Ethereum Rises in the Competition for Value Storage, May Surpass Bitcoin

Recent analysis shows that Ethereum is gradually becoming a strong competitor to Bitcoin in the field of value storage. This trend is mainly due to the increasing popularity of Digital Asset Treasuries (DATs), with global enterprises increasingly inclined to choose Ethereum and Bitcoin as their digital asset reserves.

In the early days, Bitcoin became the preferred choice for DATs due to its fixed supply and recognized stability. However, recent developments have sparked significant interest in Ethereum. Changes in the regulatory environment in the United States have highlighted the importance of stablecoins and tokenization, which are precisely the core advantages of the Ethereum ecosystem.

This has made the application scope of Ether far exceed its original design, with several large brokers and exchanges launching tokenized stocks on the Ethereum blockchain. In addition, the increasing flexibility of Ethereum is seen as a significant advantage relative to Bitcoin.

Analysts point out that Ethereum provides more possibilities for complex financial strategies, allowing institutions to accumulate ETH more efficiently than BTC. Through Ethereum's staking feature, the treasury can earn additional ETH by participating in the network, which is a source of yield that Bitcoin cannot provide.

The transition of Ethereum from Proof of Work (PoW) to Proof of Stake (PoS) has had a significant impact on its inflation rate. Data shows that this shift has drastically reduced the supply growth of ETH: from approximately 120.6 million ETH in October 2022 to 120.1 million in April 2024, resulting in a negative inflation rate of -0.25%. In contrast, during the same period, the supply of Bitcoin increased by 1.1%, making Ethereum's inflation policy more attractive to ETH holders.

The inflation rate of Bitcoin decreases by 50% after each halving, making its inflation rate more predictable. However, this top cryptocurrency has long relied on inflationary issuance to incentivize miners. Last year, Bitcoin miners earned over $14 billion in massive revenue from inflation rewards.

As the inflation rate of Bitcoin continues to decrease in subsequent halvings, its security model will face increasing pressure, potentially needing to rely on transaction fees or price increases to sustain itself. Without these supports, the security of the blockchain network may face risks, which could in turn force significant changes in the economic structure.

In contrast, Ethereum's PoS model gives token holders more control over network governance, ensuring that decisions regarding network upgrades and economic policies are more directly aligned with their interests. This contrasts with Bitcoin's miner-centric governance model, where the economic incentives of miners often influence decision-making.

Therefore, the analysis suggests that as Ethereum continues to develop with a more flexible governance structure, it may become a superior long-term store of value compared to Bitcoin.