12 Comments

The facts presented are real but also have an emotional component and the perspective of a BTC maxi, which is ok! :) I honestly believe that ETH is the second strongest asset and will perform well due to the following reasons:

- there is still no other battle tested ecosystem which has performed as good. ETH becomes a secure and safe place to store value just like BTC because it gained the most important quality: TRUST.

- it still doen't have any strong competitors as Solana has downtime, Cosmos hasn't managed to achieve a large market share, the others are EVM based chains and more centralized and are derivatives of ETH which came first.

- the rise of gas price could be seed as a feature because ETH becomes store of value similar to BTC. It has the necessary security and because it runs smart contracts it should be a similar asset class. If you want cheap gas for memecoins you could go in other ecosystems, but if you want security and trust you stay in ETH

- they invented smart contracts, proved that they are secure and this is enough to remain a strong ecosystem

The main issue I see is related to centralization after the migration to POS but we should see how they will mitigate this.

Really enjoyed the essay. Thanks & keep up the fabulous work!

Expand full comment

Great points, I agree with you! Also I would add that Blackrock is a big supporter of Ethereum, and we can not be that naive to think these people don't know what they are doing. They will come up with a huge narrative like "We are going to tokenize the world, and Ethereum is the platform to do it". It seems like Wall Street has already picked the programable money winner.

Expand full comment

They don’t care which chain to use. They come to ETH first because it is the biggest pool of capital, now they are moving to other L1s as well.

Expand full comment

Great article and helped explain what could sometimes appear as hostility towards Ethereum but now it's clear to me you really gave it a fair chance.

Just one minor point though, I also have concerns about the L2 ecosystem, particularly with fragmentation. However, I don't think Bankless pushed using CeFi platforms for bridging within L2s. I think they suggested entering the L2 ecosystem direct via CeFi to completely avoid fees but from there you can use the DeFi bridges. Some are quite user-friendly but still annoying they are needed at all.

So the main risk is the initial onramp but that also applies to getting fiat into Bitcoin too.

Expand full comment

I had similar experience, in 2021 cycle, using colateral coins to borrow USDT to buy more coins. I decided to exit because it was far easier to speculate in Binance (and cheaper transaction fees). Nowadays I somehow miss the "decentralized" environment of those platforms, but It hardly would make any sense to go back. Maybe this UX (user experience) problem, in a broad approach, beyond design flaws and fees, explains why ETH price is struggling compared to BTC.

Thanks for the insights!

Expand full comment

Never had doubt about that. Made money with ETH and XRP and moved to BTC long time ago. As an aerospace engineer I felt the need to understand. Deep knowledge of BTC tech is as relevant as an even deeper knowledge of world monetary and economic history (through the Austrian eyes you can see the truth). Only after you intersect both disciplines, you see the difference between btc and all others.

Expand full comment

i have held ~20% of my portfolio since i started (2020) and i staked it when it went proof of stake. so i just lucked out a bit so far but have had my doubts about ETH's long term competitiveness and also the whole proof of stake thing. initially i though the lower energy use was eco ok. do you have a medium term outlook for BTC/ETH? maybe the ETF will give ETH a bump or maybe the ETF is already priced in. you are a gem.

Expand full comment

The two stated reasons that Ethereum went to PoS (as stated on the ethereum.org website) were:

1. More environmentally friendly

2. To enable sharding

Sharding has been scrapped as a path forwards to the best of my understanding, and Bitcoins PoW is undeniably the greener alternative (how ironic). The ability to consume wasted, stranded, and load balancing energy is incredible to see built out. This information was also known at the time of the Merge...but they pushed ahead anyway...politics.

RE price, I don't have a firm read in the immediate term. I'd be surprised if we were to enter a bear market across the industry as a whole (vs fiat). ETH will benefit for sure from ETF flows, however my instinct tells me that there simply isn't anywhere close to the same level of demand. If The ETH ETFs reached 20% of the Bitcoin AUM, I would be astounded.

Meanwhile, I see very few competitive advantages, and a shrinking market share. I struggle to be bullish ETH vs BTC over the medium to long term, but who knows what the animal spirits will do.

Expand full comment

just what i needed to know. thanks muchly.

Expand full comment

Fascinating journey. Ethereum is a very complex ec0system that I have struggled to get even a modicum of understanding for. Many thanks for tie in depth analysis and for your perspective.

Expand full comment

Hey James

Are you able to "live-chart" the Ethereum Circulating Supply and Issuance chart?

Would be awesome

Expand full comment