[ad_1]
Ethereum, having long played the role of second fiddle to the number one cryptocurrency, bitcoin, is coming to the fore.
The price of Ethereum, which has risen more than 10% in the last 24-hour trading period and added to gains of nearly 300% so far this year, lags far behind the price of bitcoin, but the price that’s not all, with the number of bitcoin tokens “wrapped” in ethereum doubling in August.
Ethereum’s supply of tokenized bitcoins hovered around 3,000 until mid-May, when the rate … [+]
getty
Bitcoin can be inserted into the Ethereum blockchain using a series of Ethereum-based tokens, such as WBTC, which has been popular since May, according to data from Dune Analytics. At certain times in August, more bitcoin was wrapped on ethereum than was created by bitcoin miners.
Bitcoin wrapped in the Ethereum blockchain using WBTC is backed 1: 1 by bitcoin and minted by blocking bitcoin on the bitcoin blockchain. It is thought that by wrapping bitcoin on ethereum and making it compatible with smart contracts, users will be able to unlock tools such as loans, liquidity provision and decentralized exchanges.
“This presents an interesting dilemma for bitcoin. While it clearly has more utility after being converted to the Ethereum blockchain, its underlying value apparently comes from the 68 terawatt-hours of power that go into securing the bitcoin blockchain each year,” Glassnode analysts in their weekly newsletter.
“How much bitcoin has to migrate to Ethereum before the need for the bitcoin blockchain itself starts to be questioned,” asks Glassnode. “And, if that happens, what would sustain the value of bitcoin if not the enormous amounts of energy that serve to maintain its existence?”
The value of WBTC – bitcoin wrapped in the Ethereum blockchain – has exploded in recent months.
Glassnode
Meanwhile, Ethereum’s price is skyrocketing, driven by the decentralized finance (DeFi) craze that is currently sweeping the bitcoin and cryptocurrency world. DeFi is the idea that cryptocurrency technology can be used to recreate traditional financial instruments like loans and insurance.
“After a challenging number of weeks for many crypto assets, the rise in prices of ethereum shows that it is a major alt leader in the market,” Simon Peters, a bitcoin and crypto analyst at the platform, said via email. eToro investment.
“I agree with Glassnote reports that bitcoin is no longer investors’ first step towards cryptocurrencies: many new investors could enter the market directly in the ethereum or DeFi protocols, rather than choosing bitcoin as their first or only investment in cryptocurrency as they did in 2017 crypto bull run. “
.[ad_2]Source link
