Ethereum Could Surpass Bitcoin as the Top Store of Value Asset According to VanEck Research
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Trusted Editorial Content, reviewed by industry experts and experienced editors. Ad DisclosureIn its July 2025 cryptocurrency monthly report, the global investment firm VanEck proposed that Ethereum (ETH) could potentially outperform Bitcoin (BTC) as a store of value. The analysis pointed to ETH’s lower inflation rate in recent months compared to BTC, along with its expanding role in decentralized finance (DeFi).
Is Ethereum a Better Store of Value Than Bitcoin?
Over the past few years, an increasing number of companies have started diversifying their financial reserves by investing in digital assets, with Bitcoin being the most popular choice. However, new trends indicate that businesses are also beginning to acquire Ethereum, recognizing its potential as both a yield-generating and deflationary asset.Related Reading: Ethereum Treasury Adoption Surges: Corporates Acquire 550,000 ETH in a MonthVanEck’s report notes that although Bitcoin’s limited supply and predictable issuance make it a strong candidate for a store of value, Ethereum offers more financial flexibility. For instance, ETH holders can stake their tokens to earn rewards, collect network revenue, and participate in DeFi protocols to generate additional returns.The report also highlights key differences in the monetary policies of both blockchains. At launch, Ethereum had an initial issuance rate of 14.4%, while Bitcoin’s was 9.3%. However, two major policy updates have significantly lowered ETH’s inflation rate, bringing it below that of Bitcoin.The first change was the implementation of Ethereum Improvement Proposal (EIP-1559) in August 2021, which introduced a mechanism to “burn” a portion of transaction fees. This created deflationary pressure during periods of high network usage, effectively reducing the total supply of ETH.The second major shift occurred with “The Merge” in September 2022, when Ethereum transitioned from a Proof-of-Work (PoW) to a Proof-of-Stake (PoS) consensus model. This move drastically reduced the daily issuance of ETH — from about 13,000 to around 1,700 — by eliminating the need to compensate miners.After these changes, ETH’s inflation rate dropped below Bitcoin’s for the first time in March 2023. Since then, ETH’s supply has increased by just 0.2%, while Bitcoin’s has grown by 3%. According to the report:Between October 7th, 2022, and April 4th, 2024, the total supply of ETH decreased from ~120.6 million to a low of ~120.1 million, achieving an annualized inflation rate of (-0.25%).
Ethereum vs. Bitcoin: Key Differences
Ethereum vs. Bitcoin: Key Differences
While both Ethereum and Bitcoin are among the most well-known cryptocurrencies, they serve different purposes and have distinct features that set them apart. Understanding these differences is crucial for investors, developers, and users who want to navigate the cryptocurrency landscape effectively.
1. Purpose and Use Case
Bitcoin (BTC) was the first cryptocurrency created in 2009 by an anonymous person or group known as Satoshi Nakamoto. Its primary purpose is to function as a decentralized digital currency and store of value—often referred to as “digital gold.” Bitcoin’s design emphasizes security, scarcity, and resistance to censorship, making it a popular choice for long-term investment and peer-to-peer transactions.
Ethereum (ETH), on the other hand, was launched in 2015 by Vitalik Buterin and a team of developers. Unlike Bitcoin, Ethereum was designed not just as a currency but as a platform for building decentralized applications (dApps) and executing smart contracts. This makes Ethereum more versatile, allowing developers to create complex systems such as DeFi protocols, NFT marketplaces, and more without relying on traditional intermediaries.
2. Blockchain Architecture and Consensus Mechanism
Both blockchains use proof-of-work (PoW) initially, but they differ in their transition to more efficient consensus mechanisms. Bitcoin currently uses PoW, although there have been discussions about transitioning to a proof-of-stake (PoS) model in the future. However, as of now, it remains a PoW blockchain.
Ethereum made a significant shift in 2022 with the launch of the Ethereum 2.0 upgrade, moving from PoW to PoS. This change improved scalability, reduced energy consumption, and increased network security. The move to PoS also introduced staking, where users can earn rewards by validating transactions on the network.
3. Supply and Inflation Model
Bitcoin has a capped supply of 21 million coins, which ensures scarcity over time. The rate at which new Bitcoins are mined decreases every four years through a process called “halving,” leading to a predictable and deflationary monetary policy.
Ethereum does not have a hard cap on its supply. Instead, it has an inflationary model, where new ETH is continuously minted to reward validators on the network. However, the introduction of EIP-1559 in 2021 introduced a mechanism that burns a portion of transaction fees, potentially reducing the overall supply over time and introducing a degree of deflationary pressure.
4. Smart Contracts and Programmability
One of the most significant differences between the two is Ethereum’s support for smart contracts. These self-executing contracts allow for automated and trustless execution of agreements based on predefined conditions. This feature enables the creation of decentralized finance (DeFi) platforms, non-fungible tokens (NFTs), and other complex applications that go beyond simple transactions.
Bitcoin, while highly secure and reliable, lacks native support for smart contracts. While there are third-party solutions and layer-2 protocols like the Lightning Network that enable some level of programmability, Bitcoin’s core design focuses on being a secure and stable store of value rather than a development platform.
5. Scalability and Transaction Speed
Ethereum was designed with scalability in mind, though it has faced challenges with high gas fees and network congestion, especially during periods of heavy usage. To address this, Ethereum has implemented upgrades such as layer-2 solutions (e.g., Optimism, Arbitrum) and the ongoing Ethereum 2.0 roadmap, which aims to increase throughput and reduce costs.
Bitcoin has a slower block time (approximately 10 minutes) and limited transaction capacity compared to Ethereum. This makes it less suitable for high-frequency transactions, though it excels in providing a secure and decentralized network for value transfer.
6. Community and Ecosystem
The Bitcoin community is largely focused on maintaining the integrity and decentralization of the network, with a strong emphasis on its role as a hedge against inflation and a safe-haven asset. The ecosystem around Bitcoin is growing, particularly in the realm of institutional adoption and financial products like ETFs.
Ethereum has a vibrant and active developer community, driving innovation in decentralized technologies. It hosts a wide range of dApps, NFTs, and DeFi platforms, making it the go-to blockchain for developers looking to build next-generation applications. This has led to Ethereum becoming a hub for Web3 and the broader crypto ecosystem.
Conclusion
In summary, while both Bitcoin and Ethereum play important roles in the cryptocurrency space, they cater to different needs. Bitcoin is primarily a digital store of value and medium of exchange, while Ethereum serves as a powerful platform for decentralized applications and smart contract functionality. Understanding these distinctions can help users make informed decisions based on their goals, whether they’re investing, developing, or simply exploring the world of blockchain technology.
What Is a Store of Value?
What Is a Store of Value?
A store of value is an asset that maintains its value over time, allowing individuals to preserve wealth and use it for future purchases or investments. In traditional economics, a good store of value should be durable, portable, divisible, uniform, and have limited supply. These characteristics ensure that the asset can be stored without degrading, easily transported, divided into smaller units, consistently valued, and not subject to rapid inflation.
Historically, precious metals like gold and silver have served as reliable stores of value due to their scarcity, durability, and universal acceptance. However, in modern economies, currencies such as the US Dollar, Euro, and other fiat currencies are also considered stores of value, though they are more susceptible to inflation and government policy changes.
In the context of cryptocurrency, digital assets like Bitcoin (BTC) and Ethereum (ETH) are increasingly being recognized as potential stores of value. Unlike traditional fiat currencies, which are subject to central bank control and monetary policy, cryptocurrencies offer a decentralized alternative that is resistant to censorship and manipulation. This has led to the concept of “digital gold,” where Bitcoin is viewed as a long-term store of value similar to physical gold.
The key attributes that make a cryptocurrency a viable store of value include:
Scarcity: A limited supply ensures that the asset retains value over time, preventing devaluation from excessive issuance. Decentralization: No single entity controls the network, reducing the risk of political or economic interference. Security: Robust cryptographic protocols protect the asset from fraud and hacking. Liquidity: The ability to buy and sell the asset quickly without significantly affecting its price. Adoption: Widespread use and recognition increase confidence in the asset’s long-term value.
While traditional stores of value have been used for centuries, the rise of blockchain technology and cryptocurrencies is redefining what it means to store value in the digital age. As more individuals and institutions adopt digital assets, the role of cryptocurrencies as a store of value continues to evolve and gain legitimacy.
Smart Contracts and Ethereum’s Functionality
Smart Contracts and Ethereum’s Functionality
At the heart of Ethereum’s revolutionary potential lies the concept of smart contracts. Unlike traditional contracts, which require intermediaries such as lawyers or banks to enforce agreements, smart contracts are self-executing agreements with the terms of the contract directly written into lines of code. These contracts automatically execute actions when predefined conditions are met, eliminating the need for middlemen and reducing the risk of fraud or human error.
Ethereum, the second-largest cryptocurrency by market capitalization after Bitcoin, was designed not only as a digital currency but also as a decentralized platform for building and deploying smart contracts. Launched in 2015 by Vitalik Buterin and a team of developers, Ethereum introduced a Turing-complete programming language—Solidity—that allows developers to create complex applications (dApps) that run on the blockchain.
How Smart Contracts Work
Smart contracts operate on the Ethereum Virtual Machine (EVM), a decentralized virtual machine that runs on every node in the Ethereum network. When a developer writes a smart contract in Solidity, it is compiled into bytecode, which is then deployed onto the Ethereum blockchain. Once deployed, the contract becomes part of the immutable ledger and can be accessed and executed by any participant on the network.
The execution of a smart contract is triggered by transactions or events on the blockchain. For example, if a user sends a certain amount of Ether (Ethereum’s native cryptocurrency) to a contract address, the contract’s code will run, and the agreed-upon action—such as transferring tokens, releasing funds, or updating a record—will occur automatically.
Key Features of Smart Contracts on Ethereum
Automation: Smart contracts eliminate the need for manual intervention by automating processes based on pre-defined rules. Transparency: All contract executions are recorded on the blockchain, making them publicly visible and auditable. Immutability: Once deployed, smart contracts cannot be altered, ensuring that the terms of the agreement remain unchanged over time. Trustlessness: Participants do not need to trust each other or a central authority because the contract’s execution is enforced by the network itself.
Use Cases of Smart Contracts
Smart contracts have a wide range of applications across various industries. Some notable use cases include:
Decentralized Finance (DeFi): Platforms like Uniswap and Aave use smart contracts to facilitate lending, borrowing, and trading without the need for traditional financial institutions. NFTs (Non-Fungible Tokens): Smart contracts are used to create and manage unique digital assets, such as artwork, collectibles, and virtual real estate. Supply Chain Management: Smart contracts can automate payments, track shipments, and verify product authenticity in global supply chains. Insurance: Insurers use smart contracts to automate claims processing and ensure that payouts are made based on verified events.
Challenges and Considerations
While smart contracts offer numerous benefits, they are not without challenges. One major concern is the risk of bugs or vulnerabilities in the code, which can lead to security breaches or loss of funds. High-profile incidents, such as the DAO hack in 2016, highlighted the importance of rigorous testing and auditing before deploying smart contracts.
Additionally, the immutability of smart contracts means that once deployed, any errors or issues must be addressed through upgrades or alternative solutions rather than direct modifications. This has led to the development of upgradeable smart contract patterns and governance mechanisms to allow for future improvements.
In summary, smart contracts are a foundational element of Ethereum’s functionality, enabling a new era of decentralized applications and automated trust systems. As the technology continues to evolve, the role of smart contracts in shaping the future of finance, commerce, and digital interactions is expected to grow significantly.
VanEck’s Perspective on Digital Assets
VanEck’s Perspective on Digital Assets
As one of the most prominent and long-standing institutional investors in the digital asset space, VanEck has played a significant role in shaping the narrative around cryptocurrencies and blockchain technology. With its deep roots in traditional finance and a forward-thinking approach to innovation, VanEck has consistently positioned itself as a key player in the evolution of digital assets.
Early Adoption and Institutional Trust
VanEck was among the first institutional investors to recognize the potential of digital assets, particularly Bitcoin. In 2013, the firm launched the VanEck Bitcoin Strategy, which marked a pivotal moment in the mainstream acceptance of cryptocurrency. This early move not only demonstrated VanEck’s confidence in the emerging asset class but also helped build trust among other institutional investors who were hesitant to enter the market.
Expanding the Digital Asset Ecosystem
Over the years, VanEck has expanded its focus beyond Bitcoin to include a broader range of digital assets. The firm has developed and managed several exchange-traded products (ETPs) that provide exposure to various cryptocurrencies and blockchain-based assets. These products have made it easier for both retail and institutional investors to access the digital asset market through familiar and regulated investment vehicles.
Advocacy for Regulation and Innovation
VanEck has been a strong advocate for regulatory clarity in the digital asset space. The firm believes that a well-regulated environment is essential for the long-term growth and sustainability of the industry. By working closely with regulators and policymakers, VanEck aims to promote frameworks that protect investors while fostering innovation and competition.
Focus on Security and Transparency
A core principle of VanEck’s approach to digital assets is the emphasis on security and transparency. The firm ensures that all of its digital asset products are backed by secure custodial solutions and operate within transparent market structures. This commitment to safety and accountability helps mitigate risks associated with the volatile nature of the digital asset market.
The Future of Digital Assets: VanEck’s Vision
Looking ahead, VanEck envisions a future where digital assets play a central role in the global financial system. The firm sees potential for blockchain technology to revolutionize everything from cross-border payments to asset tokenization. VanEck continues to invest in research, education, and product development to support this vision and empower investors with the tools they need to navigate the evolving landscape of digital assets.
As the digital asset ecosystem continues to mature, VanEck remains a trusted voice and a driving force in the industry, helping to bridge the gap between traditional finance and the future of money.
Future Trends in Cryptocurrency Investment
Future Trends in Cryptocurrency Investment
The world of cryptocurrency investment is rapidly evolving, driven by technological advancements, regulatory developments, and shifting investor behavior. As the market matures, several key trends are emerging that are likely to shape the future of digital asset investing. Understanding these trends can help investors make informed decisions and stay ahead of the curve.
1. Institutional Adoption and Mainstream Integration
One of the most significant trends in the cryptocurrency space is the increasing involvement of institutional investors. Major financial institutions, hedge funds, and even central banks are beginning to explore and integrate cryptocurrencies into their portfolios. This shift is not only a sign of growing trust in digital assets but also a catalyst for greater liquidity and market stability.
As more traditional financial institutions offer cryptocurrency-related products—such as ETFs, futures, and custodial services—the barriers to entry for retail investors are likely to decrease. This could lead to a broader acceptance of cryptocurrencies as a legitimate asset class, further legitimizing their role in the global financial system.
2. Regulatory Evolution and Compliance Frameworks
Regulation is a double-edged sword in the cryptocurrency space. While it can introduce uncertainty, it also brings clarity, security, and legitimacy. Governments around the world are increasingly focusing on creating comprehensive regulatory frameworks to govern the use of cryptocurrencies and protect investors from fraud and scams.
Expect to see more stringent anti-money laundering (AML) and know-your-customer (KYC) requirements, as well as clearer guidelines for initial coin offerings (ICOs) and token sales. These regulations will not only reduce risks for investors but also encourage responsible innovation within the industry.
3. Decentralized Finance (DeFi) and Smart Contracts
Decentralized finance, or DeFi, is revolutionizing traditional financial systems by offering decentralized alternatives to banking, lending, and trading. Built on blockchain technology, DeFi platforms allow users to access financial services without relying on intermediaries such as banks or brokers.
Smart contracts—self-executing agreements with the terms of the contract directly written into code—are at the heart of DeFi. As these technologies continue to mature, they are expected to drive innovation in areas such as yield farming, staking, and automated trading. Investors looking to diversify their portfolios may find opportunities in DeFi protocols and tokenized assets.
4. Tokenization of Real-World Assets
Another exciting trend is the tokenization of real-world assets, such as real estate, art, and commodities. By representing physical assets as digital tokens on a blockchain, investors can gain fractional ownership, increase liquidity, and reduce transaction costs.
This trend has the potential to democratize access to high-value assets that were previously out of reach for many investors. As tokenization becomes more widespread, it could significantly expand the range of investment opportunities available in the cryptocurrency ecosystem.
5. Environmental and Sustainability Concerns
With growing awareness of environmental issues, the sustainability of blockchain networks is becoming a critical factor for investors. The energy consumption of proof-of-work (PoW) blockchains, such as Bitcoin, has drawn criticism from environmental advocates and regulators alike.
In response, many projects are transitioning to more energy-efficient consensus mechanisms, such as proof-of-stake (PoS). Investors are increasingly favoring sustainable and eco-friendly cryptocurrencies, which could influence the long-term value and adoption of different digital assets.
6. Artificial Intelligence and Data Analytics
Artificial intelligence (AI) and advanced data analytics are playing an increasingly important role in cryptocurrency investment. From algorithmic trading strategies to predictive modeling, AI tools are helping investors analyze market trends, manage risk, and optimize returns.
As machine learning models become more sophisticated, they are expected to provide deeper insights into market behavior, enabling more accurate predictions and smarter investment decisions. This integration of AI and blockchain technology is set to redefine how investors approach the crypto market.
7. Cross-Border and Borderless Transactions
Cryptocurrencies have the potential to facilitate faster, cheaper, and more transparent cross-border transactions compared to traditional banking systems. As global trade and digital economies continue to grow, the demand for borderless payment solutions is expected to rise.
Investors who understand the importance of global connectivity and remittance efficiency may find opportunities in cryptocurrencies designed for international transactions, such as stablecoins and programmable money.
Conclusion
The future of cryptocurrency investment is bright and full of possibilities. As the market continues to evolve, staying informed about emerging trends and technological innovations will be essential for both new and experienced investors. Whether through institutional adoption, regulatory clarity, DeFi growth, or environmental responsibility, the cryptocurrency landscape is poised for continued transformation and expansion.
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Ad Disclosure
In its July 2025 crypto monthly recap report, global investment management firm VanEck suggested that Ethereum (ETH) could emerge as a superior store of value compared to Bitcoin (BTC). The report pointed to ETH’s lower inflation rate in recent months relative to BTC, alongside its growing utility within decentralized finance (DeFi).
Ethereum A Better Store Of Value Than Bitcoin?
In recent years, a growing number of investors have begun to question whether Ethereum might surpass Bitcoin as a more effective store of value. Below are five common questions users often ask about this topic.
Question 1: What makes Ethereum a better store of value than Bitcoin?
Answer 1: Ethereum is considered a potential better store of value due to its lower inflation rate compared to Bitcoin. Additionally, its increasing use in decentralized finance (DeFi) and smart contract capabilities provide it with greater utility beyond just being a digital currency.
Question 2: How does the inflation rate of Ethereum compare to Bitcoin?
Answer 2: Ethereum has a lower inflation rate than Bitcoin because of its transition to a proof-of-stake consensus mechanism, which reduces the number of new ETH tokens being created each year. Bitcoin, on the other hand, has a fixed supply and a predictable halving schedule that gradually decreases its inflation over time.
Question 3: Why is DeFi important for Ethereum’s value proposition?
Answer 3: Decentralized Finance (DeFi) allows users to access financial services without relying on traditional banks or intermediaries. Ethereum’s smart contract functionality enables the development of DeFi applications, making it a key platform for innovation in the blockchain space.
Question 4: Can Ethereum truly compete with Bitcoin as a store of value?
Answer 4: While Bitcoin is widely recognized as the first and most established cryptocurrency, Ethereum’s evolving ecosystem and technological advancements suggest it has the potential to compete, especially if its utility and adoption continue to grow.
Question 5: What factors should be considered when evaluating a cryptocurrency as a store of value?
Answer 5: Key factors include scarcity, inflation rate, utility, security, adoption, and the strength of the underlying technology. Both Ethereum and Bitcoin have unique strengths, and the choice between them depends on individual investment goals and risk tolerance.
