Key takeaways:
- Goldman Sachs gives high praise to Ethereum, putting it as a favorite to win out the race to become the world’s most valuable crypto platform
- The real use potential of Ethereum smart contracts and decentralized applications (DApps) is the main reason for the bank’s bullish outlook
- Bitcoin’s lack of functionality and slow transaction speeds could ultimately lead to it relinquishing the top spot among cryptos
In a recent note to its clients, investment banking giant Goldman Sachs shared its prediction for the future of the cryptocurrency space, specifically about which coin will emerge victorious as the most dominant store of value.
Functionality over brand recognition
While, at the moment, it seems obvious that Bitcoin has a store of value/safe haven aspect of the cryptocurrency sector pretty much on lockdown, Goldman Sachs doubts this trend will continue over the long term. The rise in popularity of smart contracts and the thriving decentralized finance (DeFi) ecosystem they were instrumental in creating, could, in time, push Ethereum’s market value well past Bitcoin’s market capitalization.
“[Ether] 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.” – Goldman Sachs
Goldman Sachs’ analysts believe that Bitcoin has managed to occupy the top spot on the crypto charts mostly due to the so-called first-mover advantage and immense brand recognition. Ethereum, on the other hand, is a much more flexible product, offering faster transactions speeds, more functionality, and one of the most engaged communities in the crypto space. This hasn’t gone unnoticed by the investors, as Ethereum continues to close the gap with Bitcoin. At the time of this writing, the Bitcoin market cap is $611 billion, while Ethereum sits at $254 billion.
Gold still reigns supreme, according to Goldman
Despite high praise for Etherum, the bank still values gold’s ability to act as a safe-haven asset in times of crisis as unrivaled, at least for the time being. In general, Goldman categorizes all crypto assets as risk-on assets, while putting gold in the defensive asset category.
In simple terms, this means that gold proves its worth as a safe haven asset primarily in times of economic distress, while crypto assets perform at their best when the economy is expanding and there is easy access to easy money.
