Now that the Merge has been executed, the question remains: who is more decentralized between Bitcoin and Ethereum?
Bitcoin vs. Ethereum after the Merge: the importance of decentralization
Ethereum’s move to Proof-of-Stake (PoS) after the Merge in September marked a change of scenery that also involves Bitcoin with its Proof-of-Work (PoW), questioning which of the two blockchains is the more decentralized.
In the crypto sector, decentralization remains one of the basic principles, as it ensures a blockchain’s resilience from censorship and attacks.
In this sense, according to a more in-depth analysis of blockchain metrics, Figment, a leading provider of institutional staking services, began by stating that Ethereum’s decentralization has increased since the Merge.
Figment is part of Lido’s 30 independent operators, the largest entity on Ethereum by participation that has more than $5 billion in ETH staking in the project.
In this regard, Figment analyzed that to attempt a 51% attack on Lido would require the collusion of all 29 Lido operators plus 2 other major validators. This means that if collusion were to occur, the remaining honest validators could decide to continue building on the minority chain and ignore the attacker’s fork. A catch-up situation that before the Ethereum Merge was not possible to implement.
Another interesting aspect is that with the PoS, now ETH that are in staking still cannot be withdrawn and this would currently eliminate the capacity and influence needed to hold validators accountable.
Bitcoin vs. Ethereum after the Merge: decentralization PoW vs. PoS
In order to compare Bitcoin and Ethereum and their degree of decentralization, it is necessary to compare the PoW and PoS protocols of the two most prominent crypto in the industry.
Indeed, while theoretically PoW has always been regarded as the protocol of decentralization par excellence, now, due to the expansion of cryptocurrencies, perhaps not so much anymore.
Taking into consideration the different mining pools with which Bitcoin operates and the staking of Ethereum validators, one could even argue that ETH is more decentralized.
The cause is the barriers to entry for PoW mining, which are much higher than for PoS validation. And indeed, while to become an Ethereum validator one only needs to deposit 32 ETH (today valued at ~$41,129), to successfully mine Bitcoin requires a multimillion-dollar operation, or at least be part of one.
Not only that, Bitcoin’s energy consumption is also steadily increasing, compared to that of Ethereum post-Merge. And indeed, the Merge has alleviated the energy concerns surrounding the crypto sector by moving away from mining or PoW, which relies on computers solving complex mathematical problems to mine coins, which must be in continuous operation.
Bitcoin vs. Ethereum post-Merge: when is the Flippening?
For Ethereum enthusiasts, there will come a day when the second crypto by market cap will surpass queen Bitcoin, and that is when the “Flippening” will happen.
According to these very people, the Merge was the trigger that could give rise to this hypothetical change.
In contrast, market experts do not think that the “Flippening” will happen in the short term, as overcoming Bitcoin’s establishment as the main and driving asset of the entire crypto market is no small feat. Indeed, the Bitcoin community remains one of strong sentiment toward the queen of cryptocurrencies, considering it the basic currency of the internet.
In addition, this market has proven over the years to be a multi-chain ecosystem, so the possibility that Ethereum could surpass Bitcoin in terms of market capitalization is vanishingly small.
If, however, other metrics were considered instead of market capitalization, then perhaps the Flippening could already be a reality. For example, while Ethereum records about 1 million daily transactions, Bitcoin completes about 270,000 transactions in the same period. In this sense, Ethereum has a higher transaction volume than Bitcoin.
Not only that, if we also consider the number of crypto projects and active addresses at the top of the networks, again Ethereum already surpasses Bitcoin. However, this does not detract from the fact that despite the PoW, Bitcoin remains the number one asset in the crypto market.
Price predictions for ETH post Merge
eToro’s crypto market analyst Simon Peters published an interesting commentary last month on the post-Merge ETH price prediction.
In general, expectations were for ETH’s price to rise, especially as its move to PoS brings economic benefits. In reality, this did not happen and could also mean that investors would not have appreciated the upgrade.
In this regard, Peters assessed that the reasons why the price of ETH has not increased is not related to the Merge but to macroeconomic factors and in interest rates.
This means that post-Merge ETH price predictions should not be made in the short run but in the long run.
At the time of writing, Ethereum is worth $1480 versus Bitcoin which is worth $19,700, so both are in a downward trend.
