The second-largest cryptocurrency by market capitalization, Ethereum, has the highest “real use potential” according to analysts at Goldman Sachs, and it could one day overtake Bitcoin as the go-to store of value in the cryptocurrency space.

In a note sent to clients, first reported on by Business Insider, Goldman Sachs predicted Ethereum’s market capitalization could overtake Bitcoin’s market capitalization one day as it has more real use cases, while Bitcoin has been slowed down by its large transaction fees. The note reads:

[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.

Smart contracts are chunks of code that self-execute when certain predetermined conditions are met. They are behind most popular decentralized applications and allows the decentralized finance space to grow to where it is today.

Goldman Sachs’ analysts added that Bitcoin has a first-mover advantage and a stronger brand, but believe that its transaction limits and high transaction fees will keep its level of functionality below that of Ethereum. Bitcoin can currently handle around seven transactions per second, while Ethereum handles between 15 and 20. The latter is, however, set to scale in the near future with the launch of Ethereum 2.0.

Both cryptocurrencies are, to the analysts, a “risk-on inflation hedge” and fail to compete with gold, as the precious metal is still a “defensive inflation hedge.” The competition among different cryptocurrencies, they wrote, is “another risk factor that prevents them from becoming safe haven assets at this stage.”

As CryptoGlobe reported, CEO of cryptocurrency lending platform Celsius, Alex Mashinsky, has revealed earlier this month that Ethereum is already “flippening” bitcoin when it comes to total U.S. dollar amounts invested by its firm’s users, and believes the trend will expand to the wider market.


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