Bitcoin Beats Bananas, But Mark Cuban Bets On Ethereum

The celebrity investor said Ethereum is “most like money” and believes in the power of NFTs and smart contracts.

The ETH/USD exchange rate surged to $2,007 during the Asia-Pacific trading session Friday, bringing the Bitcoin Dominance Index to its lowest point since October 2020.

The BTC supporters are legion on social media –– but there is a dedicated base for Eth. This makes one ask -- is it the year of Bitcoin or the year of Ethereum?

We know this is comparing Apples and a decentralized platform, but a comparison is inevitable -- you can support both horses and still speculate around who is going to win the race.

Billionaire investor and co-owner of The Shark Tank and the Houston Mavericks, Mark Cuban recently appeared on the Delphi Podcast.

Mark has revised his 2019 assessment when he stated he’d “rather have bananas” than Bitcoin. His opinion has changed on BTC -- but NFTs and their smart contract capabilities really have his interest. 

“I was always positive on Bitcoin as a store of value,” Cuban said. “The whole banana thing was over the utility of Bitcoin -- I didn’t see it as a currency. I don’t see it as a currency.”

Cuban said he “hasn’t sold anything,” and he does believe in BTC as a store of value. However, he thinks we are in a new hype cycle -- around NFTs and smart contract capabilities associated with Ethereum. 

“This is the hype cycle. We are in it right now… We already had a hype cycle for BTC and Eth in 2017… Now we have a hype cycle for smart contracts and NFTs… but it also becomes an education.”
Cuban described his own attitudes on crypto as having evolved. For him, the lightbulb moment happened in January when he went to Mintable to start creating NFTs.

“That’s what really got my interest and what really propelled me down the rabbit hole… I started creating NFTs, that led me to dig into solidity, making smart contracts, understanding the scalability... that introduction to minting and the capabilities of a smart contract, that’s what got me super excited and kept me there.”

Putting his Shark Tank hat on -- Mark is bullish on Bitcoin, but he believes in Ethereum as the real game-changer.

“(NFT) royalties got me to understand smart contracts and how simple it was to program this s**t. Decentralization and the fact that with smart contracts, you can control everything that happens in a transaction or a process. Knowing what I know about business, I put my Shark Tank hat on and said, ok, this is crazy. This is really going to change the game.”

Ethereum Changing the Game

Ethereum has performed solidly at the top of the heap of altcoins and runner up to Bitcoin’s stardom. 

What is driving the support and excitement for Ethereum? It seems fair to say that DeFi is the big draw, but NFTs have been a surprising extra source of excitement. 

“I think the main beauty of Ethereum lies in the fact that it’s a hotbed of continuous innovation. In 2020 we saw the rise of a $40 billion dollar market (DeFi) on top of Ethereum’s ecosystem.

In 2021 so far, we have seen the rise of NFTs, which are also mostly powered by Ethereum. So even if Ethereum itself doesn’t dominate the headlines, it is very likely that something built on top of it, will,” Marie Tatibouet CMO at Gate.io said.

“The beauty of NFTs lies in the fact that on the surface, they are a pretty simple concept to understand. NFTs can be a tweet, a digital art, a digital cat, anything. This ease of interpretation has allowed the mainstream market to open their arms and get into the NFT game.”

Avid cryptomarket watchers and influencers see big things for Eth in 2021. Bitboy’s Ben Armstrong is bullish on the potential of Eth and DeFi adoption.

“I believe by the end of this, Ethereum will be one of the best performers of the year and become a household name like Bitcoin,” Ben Armstrong, founder & host of Bitboy Crypto, said.

“Ethereum adoption is twofold. It is being adopted by companies in the enterprise sector for its decentralization and smart contract integration. It makes business easier.

The pandemic has certainly highlighted the need for this. But institutions are also starting to adopt it as a store of value similar to what we have seen for Bitcoin. In five years, I believe Ethereum will make up a large portion of the decentralized internet and will be the underlying infrastructure of enterprise blockchains.”

Financial incentives have certainly been a factor in attracting new retail investors to Ethereum. DeFi farming is the answer to BTC mining -- and aggressive promotions by DeFi projects are helping get people involved.

“With Uniswap’s UNI token airdrop in September of 2020, more users joined Ethereum, and other projects implemented retroactive airdrops for their users.

2021 saw the Non-fungible token (NFT) space grow immensely, with celebrities, mainstream media, art institutions, and creatives joining Ethereum and interacting with DeFi,” Maria Paula Fernandez, Advisor to the Board of Directors at Golem Network, said.

The Year of Ethereum

Ethereum’s fortunes are certainly on the rise -- and the use cases are just beginning to come into play.

“2021 is a pivotal year for Ethereum. Mainstream consumers are starting to take notice of the ecosystem (thanks to the growing popularity of non-fungible tokens, or NFTs), and layer 2 scaling solutions are being implemented as well.

In hindsight, we'll look back on 2021 as the year where Ethereum solidified its ability to meet the oncoming surge of demand,” Kent Barton, Head of Research and Development of ShapeShift, said.

Asking multiple leaders in crypto and blockchain projects, the answers seem to be directionally in line with what Cuban was describing -- but with expanded use cases that can empower the user.

“Mainstream use cases are where things will get really exciting. On the NFT side, just about everything could conceivably be tokenized. Multiple buyers should be able to share ownership of houses, with the recent addition of the concept of refungible tokens, or RFTs, as very recently introduced in EIP-1633.

Fans may be able to support their favorite bands by purchasing a share of their streaming revenue. Academic credentials and other documents could live on Ethereum, eliminating any ambiguity about whether they're available or legitimate.

Decentralized reputation and identity will start reducing the need for centralized institutions to hold private data. Uncensorable social networks based on Ethereum may extend the functionality of current social platforms, but without the need for a middleman to profit from selling their data.

Humans living in authoritarian countries could use Ethereum's censorship-resistance to maintain a bubble of free speech and expression in the face of state control,” Barton said. 

William Noble, Chief Technical Analyst for Token Metrics, sees the appeal and excitement of NFTs, but believes that hedging against inflation is still the “ultimate use case.”

“Recently, the demand for art and collectibles has proven to be a strong use case for driving demand for crypto. People are so keen on purchasing art and collectibles that they are willing to exchange fiat for ETH to get involved in the NFT market,” William Noble, Chief Technical Analyst at Token Metrics, said.

“However, the ultimate use case to drive mainstream adoption of crypto is crypto’s ability to protect consumers against inflation. As a result of monetary and fiscal stimulus, the money supply has nearly doubled since the start of the pandemic.

This phenomenon is creating inflation, causing erosion in consumer purchasing power. The only way to protect against inflation is to convert dollars into a currency that is unaffected by inflation, and crypto is that strong alternative.

As we see these use cases for cryptocurrency continue to drive mainstream adoption, we can expect to see more institutions like PayPal adopt the currency as well.”

Addressing Scalability

Up to this point, transaction costs, transaction speed, and the ability to scale for global enterprise usage have been the big concerns for Ethereum. On Dec. 1, 2020, Ethereum launched Phase 0 of Ethereum 2.0 -- known as “Serenity.”

Perhaps that explains its ability to soothe the concerns of supporters, devs, and investors and drive mainstream adoption.

“I believe 2021 is the year where crypto goes mainstream. Adoption of Ethereum within the DeFi space has definitely proven its wide usability, but at the same time, it has exposed its shortcomings.

The good thing is that its biggest issue, scalability, has already been worked on for a while, and the next major update Ethereum 2.0 is scheduled to be released this year,” Tim Sabanov, CTO of Zumo, said.

Some pointed out the large block developer community that is relying on the success of Ethereum 2.0. 

“Crypto investors believe a factor potentially boosting Ether was the start of a major upgrade to the Ethereum blockchain, called Ethereum 2.0. Ethereum has the largest developer community in the blockchain world and is one of the most widely used cryptocurrencies.

A lot of applications have been built on top of Ethereum. However, Ethereum 1.0 is using PoW as its consensus algorithms, which is low in performance and high in transaction fees. Instead, the new and improved Ethereum 2.0 will use a proven consensus algorithm named PoS (Proof-of-Stake) to replace PoW.

This algorithm significantly improves the throughput of the system, which lowers the transaction fees on the blockchain. Ethereum 2.0 is more attractive to developers and end-users, leading to more applications deployed on the network,” Jonathan Shi, CEO and Founder at InfStones, said.

The utilization of Layer 2 scaling solutions gives projects and investors further hope for a bright future of DeFi on Ethereum.

“Since Layer 2 solutions will now allow for Ethereum to scale, improving some of the main issues the platform faces, I anticipate 2021 will be another year of astronomical growth for the Ethereum space.

Another trend to watch for in 2021, together with the aforementioned, is Decentralized Autonomous Organizations (DAOs) and the infrastructure layer, bringing decentralized services similar to AWS or Google Cloud, but without the tradeoffs inherent to centralized infrastructure.

Decentralized services like Golem Network are aptly positioned in the path towards mass adoption, and there is no slowing down,” Fernandez said.

It remains to be seen whether Ethereum will ever be the household name Bitcoin is -- but it’s also questionable whether that will really matter.

“The beauty of Ethereum is that it is a platform where people can build on. Even if people don't talk directly about Ethereum, people will talk about the services and DApps built on top of it.

I believe there will be way more use cases built on top of Ethereum in 5 yrs which can be used by the general public,” Kosala Hemachandra, Founder/CEO of MyEtherWallet, said.

Conclusion

Invictus Capital shared an exclusive survey with Benzinga that showed that the modern crypto investor has changed – a survey of over 3,500 people, from a sample of individuals with high-speed internet distributed globally.

The study found that 41% of these investors are crypto newbies riding the crypto boom, and just 60% of the investors have invested between $2.5K-$5K in crypto. 

These new retail customers are part of the 12-month+ bull run we have enjoyed with Bitcoin and Ethereum, and if we want the train to continue, we need to keep converting mainstream buyers.

In general, these buyers will favor Bitcoin -- the only crypto they have heard of. But things are changing, so they take an interest in Ethereum, too, as La La Anthony has. 

In the meantime, NFTs seem to be the wildcard of 2021 and a marketing boon not just for creators of art and collectibles but for the crypto industry as a whole -- what better way to attract the uninitiated than to combine crypto with the idea of valuable collectibles. 

Image modified from WorldSpectrum from Pixabay