Ethereum dominance may dwindle as competitors emerge: Morgan Stanley

Morgan Stanley’s wealthiness absorption planetary concern bureau has published a study connected Ethereum (ETH) arguing that the blockchain’s dominance could dwindle if beardown marketplace contention emerges.

The investment banking giant’s study is titled “Cryptocurrency 201: What Is Ethereum?” and it provides a elaborate rundown of the ecosystem on with its advantages and disadvantages successful narration to Bitcoin (BTC).

“Due successful portion to its much ambitious addressable market, Ethereum faces much competitory threats, scalability issues, and complexity challenges than Bitcoin. Furthermore, Ether is much volatile than Bitcoin,” the study reads.

Morgan Stanley argued that Ethereum whitethorn suffer astute declaration superiority to cheaper and faster blockchains — thing that has often been argued by supporters of the Ethereum killer marketplace that includes networks specified arsenic Cardano (ADA), Solana (SOL), Polkadot (DOT), and Tezos (XTZ):

“Ethereum faces much contention successful the astute declaration marketplace than Bitcoin faces successful the store-of-value market. Ethereum whitethorn suffer astute declaration level marketplace stock to faster oregon cheaper alternatives.”

The concern slope besides suggested that Ethereum poses a greater concern hazard than Bitcoin arsenic it faces greater contention successful the astute declaration marketplace than “Bitcoin faces successful the store-of-value market.”

“Fewer transactions per idiosyncratic are needed to ‘use’ Bitcoin, which is akin to a decentralized savings account. Ethereum request is tied much intimately to transactions. Therefore, akin scaling constraints wounded Ethereum request much than they suppress Bitcoin demand,” the study read.

Other concerns raised astir the web included the evolving regulatory presumption of applications built connected Ethereum specified arsenic Decentralized Finance (DeFi) and nonfungible tokens (NFTs) which whitethorn spot strict regulations placed connected them successful the future, resulting successful reduced request for Ethereum transactions.

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While the centralization of Ethereum was besides highlighted, with the study noting that astir of Ether's proviso is held by a “relatively tiny fig of accounts”:

“It is little decentralized than Bitcoin, with the apical 100 addresses holding 39% of Ether, which compares to 14% for Bitcoin.”

On the bullish broadside of the equation, the Morgan Stanley study argued that Ethereum has greater marketplace imaginable than Bitcoin, it has deflationary traits via its transaction-based burning mechanism, and its show volition importantly amended pursuing the eventual modulation to a proof-of-stake statement mechanism:

“Ethereum has a overmuch bigger addressable marketplace than Bitcoin and tin truthful beryllium worthy much than Bitcoin, which is simply the marketplace for store of worth products similar savings accounts and gold.”