Economist Raoul Pal says Ethereum’s (ETH) probable adoption as programmable money may see it becoming the largest cryptocurrency by market capitalization, overtaking Bitcoin (BTC) within the next ten years. At such a time, several blockchain networks may account for a larger share of the global financial markets as digital assets become more mainstream.
Tweeting on Friday (Dec. 11, 2020), Pal provided a series of arguments based on the current market size of several sectors of the global financial space that point to Ethereum being primed for greater exponential growth than Bitcoin within the next decade. According to Pal:
“My hunch is BTC is a perfect collateral layer but ETH might be bigger in market cap terms in 10 years for the reasons above. Money and collateral is just the base layer. Everything builds on top. The store of value is collateral, the trust layer and exchange of value is bigger.”
My hunch is BTC is a perfect collateral layer but ETH might be bigger in market cap terms in 10 years for the reasons above.
Money and collateral is just the base layer. Everything builds on top.
The store of value is collateral, the trust layer and exchange of value is bigger
— Raoul Pal (@RaoulGMI) December 11, 2020
Pal dismissed the “one blockchain to rule them all” argument, insisting instead that different networks will carve out niches for themselves in the global business process. For Pal, Ethereum is better placed to capture areas like the $1.2 quadrillion derivatives layer, the $70 trillion equities arena, and the $260 trillion debt market.
These market segments are also in addition to the tokenization potential that already exists on the Ethereum chain. The decentralized finance (DeFi) market on the Ethereum chain will probably play a pivotal role in catapulting the network towards greater prominence in the global finance scene.
Indeed, the DeFi market has seen significant growth in 2020 with numerous protocol launches since the start of the year. According to DeFi aggregator Defipulse.com, the total value locked (TVL) in the DeFi market now stands at almost $14 billion.
Commenting on the need for a broad-based assessment of value across the digital asset (DA) space, Pal argued:
“This is why I care about the entire DA space. There will be many enormous winners, many failures, many scams, many false dawns but in the end, trillions and trillions of value will accrue across digital assets, tokens, protocols and crypto that tie all of this together.“
“The future is a super network of blockchains with the most pristine being bitcoin and the risk curve moves out from there. Any other outcome accruing to one winner is nothing but false hopes and dreams,” Pal added in his Friday thread.