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This Is Why Ethereum, Not Bitcoin, Will Power the Future Financial System

2 mins
Updated by Bary Rahma
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In Brief

  • Ethereum's price has increased more than 50% this year, fueled in part by the growth in the NFT and stablecoin industries.
  • The Dencun upgrade has reduced transaction costs on major Ethereum networks like Arbitrum, Optimism, Base, and zkSync Era.
  • Ethereum also offers NFTs increased versatility as the NFT market seems to be maturing, attracting a $50 million investment.
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Ethereum, not Bitcoin, is poised to be the cornerstone of the future financial system. 

This assertion stems from a series of advancements and the inherent characteristics of the Ethereum blockchain. Particularly, in light of the recent Dencun upgrade, which has significantly lowered transaction fees on its network.

Ethereum Is About to Change Everything

Ethereum’s journey through 2024 has been spectacular. Its market value surged over 58% year-to-date, with revitalization within the NFT sector and stablecoin market capitalization reaching multi-year highs. This surge in Ethereum’s prominence reflects its growing utility and adoption across various sectors, from digital art to DeFi.

Moreover, the recent Dencun upgrade has dramatically reduced transaction costs by implementing the Ethereum Improvement Proposal (EIP) 4844. It led to a significant decrease in Layer 2 transaction costs by introducing data blobs or proto-danksharding. This modification also improved data availability on Layer 2 networks, cutting gas expenses by up to 90% on certain platforms.

Indeed, the average costs for transactions across prominent Layer 2 networks such as Arbitrum, Optimism, Base, and zkSync Era experienced a reduction ranging from 60% to 90%. Such advancements solidify Ethereum’s position as a versatile and efficient platform for blockchain applications.

Read more: Layer-2 Crypto Projects for 2024: The Top Picks

Ethereum Layer 2 Fees After Dencun Upgrade
Ethereum Layer 2 Fees After Dencun Upgrade. Source: IntoTheBlock

Smart contracts, a defining feature of the Ethereum network, stand at the forefront of this technological leap. Indeed, they are the backbone for many applications, enabling seamless blockchain-to-blockchain and blockchain-to-other technology communications. While transaction fees decrease, the adoption and development of smart contracts are expected to accelerate, fostering innovation and investment.

Despite its challenges, Ethereum’s role in the NFT marketplace reflects its versatility and potential for growth. Beyond their association with digital art, NFTs offer unique opportunities for representing ownership and control across the digital and physical realms. 

The recent resurgence in NFT investment, evidenced by Hivemind Capital Partners’ $50 million fund dedicated to NFTs, signals a maturing market and expanding use cases for Ethereum’s technology.

“The digital art, digital culture, generative art markets today are where the cryptocurrency market was 12 months ago. When people talk about NFTs, those three letters, people associate a lot of bad things around them the last couple of years, which is actually very, very undeserving for what it is,” Hivemind Digital Culture Fund founder said

The contrast between Ethereum and Bitcoin is becoming increasingly stark. While Bitcoin continues to dominate headlines with its price and investment inflows, Ethereum is laying the groundwork for a new financial system. Ethereum’s commitment to innovation, scalability, and utility fosters a more inclusive, efficient, and decentralized financial ecosystem.

Read more: Ethereum (ETH) Price Prediction 2024/2025/2030

The Dencun upgrade and Ethereum’s growing ecosystem exemplify the blockchain’s potential to disrupt finance. Ethereum’s vision of a permissionless and neutral foundation is becoming more critical. Especially, as the industry moves towards a modular approach, different Layer 2 and Layer 3 networks offer tailored solutions for speed, decentralization, and security.

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Bary Rahma
Bary Rahman, a talented journalist, graduated from New York University with a degree in Journalism. Skilled in SEO, she has worked with CNN, showcasing her investigative skills and storytelling abilities. In addition to her journalistic accomplishments, Bary has contributed her expertise as a content writer for Binance, crafting insightful articles on the dynamic crypto industry. Her unique fusion of journalism and SEO makes her a versatile and highly respected figure in the industry.