Why Bitcoin doesn't outperform Ethereum in every way
Why Bitcoin doesn't outperform Ethereum in every wayWhy Bitcoin doesn't outperform Ethereum in every wayEthereum und Bitcoin (Symbolbild)Ethereum und Bitcoin (Symbolbild)

For a long time, Bitcoin was considered the leading cryptocurrency, with a current price of just over $46,000 and a market capitalization of around $872 billion. However, the coin is not the leader in every way. When it comes to trading volume, Ethereum has a big lead. This blockchain handles about five times the daily turnover of Bitcoin.

Ethereum remains the most popular blockchain

Ethereum is popular among traders because of its robust ecosystem. The network uses decentralized financial protocols (DeFi), sweepstakes on the blockchain, and NFTs.

While sweepstakes and NFTs are certainly attractive to traders, Ethereum’s decentralized financial system is the biggest driver of transactions. Decentralized finance reduces reliance on companies for oversight, storage, server space, and a host of other factors. This increases the security and reliability of the network, which increases traders’ trust in the network. Since there is no centralized storage, it is much more difficult to hack or disrupt the exchange.

The high fees show the current demand for the blockchain network as users are very active on Ethereum. They are also willing to pay more than $100 to interact with the decentralized applications of a network. However, these high fees can make it difficult for blockchain networks to scale. As Ethereum gains popularity, more investors lose incentive to interact with the blockchain due to the high transaction costs.

Ethereum plans to move to proof-of-stake consensus in 2022. This move should lower transaction costs. However, until that time, investors will have to rely on Layer 2 solutions like Polygon (MATIC) and Optimism to Reduce transaction costs.

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Different transaction fees

Litecoin also has an advantage over Bitcoin. While this coin is not worth nearly as much as Bitcoin, Litecoin processes transactions in a quarter of the time of Bitcoin. This results in more scalability options and much lower fees. Litecoin can process 150,000 transactions for just $2,700. An average Bitcoin transaction costs $0.03 to $0.04.

However, these fees are only so low because the coin generates a very small number of daily transactions compared to its competitors. As the volume of transactions increases, so will the fees.

Bitcoin generates around $750,000 in fees every day, while Ethereum generates around $44,000,000. Bitcoin is unlikely to overtake Ethereum’s transaction volume because its primary purpose is to store value. Ethereum, on the other hand, serves as a platform for other blockchain applications.

Ethereum is a blockchain that can process contract transactions, known as smart contracts, and payments online without a central intermediary. Ethereum is also the most popular platform for NFTs, which are purchased with the native token Ether.

Bitcoin’s transaction volume has been on the decline lately, failing to surpass its all-time high from 2017. In 2021, Bitcoin processed around 250,000 transactions per day. For Ethereum, it was over 1 million. This is mainly due to the function of the two networks. It is also important to note that all transactions on the Bitcoin Lighting network are not recorded on the blockchain.