HomeCryptoAltcoinWill Tezos replace Ethereum?

Will Tezos replace Ethereum?

Will Tezos replace Ethereum? Well, Tezos appears to be a kind of alternative to Ethereum, considering that it was conceived as a decentralised blockchain for smart contracts with a more financial focus. 

The success of decentralised finance, the now-famous DeFi, is making Ethereum much more common and widespread. Could a direct competition from Tezos in this field damage Ethereum in the long term?

The fact is that, while the Ethereum blockchain is still based on Proof of Work, and therefore not easily scalable, the Tezos blockchain is based on Delegated Proof of Stake (DPoS), making it scalable already today.

However, it must be said that even Ethereum plans, in the medium term, to integrate PoS and solve the existing scalability problems. 

The exact time when this will happen has not yet been decided, but it seems more and more likely that within a few months, or at most a few years, Ethereum will also implement a consensus algorithm based on Proof of Stake, thereby bridging this gap.

Currently, this does not seem to be a big problem, considering that at the moment the Ethereum network seems to be able to support the current transaction volumes, however, if these were to increase significantly, transactions might begin to be slow. 

Tezos has recently joined the top 10 cryptocurrencies in the world for market capitalisation, surpassing even TRON, although with its 900 million dollars it is still far from over the $14 billion of ETH. 

During 2019, the price of the XTZ token rose from less than $0.5 at the beginning of the year to over $1.3 in December, peaking at almost $1.8 on December 12th. 

ETH, on the other hand, is closing the year with a lower value than at the beginning of the year, when it was worth more than $140. It is currently just over $130, but in recent weeks it has dropped to around $120. 

The trend seems favourable for Tezos and unfavourable for Ethereum, but we must not forget that ETH is the token of reference of the Ethereum network rather than an asset representative of the value of the ecosystem itself. Therefore the comparison between ETH and XTZ may not be really relevant to determine whether Tezos is slowly replacing Ethereum. 

Moreover, during 2019 the number of daily ETH transactions has not decreased, averaging more in December than in January, while the number of active addresses is slightly lower

So far, the differences, especially in terms of use, are still too evident to imagine that Tezos can realistically replace Ethereum in the short or medium term, while in the long term this kind of forecast is too difficult to make. 

One point that could also play in favour of Tezos in the long term is governance which is on-chain, whereas that of Ethereum is off-chain. In other words, the Tezos protocol integrates a voting system that makes it possible to manage, for instance, the evolution of the project in a transparent and decentralised way, and reduces the risks of splitting the chain, as happened in the past with Ethereum Classic. 

Besides the more purely technical differences, it is precisely scalability and governance that could be the subject of future clashes between these two protocols, though Ethereum has a clear advantage due to much more widespread adoption, and a much longer history of use. 

To date, it is not possible to say whether Tezos is gaining significant market share to the detriment of Ethereum, but nor is it possible to say that it could not do so in the future. It is impossible to make certain predictions in this regard, so the possibility of Tezos replacing Ethereum will remain only a hypothesis for now, which is theoretically possible, but not particularly likely in practice. 

 

Marco Cavicchioli
Marco Cavicchioli
Born in 1975, Marco has been the first to talk about Bitcoin on YouTube in Italy. He founded ilBitcoin.news and the Facebook group" Bitcoin Italia (open and without scam) ".
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