In an interview with Bloomberg, Pantera CIO Joey Krug predicted a bright future for the Ethereum network.
Pantera CIO bullish on Ethereum
Even though many hedge funds and institutional investors have started stocking up on investments in alternative layer-one blockchains in 2021, Ethereum will remain king and even strengthen its dominant position. At least according to Pantera Capital’s Chief Investment Officer Joey Krug, that is.
Krug said as much when interviewed by Bloomberg and predicted that Ethereum would be involved in half of the global financial transactions in the next ten years. According to Krug, rivalling blockchains like Polkadot, Solana, and Cardano would not be able to challenge Ethereum’s dominance.
Can Ethereum really take over finance?
Out of all bold blockchain predictions, Krug’s may actually be the boldest, so it’s worth taking a look at whether it stands a chance of becoming true.
First, we’ll need to define what Mr. Krug meant by “financial transactions,” as this could include various concepts. Visa’s payments volume may be a good proxy and was measured to be $4 trillion AUD in 2021. However, the market capitalisation of Visa and Ethereum is already roughly equal (both over $500 billion AUD), so Ethereum would have to disproportionately increase in market capitalisation to equal Visa’s payment volume alone.
What can stop Ethereum on its way to doing so?
First and foremost, a crypto-internal rival in Bitcoin. Although some believe that Ethereum will replace Bitcoin, Bitcoin’s market capitalisation is double that of Ethereum. Moreover, when it comes to peer-to-peer payments, Bitcoin eats into Ethereum’s market share and may do so even more in the future with improvements of its Lightning Network.
Then there are Ethereum’s own problems. Despite Ethereum 2.0 being long in the making, prediction markets give its “merge” and the transition to a proof-of-stake consensus mechanism that comes with it a minuscule chance of happening in Q1 2022. Similar to other blockchain ecosystems, Ethereum, too, has had its fair share of problems shipping updates to the network. Founder Vitalik Buterin is aware of that and called for layer-two chains to effectively save the future of Ethereum, knowing that a native scaling solution may still be some time away.
What would an Ethereum-dominated world look like?
All that being said, let’s assume Ethereum can figure out its scaling problems in the next decade and pulls off fast transactions at scale. What would change for consumers?
On the surface, probably not that much. Visa is already experimenting with Ethereum-based smart contracts for its payment solutions. Central banks around the world are working on their digital currency alternatives that may or may not run on Ethereum-based solutions.
It’s important to understand that mass integration of Ethereum would look nothing like today’s usage of Ethereum and would probably happen behind the scenes from consumers’ perspective. Even if your future self has a Metamask wallet to pay for coffee at Starbucks, it will be infinitely more straightforward to do so. Of course, only if Mr. Krug’s prediction comes true.
