Ethereum could overtake Bitcoin as a dominant store of value, Goldman Sach says
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Ethereum could overtake Bitcoin as a dominant store of value, Goldman Sach says

Saudu Clement
Saudu Clement

According to Goldman Sachs, there is a possibility that the world’s second-largest cryptocurrency Ethereum could overthrow Bitcoin as a dominant store of value.

The U.S. multinational investment bank in a note to clients on Tuesday said that in the coming years, the total market cap of Ethereum might surpass that of Bitcoin, thanks to the popularity of Ethereum-based smart contracts. According to a report published on Business Insider, the bank said:

[Ether] currently looks like the cryptocurrency with the highest real use potential as Ethereum, the platform on which it is the native digital currency, is the most popular development platform for smart contract applications.

Goldman is confident that the “real use potential” of Ethereum in smart contracts will give the cryptocurrency an advantage over Bitcoin as the dominant crypto by market capitalization soon.

For the uninitiated, smart contracts are self-executing agreements that do not need the presence of a third party. The contract between the parties involved is directly written into lines of codes that are intended to automatically execute.

Looking at both digital assets, Bitcoin grew by 261% over the past year, while Ethereum recorded an 856% growth within the same period. To be fair, it is worth noting that Bitcoin currently does not offer the same level of functionality as the Ethereum blockchain.

Despite Goldman’s self-confident claims on Ethereum, they asserted that gold is a far better option as a store of value. Goldman also said competition among cryptocurrencies represented another risk factor that prevents the emerging asset class from being a safe haven to store one’s wealth.

Gold is competing with crypto to the same extent it is competing with other risky assets such as equities and cyclical commodities […] This competition among cryptocurrencies is another risk factor that prevents them from becoming safe haven assets at this stage.

The analysts characterized crypto as a ‘risk-on inflation hedge’ and gold as a ‘defensive inflation hedge’.  These comments correspond with last month’s statement from the bank’s Consumer and Wealth Management division, which concluded that cryptocurrencies are not a viable investment.

While the digital asset ecosystem may well revolutionize the future of everything, it does not imply that cryptocurrencies are an investable asset class.

Recall that last month, Ethereum outperformed Bitcoin in address activity for the first time in history. Furthermore, the number of ETH staked on the Beacon Staking contract has continued to increase, suggesting growing interest for Ethereum from investors.