ndinga, head of research at cryptocurrency exchange-traded product firm 21Shares.
The trading of NFTs — non-fungible tokens — alone could one day overshadow cryptocurrencies, said Brian Armstrong, co-founder of crypto exchange Coinbase, in a recent Bloomberg interview. Bitcoin’s blockchain is not designed to support the smart contracts required for such applications. “The code in bitcoin is a very poor man’s code..it’s not very sophisticated,” says Biais, the HEC professor.
What would the “flippening” mean for Bitcoin?
Of course, it’s not easy to predict the demise of an asset that’s worth $1.1 trillion, and whose value has doubled so far this year. One key feature of Bitcoin — the hard limit on the number of Bitcoins that can ever be mined — could help Bitcoins retain their value even if Bitcoin is overtaken by rivals and the speculative frenzy currently surrounding the original digital currency subsides.