Crypto hedge fund veteran Su Zhu is saying that Bitcoin (BTC) and Ethereum (ETH) are both good investments, but this does not guarantee that they will continue to dominate crypto.
In a new episode of the Uncommon Core podcast, the CEO and CIO of cryptocurrency hedge fund Three Arrows Capital explains why he sees the possibility of other digital assets overtaking BTC and ETH.
“Bitcoin and Ether are probably the soundest monies in crypto.
They kind of have the best distributions and they have the most decentralization, but that doesn’t actually have as much network effect when it comes to adding new users to the network as you may think.
For the same reasons that Ether gained on Bitcoin over the last year, other networks are now gaining on Ether, so I think that the main reason I see for this is that if you look at average active addresses on Ether, it’s not that much higher than 2017. It’s not double, for instance.
The reason given is that these are whale chains and it’s fine and well the new users will use other layer 2 solutions (L2s) or they’ll use this or that, but it’s actually going very much toward the Bitcoin 2017 roadmap and I think that the challenge there is simply that users will not necessarily wait around for that.”
For Ethereum, in particular, Zhu says that not everyone may be interested in what the blockchain offers.
“While Bitcoin and Ethereum can be good monies, I don’t know that Ethereum can sort of lord over other chains and say, ‘all value accrues back to me or all people have to settle back to me,’ because I don’t think that that is a business logic that makes sense.
It’s not a business logic that makes sense that, you know, eventually all users will pay rent back to ETH holders. It’s not a given.
I do think ETH can compete well as money against Bitcoin because Bitcoin has a very different trade-off pool versus ETH, but I don’t think that Ethereum itself as a network actually is that useful for most people because… they don’t need that level of decentralization that Ether is trying to say it upholds.”
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