Despite predicting a flippening could occur, the investment bank believes both coins will fail to overtake gold.
Ether “currently looks like the cryptocurrency with the highest real use potential,” according to Goldman Sachs.
The U.S. investment bank, which has often struck a cautious tone on crypto, believes that ETH could one day overtake BTC as the dominant digital store of value.
Explaining its rationale, Goldman said the Ethereum blockchain “is the most popular development platform for smart contract applications.”
In a note to clients, analysts suggested that ETH could one day enjoy a “flippening” — a long-awaited milestone for some enthusiasts where the total market cap of the world’s second-largest cryptocurrency overtakes BTC.
Although Bitcoin is said to have a stronger brand and greater levels of public recognition because of the fact it was launched in 2009, a full six years before Ether, there are concerns that BTC’s transaction speeds — which come in at just seven a second — could hold the blockchain back.
By contrast, Ethereum is currently in the process of moving to a Proof-of-Stake consensus mechanism that should help ensure it is more environmentally friendly, as well as more scalable.
As you might expect, Goldman Sachs did strike a cautious tone in its note, too.
The bank firmly believes that neither BTC or ETH have the potential to overtake the total amount of capital that’s invested in gold — a milestone that the Winklevoss twins believe could take the value of Bitcoin beyond $500,000 at some point in the future. Analysts said:
“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.”
Another threat lies in how there are now more than 10,000 cryptocurrencies, creating a level of competition that may put some investors off.
The upbeat news did help give Ether a boost. At the time of writing, it’s risen by 2.66% in 24 hours and 11.62% over a seven-day timeframe — with prices at $2,383.13.
By comparison, Bitcoin is flat on both a weekly and a daily timeframe.