Ethereum Faces Criticism Amid Rising Competition and High Fees
Summary:
The price of Ethereum (ETH) lags behind Bitcoin (BTC) and other cryptocurrencies, with critics blaming high transaction fees. Despite Ethereum fees averaging around $11 compared to Bitcoin's $32, cheaper alternatives like Solana are gaining traction, causing some to predict it may eventually surpass Ethereum. While Ethereum's founders acknowledge the need for cheaper transaction fees, supporters argue the cryptocurrency is undervalued. Despite short-term struggles, Ethereum maintains the highest total value locked (TVL) in its network among cryptocurrencies.
The advocates of Ethereum have been obliged to guard the cryptocurrency against a slew of criticism on Crypto X. Detractors have pointed out that the Ether (ETH) value has been falling behind Bitcoin (BTC) and other successful alternative coins of late. Over the last couple of years, the price of 1 Ether compared to 1 Bitcoin, as shown in the Ethereum to Bitcoin price chart, briefly fell below 0.05 BTC on Dec. 20. This lowest level since April 28, 2021, was reported by CoinMarketCap.
In the previous bull market season, the ratio peaked at 0.087 BTC on Sept. 12, 2021, but it has been on a declining trend since then. As 2023 kicked off, the ratio was around 0.072, but unfortunately, this too has decreased since then.
Various critics on social platforms are blaming the expensive transaction fees of Ethereum for this downfall. It is argued that these high charges are encouraging crypto enthusiasts to consider alternative chains which have lower associated fees. Bitcoin proponent Jason A. Williams argued this point on Dec. 20, saying, “Ethereum is broken. You don’t have to pay those fees anymore. You have options.”
BitInfoCharts data suggests that on Dec. 19, Ethereum fees averaged at approximately $11, which still remains less than the considerably higher Bitcoin fees of roughly $32. Conversely, CoinCodex reports a continuous less than $0.01 fee associated with Solana.
Even one of Ethereum's founders, Vitalik Buterin, has authorized these criticisms by commenting that Ethereum could potentially "fail" if the transaction fees do not become more affordable, particularly in times of bullish markets. However, Ethereum's supporters have eagerly risen to its defense. For instance, Anthony Sassano, from the Ethereum show The Daily Gwei, forcefully argued that Ethereum is being undervalued in the present market. Similarly, Ryan Sean Adams, co-host of Bankless, expressed his surprise at the negative sentiments being expressed towards Ethereum recently.
In parallel, Solana (SOL) believers have also observed that SOL prices have shown good performance when matched against other cryptocurrencies, including Ethereum, specifically over the previous three months. In the last 24 hours, SOL has enjoyed a 12% increase in value, to reach $83, as per CoinMarketCap.
In addition, Solana has been highlighted as outperforming Ethereum in the areas of decentralized exchange (DEX), stablecoin, and nonfungible token (NFT) trading volumes. These volumes were calculated over 24-hour and one-week periods earlier this week. This prompted predictions from some observers that Solana may one day overtake Ethereum.
Nonetheless, Ethereum retains the highest total value locked (TVL) on its network, at $28 billion. Solana places fifth in TVL rankings, with $1.15 billion, according to DefiLlama. Interestingly, Ethereum's market cap/TVL ratio is 9.4, compared to Solana's 30.45. This ratio is often used to evaluate a blockchain's inherent value. The lower value for Ethereum implies it is undervalued when compared with Solana.
Magazine: The impact of cryptocurrency on brain activity - Increasing substance abuse reported among cryptocurrency traders.
Published At
12/21/2023 7:34:26 AM
Disclaimer: Algoine does not endorse any content or product on this page. Readers should conduct their own research before taking any actions related to the asset, company, or any information in this article and assume full responsibility for their decisions. This article should not be considered as investment advice. Our news is prepared with AI support.
Do you suspect this content may be misleading, incomplete, or inappropriate in any way, requiring modification or removal?
We appreciate your report.