If ether is digital oil, Bitcoin is digital gold
Gold and oil have been a catalyst for many societal changes as they reshaped our values and ideals. Mankind has valued the scarce resources of our earth, especially when they occur naturally and the extractants require complex instruments. Sound familiar?
Our understanding of the benefits these minerals bring to our daily interactions is directly related to their monetary value. When examined, cryptocurrencies show similarities and are in contrast to gold and oil. While both are limited and rare, their underlying use cases will depend on the perceived benefits they add to the digital network. Such a view of Ethereum and Bitcoin reinforces the growing belief that Bitcoin is digital gold and Ethereum is digital oil.
A metaphor of our time
Arguments about comparisons between cryptocurrencies and minerals have been reiterated by Tyler Winklevoss, co-founder of Gemini Cryptocurrency Exchange. He claimed that Bitcoin was “better gold than gold” and emphasized the ease with which a valuable asset can be stored and transported. Additionally, Etheruem has been compared to digital oil for its versatility in powering the Ethereum Network protocol.
Ethereum and Bitcoin are digital assets that can be raised for monetary gains. However, due to the high price volatility, users are reluctant to spend BTC. In addition, Ethereum users are given an incentive to use Ethereum to partake of the craze for decentralized finance. To this end, both gold and oil share similarities with BTC and ETH if digitization is not taken into account.
Metaphors used in the crypto space act as normalization operations to distill complex systems into something that the mass audience can relate to. Ethereum’s utility and Bitcoin’s store of value are the main comparisons used in metaphors. As pointed out by Alexander Blum, both coins draw intrinsic parallels to material things due to their underlying use cases.
Vitalik Butterin reiterated the idea that Bitcoin is gold and Ethereum is oil, as “Ethereum will be the internet energy source for the technology world”. In addition, ETH is the “crypto fuel” that supplies the entire network with electricity. However, it serves a single network but does not consider all of the crypto due to interoperability restrictions.
On the downside
- Market sentiment is still heavily dependent on Bitcoin, which affects the performance of individual coins.
- The value of Ethereum within the growing blockchain network is more evident than that of Bitcoin.
- Because of price volatility, Bitcoin cannot perform currency functions like gold used centuries ago.
Ethereum as Money: One Way Forward?
Both Bitcoin and Ethereum show similarities in price activity or price movement. However, with the development of networks and the increasing use of Ethereum in the market, users are placing more emphasis on ETH.
A step towards Ethereum 2.0. could change the perception of the project for the majority of investors. For the proof of the stake consensus, the ETH must be blocked and marked. It currently has over $ 9 billion in value locked in, which to some extent coincides with price activity, which has been shown positive against Bitcoin. In addition, lower fees on the Ethereum network allow even more activity at a reduced price.
Ethereum is a gateway to interacting with the blockchain, while Bitcoin retains the basic properties of a digital metal that users are reluctant to spend. With over 3,000 dApps powered by Ethereum and ETH tokens, Ethereum’s ease of use has created an oil analogy. The improvements of Ethereum in the use cases of the ETH from 2016 onwards have led to a sustainable and organic demand for the use and ownership of the ETH. While both BTC and ETH may seem synonymous to users outside of the blockchain space, they display distinct characteristics that guide our perception of the value of each cryptocurrency.
Join in to find out the downside of Crypto
Update your inbox and get the tips from our DailyCoin editors straight to your inbox once a week.
You can unsubscribe at any time with just one click.
Read on on DailyCoin
Disclaimer: Fusion Media would like to remind you that the information contained on this website is not necessarily real-time or accurate. All CFDs (stocks, indices, futures) and forex prices are not provided by exchanges, but by market makers. As a result, prices may not be accurate and may differ from the actual market price. This means that the prices are indicative and not suitable for trading purposes. Therefore, Fusion Media is not responsible for any trading losses you may incur as a result of using this information.
Fusion Media or any person involved with Fusion Media assumes no liability for any loss or damage caused by reliance on the information contained on this website, such as data, offers, charts and buy / sell signals. Please inform yourself comprehensively about the risks and costs associated with trading in the financial markets. This is one of the riskiest forms of investment possible.