I Just Switched from Bitcoin To Ethereum Until BTC Civil War Resolution. ETH All Time High. (Updated 5/25/17)

 All Star Venture Capitalist predicts ETH will surpass BTC in market cap in 2017.

— Ethereum Data (@EthereumData) May 18, 2017

Fred Wilson, a famous Silicon Valley VC, predicts ETH will surpass BTC in 2017. https://t.co/I1REyPTnFs (8:25 in video)

Currently, the market cap for all of the crypto currencies together is now at around $90.76 billion and clearly points towards a maturing as well as growing ecosystem. At the time of initial writing on 5/4/17, the market cap was $43.97 billion. Not too much time has passed. Two of the primary digital currencies which are fueling this rise are Bitcoin and Ethereum. In the following sections let us see how both are performing. *Note that Ripple and Litecoin are getting some serious attention recently but are not subjects of this analysis.

Bitcoin — A Digital Currency Stuck in Scalability War

The largest digital currency recently reached its highest level (even surpassing gold) due to expectations of a Bitcoin ETF. However, its growth has been marred by the scalability debate aka Bitcoin Civil War, which could take a long time to resolve itself.

— Andreas (@aantonop) May 25, 2017

My estimate of the probability of a hard fork any in the next 8 months remains unchanged: less than 10%.

In addition to it, the rejection of ETF by SEC also led to a temporary drop in prices, which has now grown to $2,750.

Ethereum — Soaring to New Heights

Well, the news is out! A network market cap of $18.98 billion has been surpassed by Ethereum (a rise from 1 billion to 19 billion in only 3 months). The currency (which is just two years old) is now at $206, which is close to 42% of present market cap of Bitcoin. Some people are newly minted millionaires due to this Ethereum growth. Real time market cap information can be viewed on CoinMarketCap. Some of the contributing factors for ETH’s rise are:

• Spotify acquiring one $ETH based firm and other ETH based mergers and acquisitions.
• ETH token being top two of all cryptocurrencies.
• Enterprise Ethereum Alliance new members.
• Safe Haven status when compared to traditional financial markets, as mentioned in mainstream news.

Reasons for Popularity of Ethereum

Reason #1: The Ethereum Search Engine and Dapps

Weipoint is the name of a search engine (SE) which has been developed by a software engineer who was earlier working for Coinbase.

The main feature of this SE is that it has the capability to communicate with smart contracts and as such facilitates search of projects based on ETH and of new Dapps or decentralized applications.

Projects like this are indicative of how well Ethereum is developing infrastructure of its own and clearly point out that it is now maturing as an ecosystem. There are literally hundreds of Dapps to find use cases for, with ever increasing network effects.

Reason #2: ENS or Ethereum Name Service

A boom for Ethereum domain names is occurring with buyers bidding over $25 million for Ethereum related domain sounding names. ENS may disrupt the traditional domain name market over time with the benefit of smart contracts. People are gravitating to ENS to get easy to read addresses vs hashes. For example, a famous domain exchange.eth was purchased at a premium.

Reason #3: ICO for VC Startup

$10 million was raised by Blockchain Capital for one venture capital (VC) fund and is considered to be the very first VC fund that is raised through offering of digital token referred to as BCAP token (which is a Ethereum dependent token). The ICO is based in Singapore to benefit from local laws. More VC funds will follow this model.Many other ICOs are launching sometimes solely based on a whitepaper and website.

Reason #4: Token From Coinbase

Recently Coinbase has launched Token which is based on Ethereum and considered to be a competitor to WeChat, a messaging app. Coinbase Token allows funds to be transferred between parties at low cost and works on open protocols.

Coinbase also can’t handle the volume of new Ethereum buy requests. They will have to catch up. This can be interpreted as a positive indicator for the Ethereum network token.

Reason #5: Surviving DAO Forking Crisis

Ethereum has been able to survive a DAO hack which has boosted confidence in its infrastructure over what Bitcoin has to offer. Success performing a hard fork is extremely valuable. Other than the DAO hack, Ethereum has a clean reputation which may lead to increased demand.

Reason #6: Spark Platform

Circle is building Spark payment platform which will be smart contract driven and based on Ethereum, this in turn is increasing the popularity of Ethereum even further.

Reason #7: FOMO

Another market reaction is the fear of missing out or FOMO which is responsible for some of the movement in alt coin prices. There is a lot of general market psychology at play here. We are noticing all boats rising due new funds pouring in.

A Shift in Focus from Bitcoin to Ethereum

These details clearly highlight the fact that attention is gradually shifting from Bitcoin which has experienced a drop in its market dominance to 49.5% from the previous mark of 95%. The main reason for such plunge is the scalability debate, the Civil War which risks a 51% attack from Bitcoin Unlimited. The Bitcoin scaling debate may not resolve itself for some time. Experts estimate it could take over one year. When money is on the line, scaling moves slowly.

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