Early Bitcoin advocates: Why did I leave Bitcoin and embrace Ethereum?

Bitcoin is the only cryptocurrency that can refuse to innovate and still win; but right now, Ethereum might be the better bet.

I first got into the cryptocurrency space in 2013 by buying bitcoins. Last week, I finally sold my last BTC and bought ETH . I get asked all the time "why are you leaving Bitcoin?" and this post will answer that question.

First of all, I don't hate Bitcoin. It's a great asset and worth owning, but here are a few reasons why I choose not to own it:

In general, I try to hold assets that have real end-user demand, have real benefits, and can generate cash flow, rather than assets that are strictly dependent on market supply and demand.

On the contrary, due to applications such as NFT and DeFi, users have a huge demand for ETH. ETH's market capitalization is less than half that of BTC's, but the Ethereum network has more than 10 times the daily fees of the Bitcoin network, and fees represent demand for block space.

Bitcoin is doing well to win the "digital gold"/store-of-value asset class. But from a practical application point of view, there is little need to actually use it. And as commodities such as NFT are increasingly denominated in ETH, ETH begins to compete with BTC who is a better value store.

Once Ethereum transitions to proof-of-stake, anyone can easily stake their ETH and earn a yield (expected annualized yield of ~5-10%), making it even more attractive as a productive asset.

The block rewards obtained by miners who maintain the Bitcoin network are halved every 4 years, and all Bitcoins are expected to be "mined" in 2140, at which time miners will not be able to obtain block rewards. In the Bitcoin whitepaper, the solution to this problem is to hope that there will be high network adoption by then, with transaction fees compensating for the reduced block reward.

It's clear that Bitcoin is great as a store of value asset, but it's not how people want to transact. And in the Ethereum community, people are using their ETH to buy new NFTs, trade Dogecoin , etc.

It's hard to see how Bitcoin can remain secure and decentralized without modest inflation or a dramatic shift in attitudes toward actual Bitcoin transactions.

While bitcoin mining operations are increasingly turning to clean energy sources, environmental concerns about mining remain a concern. And Ethereum can solve this problem very well: Ethereum is moving from proof of work to proof of stake, which will reduce the energy consumption of the network by more than 99%.

Bitcoin holders are generally opposed to new tokens and anything that creates wealth for builders without looking at the whole. And it is a badge of honor for the Ethereum community to get rich by ICO new currencies in the ecology.

This leads to an atmosphere more like communism (Bitcoin) versus capitalism (Ethereum). And our innovation, progress, and economic returns are ultimately driven by capital.

Bitcoiners have been vehemently resisting change, while other competitors in the crypto industry are moving at breakneck speed. Perhaps BTC can win the competition by adding smart contracts and a long-term inflation plan to protect the network.

But the community (at least for now) will never let that happen. The Bitcoin community has become incredibly conservative, they probably entered the cryptocurrency space in the past 2 years, have 4 figure assets, but have never used DApps. In my opinion, this tribalism has alienated the brightest minds in the crypto world, who are no longer working on Bitcoin, but working on solving cutting-edge problems in the field of encryption.

Historically, a lot of the narrative around Bitcoin has been that it will function as an inflation hedge, a bear market hedge, or a currency or something.

This is not the case now, as BTC and ETH have been strongly correlated with the Nasdaq over the past year. For better or worse, the market treats them as risk assets and treats them like tech-like stocks. If I was going to own a crypto asset, I would want to own something that looks more like Ethereum than Bitcoin, an innovative and user-friendly tech company.

Here are some common rebuttals I get, and what I think about them.

In fact, Proof-of-Work makes this problem even worse. Traditional mining operations have huge economies of scale and barriers to entry. If you can't order ASICs at once and negotiate a lot of energy contracts, you're going to be at a huge disadvantage in Proof of Work mining. And with liquid staking options like Lido, Rocket Pool, and exchange staking programs, participating in Proof of Stake is easy no matter how small your funds are.

The truth is that the Bitcoin community has been very resistant to change. There are almost no smart contracts on the Bitcoin ecological chain. As long as Ethereum and other smart contract blockchains innovate at a breakneck pace, Bitcoin will not be able to capture their market share.

If you've been following the merge's progress, you should know it's coming. In the next 12 months there will be more than 66% probability that the merger will be achieved.

Likewise, I am not bearish on Bitcoin. Its inherent strengths and consensus effect make it the only cryptocurrency that can resist innovation and still win (as a store of value). But now, I prefer to hold ETH.

Written by: Cole South

Compilation: Aididiao