Bitcoin will replace Ethereum as the foundation for NFTs and meme coins in 2024 | CoinDesk JAPAN

When people hear the term “smart contract,” many people probably think of DAOs (decentralized autonomous organizations), DEXs (decentralized exchanges), and NFTs, which are mainly based on the Ethereum blockchain.

However, that situation is about to change. In 2024, Bitcoin will be an initiative to attract developers due to its superior security based on a proof-of-work (PoW) consensus mechanism and a fee model designed to effectively incentivize network contributors over the long term. is expected to take the lead in

In contrast, Ethereum blockchain enthusiasts have been predicting for years that Ethereum (ETH) would overtake Bitcoin (BTC) in market capitalization, but now such predictions have become reality. It’s obvious that it won’t happen.

ETH market capitalization is currently down nearly 30% versus BTC. Ironically, the only likely reversal is for Ethereum use cases to shift to Bitcoin. Even if hard-core Bitcoin maximalists resent it.

Proof of Stake: A Death Sentence for Ethereum

With the Ethereum blockchain transitioning to proof-of-stake (PoS), it is on the path to gradual and inevitable obsolescence. In contrast to proof-of-work (PoW), which takes into account the physics and engineering of energy consumption, staking implements a kind of “voting” system to approve the next correct state of the chain. . The more crypto assets you have, the more weight your vote will have.

PoS essentially replicates everything that is wrong with the current financial system, where the “haves” gain more power over the “have-nots” and “those who have little.”

Furthermore, when considered under the same 51% attack threat model as PoW, PoS is fundamentally and fatally insecure. This is anathema to the cypherpunk vision and should be criticized.

A system built on constant hard forks is bound to leave network participants exhausted by the unforeseen contingencies that arise with each upgrade.

Ethereum has been headed in the wrong direction from the beginning, ever since the Ethereum Foundation pre-mined 70% to compensate itself.

This set the tone for those in power to control the network, and from a regulatory perspective, it became clear that Ethereum was doomed to failure. There’s a joke that if you get a call from the Securities and Exchange Commission and someone answers it, it’s considered centralized.

It’s also true that Ethereum has had some success in the past with more expressive use cases like fees, NFTs and meme coins.

However, when compared to Bitcoin’s slow and steady progress in these categories, it is also clear that Ethereum is losing the battle. And of course, markets don’t lie.

FUD over fees

One of the main topics of FUD (fear, uncertainty and doubt) regarding Bitcoin is its long-term security model. The main concern is that block rewards will decline asymptotically until sometime in the 2100s, so there won’t be enough fees to incentivize miners to keep mining blocks in the long term.

This year, this argument was proven to be beside the point. Many times, transaction fee rewards have exceeded mining rewards, and just last week fees doubled the block reward. And we are still in the early stages of the overall halving schedule for Bitcoin as a protocol.

Inscriptions have sparked a fee war, accounting for 21% of all fees to date.

It is clear that inscriptions, so-called Bitcoin NFTs, have triggered a competitive environment around transaction fees ($18 million at the peak of the inscription boom in May), with daily transaction fees currently at around $1,300. reaching $1 million.

Even the meme coin boom once seen on Ethereum has migrated to Bitcoin. In May, BRC-20, a new token standard using the Ordinals protocol, raised Bitcoin transaction fees to their highest level in two years.

Some “transactional” Bitcoin maximalists consider such activity to be spam on the network, as propagating only BTC transactional data is the only and “true” utility. There are some people.

However, it must be said that it is naive to stubbornly think that we will not support a technology that is supported by many users and is becoming widespread. Providing a truly sustainable economic model that supports the mining industry in perpetuity is the right outcome.

This year, Bitcoin was able to attract NFT fans from Ethereum and other layer 1 blockchains thanks to Ordinals and BRC-20 tokens.

Once one of Ethereum’s preeminent use cases and touted as a competitive advantage, NFTs on Ethereum are beginning a slow decline. For example, trading volume on Ethereum’s largest NFT platform, OpenSea, has fallen 98.5% from its peak. Meanwhile, Ordinals led the spread of Bitcoin NFTs.

In fact, Galaxy Research predicts that the Bitcoin NFT market will reach $4.5 billion by 2025. This research and the growing use of the Bitcoin blockchain in new use cases has the potential to end Ethereum’s centralized network.

Bitcoin on the international and geopolitical stage

The real problem worth solving is currency, and Bitcoin wins on most metrics, including institutional and nation-state adoption.

El Salvador has adopted Bitcoin as its legal currency and is using it as a way to transform itself into a wealthy country. President Bukele has received regulatory approval to launch Bitcoin-backed “volcano bonds” in 2024.

Argentina’s recently inaugurated new president, Javier Millay, is also a supporter of Bitcoin. He has previously stated that “Bitcoin represents the return of money to its creators, who are the private sector,” and Argentina could be the next big country to adopt Bitcoin as legal tender. It is rumored that.

Bhutan is secretly mining Bitcoin. Oman has invested $1.1 billion in Bitcoin mining infrastructure, and other leading countries have also expressed interest and investment in Bitcoin.

In the West, U.S. presidential candidates like Robert F. Kennedy Jr. and Vivek Ramaswamy are seeking solutions to loose monetary policies that have undermined the very fabric of society. As a strategy, he is promoting the merits of Bitcoin.

Bitcoin spot ETFs (exchange traded funds) are just around the corner, and no matter how you look at it, Bitcoin is entering a new phase of global adoption.

Looking to 2024

What people should think about above all else is that Bitcoin is essential to a decentralized, prosperous, and fair future for all, and that other networks like Ethereum that claim to be a “better alternative” are This means that it can be considered something like a DDoS attack.

At the end of the day, a truly decentralized and healthy monetary network can always beat a centralized alternative network.

As the half-life approaches and adoption increases, by 2024 it will become increasingly clear that, as Michael Saylor likes to say, “there is no second best.”

｜Translation and editing: Akiko Yamaguchi, Takayuki Masuda
｜Image: Shutterstock
｜Original text: The Bitcoin Fee Flippening Is Upon Us