Coinbase recorded its biggest loss in history. Are Bitcoin and Ethereum Going Down?
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It hasn’t been the best year for crypto, and it certainly hasn’t been easy for Coinbase. In early 2022, the second largest centralized exchange worldwide had to ban more than 30,000 wallets linked to Russian accounts. What started as a noble attempt to fight money laundering and circumvent economic sanctions imposed on Russia by the Western world resulted in a somewhat different outcome.
To make matters worse, a few days ago Coinbase was hit with another class action lawsuit following SEC allegations. Henry Gensler, the head of the SEC, has been running the company for every user who has bought Coinbase securities for the past year and a half. The SEC has been notoriously tight-lipped when it comes to taking down crypto companies, and at the time of writing, things aren’t looking too good for Coinbase.
On the back of this news, it’s almost impossible not to wonder if this is a sign of an existential threat the crypto industry has been facing. This becomes especially evident if we consider the fact that the third largest crypto-asset, Terra, by market capitalization, has reduced to atoms in a matter of days. Join me in this editorial to see if the same fate awaits Ethereum and Bitcoin. Let’s dive in.
Is this the end of Bitcoin?
While it’s tempting to paint the current situation as dire and hopeless, as always with crypto, nothing is set in stone. Well, not quite, as Bitcoin’s value proposition is something that comes close to scripture or a holy grail. The elegance behind the design is what makes someone like Jack Dorsey believe in Bitcoin (BTC) as the only viable future for crypto.
Twitter’s founder took on an almost spiritual role in leading the crypto herd known as the Bitcoin Maximalists. The central premise behind their argument is very straightforward: Bitcoin’s inherent design is the only one secure and efficient enough to transition from the world of traditional finance to crypto. Sure, the use cases for Bitcoin’s network are somewhat limiting compared to traditional DeFi.
For example, a new project provides Youniverze Finance with a cross-chain platform to engage in a variety of DeFi activities. This is something that cannot be imagined on Bitcoin, purely by default. Despite its limitations, Bitcoin has a bright future ahead of it. With the recent Taproot upgrade, which allows processing more transactions faster than ever, the first cryptocurrency ever created will continue to reign.
Will Ethereum Sink Under Pressure?
Like Coinbase, the last eight months have not been too kind to Ethereum (ETH) and its community. It all started when the London fork, also known as EIP1599, arrived last summer. What was supposed to be a game-changer for Bitcoin’s direct successor fell short of its original goal. The plan was to reduce the number of ETH in circulation by burning excessive amounts.
This was done to reduce the ridiculously high gas taxes and make them more predictable. But fast-forward a year, and even though a lot of ETH has been taken out of circulation, gas fees remain the same.
In a sense, Ethereum is the opposite of Bitcoin, as its network design and smart contract features allow users to build virtually anything on top of it. This is both a huge advantage and a disadvantage, as a system is more susceptible to external attacks and security breaches due to the inherent complexity involved.
Still, Ethereum faithful don’t seem too concerned about that and are hoping that another upcoming upgrade, ‘The Merge’, will put Ethereum into the stratosphere. Indeed, the long-awaited hard fork has the potential to be a pivotal moment for Ethereum development.
It will finally merge Ethereum’s smart contract potential enhanced by EIP1599 with the Proof-of-Stake (PoS) system to exploit its full potential. The world of DeFi and GameFi has already built on top of the Ethereum blockchain massively, and “Merge” will only strengthen this trend.
Looking forward
Unless a planet-killing meteor hits Earth or World War III breaks out, it’s safe to assume Bitcoin and Ethereum aren’t going anywhere anytime soon. Despite the fact that both cryptos have specific weaknesses that need to be addressed and resolved in the future, the value proposition behind these projects is good.
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