With many potentials for the upcoming transition to a proof-of-stake (PoS) system, the researcher believes that it will allow Ethereum to take over Bitcoin (BTC)’s position as the biggest cryptocurrency.
Raman said:
“Ethereum does have, just from an economic perspective and because of the effect of the supply shock, a chance to flip Bitcoin.”
The Merge, a long-awaited upgrade that will complete Ethereum’s transition from proof-of-work consensus to proof-of-stake consensus, will take place in September. This upgrade will transform Ethereum’s monetary policy, make the network more environmentally sustainable, and reduce the total supply of ETH by 90%. As such, this can potentially make ETH more scarce than BTC.
Raman added:
“After The Merge, Ethereum will have lower inflation than Bitcoin. Especially with fee burns, Ethereum will be deflationary while Bitcoin will always be inflationary. Although, with every halving, the inflation rate goes down.”
While Bitcoin still retains its functionality as digital gold, according to Raman, Ethereum has “a larger adoption space” as the base layer of the decentralized financial (DeFi) economy.
The Merge won’t reduce Ethereum’s high transaction fees, which is still the main issue preventing Ethereum from scaling. However, that is not a big issue, according to Raman, as Ethereum will rely on layer 2 scaling solutions to support most user activity.
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