A new research report out of Wall Street banking giant Goldman Sachs predicts Ethereum overtaking Bitcoin as a store of value asset.

Santiago Roel Santos, General Partner at blockchain-focused investment firm ParaFi Capital, published a series of tweets showing excerpts from relevant sections of a 41-page report (titled: “Crypto: A New Asset Class?”) by Goldman’s Global Macro Research team, which was published on May 21.

The authors of the report had this to say about Ethereum:

Given the importance of real uses in determining store of value, [Ethereum] has a high chance of overtaking Bitcoin as the dominant digital store of value. The Ethereum ecosystem supports smart contracts and provides developers a new way to create new applications on its platform. Most decentralized finance (DeFi) applications are being built on the Ethereum network, and most non-fungible tokens (NFTs) issues today are purchased using Ether. The greater number of transactions in Ether versus Bitcoin reflects this dominance. As cryptocurrency use in DeFi and NFTs become more widespread, [Ethereum] will build its own first-mover advantage in applied crypto technology.

As for Bitcoin, they said:

A major argument in favor a of bitcoin as a store of value is its limited supply. But demand, not scarcity, drives the success of stores of value. No other store of value has a fixed supply. Gold supply has grown nearly ~2% pa for centuries, and it has remained an accepted store of value. Plenty of scarce elements like osmium are not stores of value. In fact, a fixed and limited a supply risks driving up price volatility by incentivizing hoarding and forcing new buyers to outbid existing holders, potentially creating financial bubbles. More important than having a limited supply to preserve value is having a low risk of dramatic and unpredictable increases in new supply. And ether, for which the total supply is not capped, but annual supply growth is, meets this criterion.


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