Ethereum Could Take Half of Bitcoin’s Market Share in Five Years: Analyst

Advancements on the Ethereum blockchain could see bitcoin lose half its market share over the next five years, according to technology analyst Ian McLeod.

Bitcoin vs. Ethereum

Despite falling to 16-month lows, the Ethereum blockchain is poised for a strong rebound this year and could eventually challenge bitcoin for market dominance, McLeod said. In a recent interview with MarketWatch, McLeod suggested that ether’s price has already bottomed, which means its value will grow as the utility of its ledger grows.

“Not only do we think it will rebound considerably before the end of 2018, I believe that over the longer time it will significantly dent bitcoin’s dominance. In fact, I think we can expect bitcoin to lose 50 percent of its cryptocurrency market share to Ethereum, its nearest rival, within five years.”

McLeod believes that the utility of smart contracts solves “authenticity and provenance issues,” making Ethereum a more attractive option in the long-term. And while Ethereum is currently bogged down by technical issues, they pale in comparison to bitcoin’s scalability problems, says McLeoad.

“Unless bitcoin does more now to tackle scalability issues, and improves the technology it runs on, we cannot see how it can catch up with Ethereum over the next five years or so, when the crypto market will be even more mainstream.

The Ethereum network is considering several initiatives to improve the system, chief among them being the proposed transition from proof-of-work to proof-of-stake.

Bitcoin’s dominance rate currently sits at 55.4%, according to CoinMarketCap. Bitcoin’s share of the overall market rose above 57% last week, the highest since December. Ethereum’s share of the overall market has fallen from a high of 21% in early February to less than 11% today.

Ether’s Recent Struggles

McLeod’s positive outlook is a welcome sign for Ethereum’s supporters, which have seen the cryptocurrency plummet nearly 90% from peak-to-trough. The decline appears to have culminated last week after prices dipped below $170. Ether’s price peaked above $1,400 earlier this year.

Ethereum is facing what some consider to be an existential crisis as its reservation demand continues to dwindle. As the market for initial coin offerings (ICOs) continues to slow, investors have felt less compelled to hold ether. After all, the Ethereum blockchain is responsible for some 80% or more of token offerings. If this market dries up, so too does the impetus to hold ETH as a reservation currency.

Companies that successfully launched their token sale on Ethereum are now looking to sell their supply of ETH to begin funding operations. The large-scale cash-out over the past month suggests fewer startups plan to utilize Ethereum’s smart contracts anytime soon.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Chief Editor to and Contributor to, Sam Bourgi has spent the past nine years focused on economics, markets and cryptocurrencies. His work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Avid crypto watchers and those with a libertarian persuasion can follow him on twitter at @hsbourgi