<\/p>\n
Ethereum (ETH) may now present advantages to institutional investors over Bitcoin (BTC), according to Fidelity\u2019s Director of Research, Chris Kuiper.<\/p>\n
During an interview with the Bankless podcast on Wednesday, Kuiper argued that legacy finance is \u201cgetting past the Bitcoin point\u201d in terms of its understanding of crypto at large, opening its minds to other digital assets.<\/p>\n
According to Kuiper, one of the key factors boosting Ethereum\u2019s attractiveness to investors is its maturation as a protocol.<\/p>\n
\n\u201cIt has set itself apart from Bitcoin even more,\u201d said<\/a> Kuiper. \u201cThe switch to proof of stake and all of these things coming up\u2026 it\u2019s making its differentiated use case, and that helps with the diversification narrative with institutional investors as well.\u201d<\/p>\n<\/blockquote>\n
Ethereum completed its \u201cmerge<\/a>\u201d upgrade roughly 12 months ago, shifting its consensus mechanism from proof of work to proof of stake<\/a>. The upgrade\u2019s benefits have been manifold: reducing Ethereum\u2019s electricity consumption by 99%, dramatically reducing Ether\u2019s inflation rate, and preparing the network for future scaling through \u2018sharding.\u2019<\/p>\n
Bitcoin, by contrast, upgrades far less frequently and boasts no particular development roadmap or centralized development team. In January 2022, Fidelity highlighted<\/a> this as one of Bitcoin\u2019s star qualities, as the protocol\u2019s decentralization gives credibility to the scarcity of its underlying asset, making it the ultimate \u201cmonetary good.\u201d<\/p>\n
Ether As Money<\/h2>\n
During Wednesday\u2019s interview, however, Fidelity remarked Ether may also be an emergent form of money \u2013 especially given its deflationary tokenomics after the merge.<\/p>\n
\n\u201cThe various upgrades from Ethereum have made the token (or the asset) more scarce,\u201d said Jack Neureuter, a research analyst for Fidelity Digital Assets, during the interview. \u201cThat has driven this sort of store of value attribute as being potentially more attractive around Ethereum.\u201d<\/p>\n<\/blockquote>\n
That said, the analysts noted that Ether\u2019s theoretically bullish new burning mechanism is yet to be reflected in its price. While supply has indeed gone down since the merge, demand for Ether is another story.<\/p>\n
\n\u201cIt doesn\u2019t have the first mover advantage and the network effect of Bitcoin,\u201d said Kuiper. \u201cYou also have maybe some people maybe doubting whether or not that will continue in the future just because it has changed so many times in the past.\u201d<\/p>\n<\/blockquote>\n
Beyond Bitcoin and Ethereum, the analysts said there simply isn\u2019t much institutional demand. \u201cThe juice isn\u2019t worth the squeeze for them, as they say,\u201d Kuiper added.<\/p>\n
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