Gold and oil have been the catalyst for many social changes and have reshaped our values and ideals. Humanity has valued the scarce resources found on earth, particularly when they are found in nature and the means of extraction require complex tools. Sound familiar to you?
Our understanding of the usefulness these minerals bring to our daily interactions is directly related to their monetary value. Cryptocurrencies show some similarities when looking at Bitcoin and Ethereum in contrast to gold and oil. While both are limited and scarce, their underlying use cases are based on their offerings that add to the digital network. Such a view of Ethereum and Bitcoin reinforces the growing belief that Bitcoin is digital gold while Ethereum is digital oil.
A metaphor of our times
Discussions about cryptocurrency versus minerals were reiterated by co-founder of cryptocurrency exchange Gemini Tyler Winklevoss, who said that Bitcoin is "better than gold than gold", underlining the ease with which it can be stored. and carry a valuable asset. Additionally, Etheruem has been compared to digital oil for its versatility in enhancing the Ethereum network protocol.
Ethereum and Bitcoin are digital assets that can be redeemed for monetary gains. However, due to the high price volatility, users are reluctant to spend BTC. Furthermore, Ethereum users are incentivized to use Ethereum to participate in the decentralized finance craze. To that end, both gold and oil bear similarities to BTC and ETH when they don't take digitization into account.
The metaphors used in the crypto space function as acts of normalization to help distill complex systems into something that the mass audience can relate to. The usefulness of Ethereum and the store of value of Bitcoin are the main comparisons used in the metaphors.
Vitalik Butterin reiterated the idea that Bitcoin is gold and Ethereum is oil, given that "Ethereum will be the source of energy on the Internet for the world of technology". Furthermore, ETH is the “crypto-fuel” that powers the entire network; however, it powers a single network but doesn't account for all cryptocurrencies due to interoperability limitations.
The other side of the coin
- Market sentiment is still heavily dependent on Bitcoin, which affects the performance of individual coins.
- The value of Ethereum within the growing blockchain network is more evident than that of Bitcoin.
- Due to price volatility, Bitcoin cannot perform currency functions like gold used centuries ago.
Both Bitcoin and Ethereum portray similarities in price activity or price action. However, as networks evolve and Ethereum becomes more and more used in the market, users place more emphasis on ETH.
A step towards Ethereum 2.0. it could change the perception of the project for most investors. Proof of stake will require ETH to be blocked and wagered. Currently, more than $ 9 billion in value is frozen, which to some extent coincides with the price activity reported favorably against Bitcoin. Plus, the lower fees on the Ethereum network facilitate even more business at a reduced price.