Ethereum (ETH) Still has a Long Way to go to Match Bitcoin’s Money and Safe Haven Status


Bitcoin (BTC) classifies as digital gold, and Ethereum (ETH) has gained the tag digital oil for its extensive uses and gas fees. The Ethereum platform ranks as the second most used platform after Bitcoin and it shows no signs of slowing down. However, sections of the Ethereum community view the smart contract platform as a form of money rather than

“digital oil”.

In an explanatory article on Longhash, Ethereum still lacks the qualities that have made Bitcoin so popular as a form of currency and store of value. In this article, we provide a brief explanation on why Ethereum is still far from being regarded as a global form of money.

Dominance of non-Native Token Transfers on Ethereum

The first key metric to measure whether Ethereum is a solid form of money is the number of native ETH tokens transferred on the platform. According to data provided by Coinmetrics/EthPolar, the total number of transfers of ERC20 tokens as a percentage of the total volume transacted on the Ethereum has exceeded 50% since May 2018.

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ERC 20 tokens have the largest number of transfers on Ethereum Network. (Source: ETHPolar)

Furthermore, Tether (USDT) transactions have swelled on the Ethereum platform as most of the tokens moved from the Bitcoin based Omni-protocol. As more stablecoins move to Ethereum, the percentage of non-native tokens transacted on the platform is set to increase too.

Transaction activity on Ethereum

Another key metric to look at is the total transaction volumes, volatility and overall trading activity of the cryptocurrency. USD-denominated adjusted transaction volume of ETH does not paint a rosy picture as the coin is still roughly at the same volume as back in 2017 before the huge bullish momentum

Furthermore, the volatility of ETH has reduced by half from 10% to 5% since the launch of the platform in 2014. Volatility is a key metric to measure the utility of a particular cryptocurrency as money.

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