Goldman Sachs, an American multinational investment bank and financial services company, has stated that Ethereum (ETH), the second-largest cryptocurrency by market capitalization, has the potential to overthrow the flagship cryptocurrency, Bitcoin (BTC), as a digital store of value in the coming years.
In a note according to Business Insider, Goldman Sachs analysts pointed out that Ethereum’s real use cases give it the potential to dominate Bitcoin in the future.
The investment bank noted:
“[Ethereum] currently looks like the cryptocurrency with the highest real use potential as Ethereum, the platform on which it is the native digital currency, is the most popular development platform for smart contract applications.”
The bank says Bitcoin may have the stronger brand due to its first-mover advantage, but it lacks loads of real use cases embedded in Ethereum.
However, the bank claimed in the note that none of the two cryptocurrencies has the capability to overtake Gold regardless of which of them reigns supreme, citing the high volatility of the two digital assets.
“Gold is competing with crypto to the same extent it is competing with other risky assets such as equities and cyclical commodities. We view gold as a defensive inflation hedge and crypto as a risk-on inflation hedge.”
The investment bank also cited the current competition between different crypto assets as a negative impact on their ability to become a safe asset class for investors at this early stage. Currently, there are over 10,700 digital currencies competing in the market, according to CoinMarketCap.
Goldman Sachs wrote:
“This competition among cryptocurrencies is another risk factor that prevents them from becoming safehaven assets at this stage.”