Bitcoin and Ethereum maximalists are both wrong

If you have delved into crypto Twitter, you’ve surely seen a few influencers with a bio that says “Bitcoin maximalist,” or “Ethereum maximalist.” This means that the only crypto they see working out in the future is either Bitcoin or Ethereum. When I see this, it makes me question whether they know what a smart contract is or not, because Bitcoin and Ethereum clearly have different purposes.

The only argument you can make for maximalism 

Maximalism is subjective, based off of a person’s values. For instance, if the only thing you cared about was price increasing as fast as possible, Bitcoin might be your best bet. I could definitely see how a pure investor would be a Bitcoin maximalist as it has proven to perform better than any other crypto, including Ethereum, by a long run.

If you are thinking about what tech will have the biggest impact on the world, Ethereum makes more sense. Transactions are potentially faster, you can build an entire financial infrastructure inside of it, and since governance is liberal there is more room to develop.

Even though I can understand these perspectives, “maximalists” must understand that there is more than one role to fill in this industry. In consumer tech, Apple maximalists think the user experience matters most, Android maximalists think innovation and accessibility matters most. AMD maximalists value productivity and Intel maximalists value gaming. You will find super-fans of each, even though each product fulfills different roles.

Blockchain isn’t just about investing in a coin or building with a coin, it’s about both. This, again, is why I feel like maximalists are actively choosing not to look at the bigger picture.

Why you shouldn’t be a Bitcoin maximalist

Bitcoin doesn’t have smart contracts. This is an immeasurable difference because it essentially adds a programming language to Ethereum. Smart contracts allow people to build lending protocols, decentralized exchanges, stablecoins, social media sites, and more all within Ethereum.

There is a difference between gold and Amazon. In this situation, Bitcoin is gold and Ethereum is Amazon. Bitcoin’s scarcity is a huge factor in its price action, where as Ethereum depends on value settled within its ecosystem.

I like to compare Ethereum to Amazon because they both experienced what some people refer to as a bubble and others call a growth cycle. Amazon survived the dot com bubble, but was stagnant for many years after. Jeff Bezos was quoted in an interview saying that everyone was talking about their stock performance, but he was never worried because he knew his model was profitable and provided a unique service.

Ethereum’s bubble happened in 2017 during the ICO craze which has tons of similarities to the dot com craze. Just like how everyone thought they could solve the world’s problems with the web during the dot com bubble, everyone though they could solve the worlds problems with blockchain applications in 2017. Many credit the ICO craze to  Ethereum’s invention of smart contracts, because it allowed people to create blockchain projects that do things other than transfer money.

Like Amazon, Ethereum is proving its use case through steady growth. The most obvious area where Ethereum has been useful is by constructing the decentralized finance (DeFi) ecosystem. This allows people with Ethereum based tokens to lend, borrow, and exchange with one another. While prices of cryptos have fluctuated to extremes since 2017, value locked in DeFi has shown consistent growth. You would not be able to build this type of ecosystem on Bitcoin, because it does not have smart contracts.

DeFi total value locked

 

Why you shouldn’t be an Ethereum maximalist

Ethereum’s brand is nowhere near the level of Bitcoin’s. This is super important because people don’t actually understand the technology behind either assets yet, but they are being recommended to invest in crypto.

Bitcoin is the asset that people can get their hands on easily. They don’t need to fully understand it, but by sending Bitcoin from one wallet to another without a bank, a significant fee or processing time, they are able to understand why people think it’s cool.

People didn’t understand the web in the late 90s, and they still don’t today, but they use it so much that it doesn’t matter to them. Bitcoin is the most popular thing in crypto because people have found practical uses for it, mostly through investing. The two major draws to Bitcoin right now is as a store of value and as a relief from the banking system.

Though Bitcoin’s price is volatile, it continues to prove that it will not go away and die. People thought that Bitcoin was over after the 2018 crash, but it came back around in 2019 and almost reached the previous $20k high. Bitcoin needs to keep proving people wrong in this manner in order to maintain its relevancy as a store of value.

Blockchain is the internet of finance, and Bitcoin is the crypto where people can see tangible results. People want to have a bank-free place to keep money and Bitcoin gives that to them, plus decent returns. The funny thing is, they can store their value offline in any crypto, but Bitcoin’s brand is so prevalent that newcomers will choose it over alternatives a majority of the time.

 

Coinfloor, trusted UK spot exchange, delists Ethereum starting 2020

Coinfloor claims to be “the UKs longest established Bitcoin and cryptocurrency exchange,” but starting next year, they will be delisting Ethereum. In a press release today, they mentioned how bitcoin’s track record was incompatible and they were excited to simplify their services.

“The decision will allow Coinfloor to provide a richer set of services for the world’s leading cryptocurrency while maintaining focus on simplicity.” – Coinfloor

The exchange has good liquidity for over the counter purchases, specialized corporate accounts and offline storage. If you could compare it to anything in the US, it would be like Coinbase or Gemini, but clearly with less crypto options. Any average person can sign up for Coinfloor, but the exchange’s services are clearly meant to draw big investors in, or people who value security.

Within the context of institutional grade crypto investments, it’s not very surprising that they would cut off Ethereum. For instance, Bakkt is the most reputable crypto futures exchange in the US and they only service Bitcoin. Still, for Ethereum fans this is just another let down after a long year of their token lacking performance.

Bitcoin and Ethereum increased similarly in value during the 2019 bull market, but Bitcoin make it much closer to its all time high. Ethereum’s high was around $1400 and in 2019 reached around $300, where as Bitcoin’s high was $20,000 and it rose back to $1,400. Subjectively speaking, Bitcoin’s price action has much more energy. When Bitcoin’s price decreases, it still sees huge corrections back up where as Ethereum experiences consistent deflation.

 

 

How to convert Bitcoin to Ethereum on Cash App

Cash App is making crypto accessible to tons of new users, but right now they only have support for one token. Sadly, Bitcoin’s top contestant, Ethereum isn’t supported on Cash App, but it’s still pretty easy to convert your tokens thanks to the Withdrawal feature. With that said, here’s everything you need to know to turn Bitcoin to Ethereum from Cash App.

Read moreHow to convert Bitcoin to Ethereum on Cash App

When will you be able to buy Ethereum on Cash App?

Cash App is one of the most accessible crypto on-ramps for American citizens, and many others throughout the world. Right now, as long as you are willing to give Cash App your personal information, they will allow you to purchase a significant amount of Bitcoin with reasonable fees. This has Ethereum enthusiasts wondering when they’ll be able to buy ETH on Cash App.

Cash App still is figuring out Bitcoin’s business model 

Unfortunately, Square has not said a word about adding support to Ethereum. In fact, they seem to be having trouble finding a profitable business model for Bitcoin. In Square’s quarter 3 earnings reports, it was clear that Bitcoin wasn’t making them much money. Square spent $146 million in operation costs for providing Bitcoin, and only brought in a revenue of $148 million, leaving total profits at $2 million. This was measly in comparison to their total $500 million in net profit.

Statement from Square‘s Q3 2019 shareholder letter:

In the third quarter of 2019, Cash App revenue comprised $159 million in subscription and services-based and transaction-based revenue, and $148 million in bitcoin revenue. During the quarter, bitcoin generated $2 million on gross profit.

Advocates of purchasing Bitcoin through a Cash App account liked to note that fees are significantly lower than on Coinbase for small purchases. Initially, Cash App made money through a price spread, which would cost tenths of a percentage on a $10 purchase in comparison to Coinbase’s 10%. After their 2019 Q3 earnings report was released, they switched over to a fee base model, similar to Coinbase’s but still cheaper for small purchases.

I say all of this to clarify that because they are still figuring out how to make decent money off of Bitcoin, they are unlikely ready to provide access to a less liquid token like Ethereum.

Would Cash App offering Ethereum pump the market? 

When Bitcoin became available to purchase on Cash App, on of the most widespread financial apps in the world, what actually happened to the price? Crypto enthusiasts are always excited when their coin is listed on huge onboarding platforms, like Coinbase or Binance. One of the reasons Ethereum holders are even wondering if Cash App will list their token is because, let’s be honest, it has the potential to increase the value of ETH.Cash App supports Bitcoin Purchases

Bitcoin has been available for purchase on Cash App, in the U.S. since August 2018. During this time, price was ranging between $6.5k and $7k. A few months later, Bitcoin capitulated to its local bottom at around $3k. Basically, after Cash App allowed U.S. Bitcoin purchases, price still decreased by half and never returned to that $7k range until around 10 months later.

This is not to say that Ethereum has no chance of seeing positive price action from a Cash App listing though. Historically, Coinbase listings have had very positive effects on the price of some tokens. LINK, or Chainlink, for instance was listed in June 2019 and there were rumors of a listing dating back to April. During this time, the price of LINK increased to about 9x at its peak and has yet to drop back down to pre-April prices. Still, this type of price action has not been consistent with every coin listed on Coinbase.

If people could predict future values of assets, money would be free. There’s no real way to predict what would happen to the value of Ethereum with a Cash App listing, but it would undoubtedly allow more people to purchase it if they wanted to.

Has Cash App said anything about letting users buy Ethereum?

Jack Dorsey, CEO of Square (who owns Cash App), appears to be what one might call a Bitcoin maximalist. Here are some tweets where he has been transparent about his opinions of other crypto assets:

Dorsey allegedly replied “no” to a tweet recommending that he “Buy ETH” which was later deleted:

Another damning tweet telling a fan that they’ll need to keep Coinbase for non-Bitcoin crypto:

All of these tweets were written around a year ago, and he hasn’t made any comments on Ethereum since. There has been natural growth in Ethereum’s decentralized finance space, which has created tangible value. It’s really up to Ethereum’s community to convince people that their product is worth-while. Maybe as new Ethereum tech releases, Dorsey will become a believer.

Ethereum’s Istanbul update might support 200x more transactions per second

According to claims by Vitalik Buterin and others in the Ethereum community, the Istanbul hard fork is able to handle 3000 transactions per second, a huge step up from the current 15.

This is allegedly a result of EIP-2028, one Ethereum Improvement Proposal within Istanbul that reduces the gas cost of “calldata,” where data from external calls to functions is stored. EIP-2028 doesn’t specifically say how many more transactions Eth will be able to fit into one second, but Vitalik put out a firm number and others agree with him.

“Optimistic rollup, 3000+ TPS post-Istanbul Non-interactive ZKPs for privacy and scalability Your staking will be rewarded Much more TPS post-sharding” – @vitalikbuterin

Eric Conner, Founder of EthHub, was the one to specify for non code readers which EIP would be making this improvement possible.

“Did you know that the Istanbul upgrade includes an EIP that allows Ethereum to scale up to 3000 TPS?,” he continued “That is thanks to EIP-2028 that lowers the gas cost of calldata.” – @econoar

Blockchains already exist that can reach these speeds, but they sacrifice either a community, decentralization or security. Still, some people are skeptical of the claims, or they think they’re just outright lies.

“So far, no public chain can reach 3000TPS. After Istanbul upgrade, isn’t it the world’s first public chain TPS? I look forward to it, but I dare not hold much hope.” -@karambyrne

Except ethereum wont scale to 2000 TPS at block 9069000. You are talking about an hypothetical zk rollup based payment layer, which cannot interact with existing smart contracts at this scale, and with serious data availability issues. – @amxx

Ethereum Transactions Chart
Ethereum transactions over time. Credit: Etherscan

Above is a chart of Ethereum transactions since 2015. Transactions are strongly correlated to price, but there is a clear difference between the 2018 drop in price compared to drops in transactions. During the 2019 bull run, Ethereum’s price only reached around 20% of its peak value while transactions spiked back to over 50% of peak volume. After 2019’s peak price, Ethereum’s transactions maintained a stable consistency while its price has continuously dropped.

This is all to say that people are transacting within Ethereum and the network could use an extra bump in speed. Some argue that transactions settled on Ethereum is what will continue to drive its price, since miners (or stakers) will receive gas fees charged as a form of return. The more return Ethereum can bring investors, the more appealing it will be for others to participate, creating demand. Holding ETH is also necessary in order to transact on the network, because it is how gas fees are paid.

Istanbul was supposed to be implemented yesterday, December 4th, but only 40% of the network was ready for it. Now, it is scheduled to be released on December 6th.