- The CEO of a blockchain firm told Insider why he believes bitcoin cannot be caught by rivals.
The crypto market is finding its feet after a severe crash spanning May and early June.
It remains unclear whether a sustained recovery will be seen from here, or just a pause before a further dip, but each week that goes by without further panic selling increases confidence that the worst may have passed.
That being so, attention will gradually turn to the future shape of the market and one of the key questions is whether ethereum will become the number one crypto, or if bitcoin's position as the largest digital coin is unassailable.
Bitcoin has a market value of around $440 billion and accounts for roughly 42% of the total market. Ether, meanwhile, has a market size that is less than half of that right now, according to CoinMarketCap.
But ethereum proponents have a strong case. The blockchain is still dominant in terms of Web3 activity, with defi (decentralized finance) and NFT markets gaining widespread adoption, although there has been a drop-off during the recent downturn.
The other big reason for optimism over ethereum's prospects is the long awaited "merge" that is expected to go through in September.
This will merge the proof of work network with the new proof of stake version. This does away with mining in favour of staking, and is expected to push the price up because the large numbers of tokens paid to miners will no longer be sold on a daily basis. It is also expected to pave the way for big increases in performance and scalability in the future.
Bitcoin advocates are unconvinced by the merge, and ethereum's claim to be the number one crypto sometime soon.
Among them is Alex Miller, CEO of blockchain firm Hiro. He argues bitcoin can maintain its lead because the key applications that run on ethereum can also be run on bitcoin using the Stacks protocol, and other similar tech.
Miller expects adoption of Web3 protocols such as defi lending platforms, decentralized exchanges (DEXs) and NFT marketplaces on Stacks, and by extension bitcoin, to accelerate. This will feed through into the price of the coin over time, helping to preserve its market cap lead.
"As blockchains like Stacks become more prominent, they create a stronger ecosystem around bitcoin, which only adds innovation and more opportunities for developers and users," he said.
"There's a bunch of that happening on bitcoin via Stacks already. I think the merge doesn't do a lot for actually improving the developer experience. It's not going to revolutionize what you can build on top of it."
"It'll be moderately good for ethereum's price, but honestly I think that's less about the technology behind it and more just about increased certainty. This is been going on for five or six years now, so the future potential I think is largely priced in."
Miller also pointed to the "Bitcoin Odyssey" project as a reason to be optimistic on bitcoin becoming a Web3 platform rather than just a coin.
Investors including the people behind Stacks and crypto exchange OKCoin have put together $165 million of funding targeted at making bitcoin competitive as a platform for defi and other app development.
Turning to the state of the crypto market and the bitcoin price, Miller struck a relaxed tone and unsurprisingly for somebody heavily involved in crypto, is comfortable with the recent volatility.
"What happened to the market was similar to what you saw in 1999 to 2001 where you had the bottom kind of fall out and massive corrections in the general tech market. It was just a matter of time, right. There was a lot of weird stuff that was going on," Miller said.
"The crash clears out the stuff where there's funny games being played, but there is still a fundamental value to these things. It could drop more, but it has still dropped less than in previous crypto winters and downturns, right?"
Bitcoin has fallen around 75% from peak to trough this time around, while ethereum dropped around 80%. These figures, while dramatic, are much less than the 95% drops seen in earlier cycles. Miller said this is indicative of a maturing asset class.
While noting that nobody can say with any certainty what the price will do next, Miller added he sees a consolidation period over the next few months as likely, with price ranging between $15,000 and $30,000 for some time before moving on to new highs.
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