Early Bitcoin holder and professional poker player Cole South: Why should I convert all my holdings to Ethereum?

Bitcoin is the only cryptocurrency that can refuse innovation and still win; but now, Ethereum may be a better choice.

This article is authorized to be reprinted from ForesightNews, original article here.

I first entered the cryptocurrency space in 2013 by buying Bitcoin. Last week, I finally sold my last BTC and bought ETH. I have been asked "Why are you leaving Bitcoin?" This article will answer that question.

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First of all, I do not hate Bitcoin. It is a high-quality asset and worth holding, but here are a few reasons why I chose not to hold it anymore:

Bitcoin is not a productive asset

Overall, I try to hold assets with real end-user demand, actual utility, and the ability to generate cash flow, rather than assets that rely strictly on market supply and demand.

On the contrary, due to applications like NFTs and DeFi, there is a massive demand for ETH. ETH's market cap is less than half of BTC's, yet the daily fees on the Ethereum network are over 10 times that of the Bitcoin network, with fees representing demand for block space.

Bitcoin has done well in establishing itself as "digital gold"/ a store of value asset. However, from a practical application perspective, there is minimal actual demand for using it. As more commodities, including NFTs, are priced in ETH, ETH is starting to compete with BTC as a better store of value.

Once Ethereum transitions to proof of stake, anyone can easily stake their ETH and earn returns (expected annualized returns around 5-10%), making it more attractive as a productive asset.

Bitcoin faces serious security and decentralization challenges

The block rewards miners receive for maintaining the Bitcoin network halve every 4 years, and Bitcoin is expected to be fully "mined" by 2140, at which point miners will no longer receive block rewards. The solution proposed in the Bitcoin whitepaper is to hope for higher network adoption by then and offset reduced block rewards with transaction fees.

It is evident that Bitcoin excels as a store of value asset, but it is not the means of exchange people desire. In the Ethereum community, people are using their ETH to purchase new NFTs, trade meme coins, and more.

Without a significant shift in attitude towards actual Bitcoin transactions or moderate currency inflation, it is difficult to see how Bitcoin can maintain its security and decentralization.

ESG concerns over energy consumption from Bitcoin mining

While Bitcoin mining operations are increasingly moving towards clean energy, concerns about environmental impact persist. Ethereum, on the other hand, can address this issue well: Ethereum is transitioning from proof of work to proof of stake, reducing the network's energy consumption by over 99%.

The Bitcoin community does not support capitalism

Bitcoin holders typically oppose new tokens and anything that can create wealth for builders without considering the bigger picture. Enriching oneself through new coin offerings in the ecosystem is a badge of honor in the Ethereum community.

This has created an atmosphere akin to communism (Bitcoin) versus capitalism (Ethereum). Our innovation, progress, and economic returns ultimately depend on capital driving them.

The Bitcoin community focuses on community loyalty rather than innovation

Bitcoin users have been resistant to change, while competitors in the crypto industry are rapidly evolving. Perhaps for BTC to stay competitive, it needs to incorporate smart contracts and establish long-term inflation plans to safeguard the network.

However, the community (at least for now) is unlikely to allow this. The Bitcoin community has become extremely conservative, with many who entered the cryptocurrency space in the past 2 years holding assets in the four digits but have never used a DApp. In my view, this tribalism has alienated some of the brightest minds in the crypto world, who are now focusing on solving cutting-edge issues in the crypto space rather than studying Bitcoin.

Bitcoin has not acted as a hedge against inflation or bear markets

Historically, many claims around Bitcoin have been that it would act as a hedge against inflation, bear markets, or as a form of currency.

Currently, this is not the case; in the past year, BTC and ETH have been strongly correlated with the Nasdaq index. Regardless of good or bad, the market views them as risk assets and tech-like stocks. If I were to hold a crypto asset, I would prefer one that resembles a tech company with innovation and user-centric demand like Ethereum rather than Bitcoin.

Below are some common rebuttals I have received and my thoughts on them.

Will Ethereum's merge to proof of stake result in "the rich getting richer"?

In reality, proof of work exacerbates this issue. Traditional mining operations have significant economies of scale and entry barriers. Participating in Proof of Stake is made easy, regardless of your capital size, through options like Lido, Rocket Pool, and exchange staking programs.

Can Bitcoin do everything Ethereum can?

The fact is, the Bitcoin community has been resistant to change. There are almost no smart contracts on the Bitcoin ecosystem. As Ethereum and other smart contract blockchains innovate at a rapid pace, Bitcoin will struggle to capture their market share.

For seven years, Ethereum has been saying they will upgrade to proof of stake

If you are following the progress of the merge, you should know it is imminent. There is over a 66% probability that the merge will be achieved in the next 12 months.

Conclusion

Similarly, I am not bearish on Bitcoin. Its inherent advantages and network effect make it the only cryptocurrency that can resist innovation and still prevail (as a store of value). However, for now, I prefer holding ETH.