After increasing more than 900% last year, solarium (CRYPT: SUN) could be most deserving of holding the title of cryptocurrency MVP in 2023. However, while the digital currency's monumental resurgence provided a much-needed respite after it fell to as low as $8, Solana's long-term prospects They pale in comparison to one of the best-known names in cryptocurrencies: Ethereum (CRYPT: ETH).
Here's why investors would be remiss to overlook Ethereum's potential while the market focuses elsewhere.
A little context first
In 2015, Ethereum hit the cryptocurrency scene with a bang. At the time, it was the first blockchain that allowed developers to create custom decentralized applications through smart contracts -- transactions that are automatically executed when certain terms are met, making Ethereum the first programmable cryptocurrency.
Ethereum's pioneering nature of smart contracts meant that most of the innovative uses of cryptocurrencies initially found a home on its blockchain. Things like non-fungible tokens (NFTs), decentralized finance (DeFi), and much more, it all started on Ethereum and represented a seismic shift in the trajectory of cryptocurrency capabilities.
But like any iteration of technology, new versions eventually emerged. Solana enters. Building on Ethereum's efforts, Solana arrived in 2017 offering developers and users a faster and cheaper alternative to Ethereum.
A few years later, Solana has taken on the title of Ethereum killer, gaining significant traction in the crypto economy thanks to its blazing speeds and extremely low fees. Today, it is the fifth most valuable cryptocurrency on the market with a total valuation of $41 billion.
Solana's rapid rise to become one of the most valuable cryptocurrencies has brought with it a wave of publicity. However, even with this, Ethereum is still almost six times more valuable and supports 20 times more value across the entire DeFi economy.
Ethereum's revolutionary upgrades
While Solana optimists may paint a different picture, the reality is that Ethereum remains the epicenter of the decentralized economy. It has the largest developer community, a proven track record of functionality, and continues to roll out updates that will further increase network capabilities.
Most importantly, these updates are part of the reason Ethereum is ready to go in 2024. In the second half of the year, Ethereum will release EIP-41844, an update that will reduce transaction fees and increase its performance.
Throughout Solana's existence, its main advantage was that it is a cheaper and faster version of Ethereum. But what will happen if Ethereum levels the playing field?
With greater efficiency and scalability, the number of uses Ethereum can support is likely to increase. Since one of the main ways a cryptocurrency is valued lies in the utility it provides, EIP-41844 could bring new value to Ethereum's long-term prospects.
Best of all, however, EIP-41844 is just one of a series of updates planned for the coming years. Subsequent enhancements will introduce new features such as increased security, greater decentralization, and greater network rationalization.
Collectively, future upgrades to Ethereum have the potential to solidify it as the most valuable smart contract blockchain and crush any competition.
The multi-chain future
Like many markets in the world today, the DeFi economy will likely have several competitors. Take the smartphone market as an example. Although Androids represent more than 80% of the global market, AppleThe iPhone still occupies a considerable part.
A similar future is likely to happen in the cryptocurrency sector: one where Solana and Ethereum coexist, each offering developers and users different options. However, when deciding which of the two is poised for a significant run, Ethereum looks more promising, especially in the long term.
While Solana is up over 900% in 2023, Ethereum witnessed a measly 90% jump. As the second most valuable cryptocurrency on the market and home to more decentralized applications than any other blockchain, this lack of performance suggests that Ethereum has a bit of a way to go.
Fortunately, Ethereum is no stranger to significant growth. During the last bull market, it rose almost 2,000% as it skyrocketed from around $200 to over $4,800 in a year and a half. It remains to be seen if a similar scenario plays out.
But when considering the potential that will accompany EIP-41844, as well as future upgrades, don't be surprised if Ethereum becomes one of the best performers in your portfolio in the coming years.
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RF Fulton has positions in Ethereum and Solana. The Motley Fool has positions and recommends Ethereum and Solana. The Motley Fool has a disclosure policy.
Forget Solana, This Cryptocurrency Is Poised For An Incredible Run In 2024 was originally published by The Motley Fool
