ethereum (eth) may now present advantages to institutional investors over bitcoin (btc), according to Fidelity research director Chris Kuiper.
During an interview with the Bankless podcast on Wednesday, Kuiper argued that legacy finance is “past the point of bitcoin” in terms of its understanding of cryptocurrencies in general, opening its minds to other digital assets.
Institutions that go beyond bitcoin
According to Kuiper, one of the key factors driving ethereum‘s appeal to investors is its maturation as a protocol.
“It has become even more differentiated from bitcoin” saying Kuiper. “The shift to proof-of-stake and all these things that are emerging… is creating a differentiated use case, and that also helps with the diversification narrative with institutional investors.”
ethereum completed its “merger” upgrade about 12 months ago, changing its consensus mechanism from proof-of-work to proof-of-stake. The benefits of the update have been multiple: reducing ethereum‘s electricity consumption by 99%, drastically reducing the inflation rate of Ether and preparing the network for future expansion through ‘sharding’.
bitcoin, on the other hand, is updated much less frequently and has no particular development roadmap or centralized development team. In January 2022, Fidelity bitcoin-first.pdf” data-wpel-link=”external” target=”_blank”>highlighted This is one of bitcoin‘s star qualities, as the protocol’s decentralization lends credence to the scarcity of its underlying asset, making it the ultimate “monetary good.”
Ether as money
However, during Wednesday’s interview, Fidelity commented that Ether may also be an emerging form of money, especially given its deflationary tokenomics after the merger.
“ethereum‘s various upgrades have made the token (or asset) more scarce,” Jack Neureuter, research analyst at Fidelity Digital Assets, said during the interview. “That has made this type of store of value attribute potentially more attractive around ethereum.”
That said, analysts noted that Ether’s theoretically bullish new burning mechanism has not yet been reflected in its price. While supply has decreased since the merger, demand for Ether is another story.
“It doesn’t have the first-mover advantage or network effect of bitcoin,” Kuiper said. “There are also some people who perhaps doubt whether or not that will continue in the future simply because it has changed so many times in the past.”
Beyond bitcoin and ethereum, analysts said there simply isn’t much institutional demand. “For them, the juice is not worth the squeeze, as they say,” Kuiper added.
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