I saw a viewpoint online that ETH will surpass BTC in the future, but I don't think so. However, it is still possible for ETH's market value to reach half of BTC's; currently, BTC's market value is 2.05 trillion, and ETH's market value is 293.7 billion, indicating that ETH is significantly undervalued.

Note that I am talking about market value; the number of ETH tokens fluctuates slowly.

I believe that in the long term, ETH's market value will reach half of BTC's market value, which is 50%. The logic is as follows.

ETH is essentially deflationary, and its decentralization is not inferior to BTC, making its value storage properties exceed those of BTC.

The security and value ceiling of POS are superior to those of POW.

The development potential of ETH as a world computer.

The limitations of POW

POW is essentially an unbalanced decentralization; the imbalance refers to the disparity between computing power costs and currency value.

If a currency has a market value of one trillion, and the cost of the mining machines controlling the entire network is only one hundred billion, then capable individuals or organizations can completely choose to make a big move.

The value storage in this form of POW is severely limited by the scale of mining machines; otherwise, the aforementioned risks will occur.

Moreover, the electricity costs differ across regions, and POW will naturally lead to computational power being inclined toward areas with lower electricity costs, resulting in centralization.

BTC is not digital gold.

Contrary to mainstream opinion, I believe BTC is not digital gold. Because gold is POS, refer to the above point.

Therefore, ETH should replace a portion of BTC's storage value.

The inherent deflation of ETH

Many people believe that ETH is inflationary because it issues more to stakers. I do not think so; I believe that ETH is essentially deflationary, and even strongly deflationary.

Because the issuance of ETH is not generated out of thin air, nor is it issued to specific entities. As long as you hold ETH, you can stake it natively or stake it through some protocols to earn staking rewards. Therefore, if you use ETH as a store of value, you can completely stake it to earn staking rewards, and the staking yield is mathematically greater than or equal to the inflation of ETH in the entire network. Thus, ETH is essentially deflationary, and smart contracts will burn a portion of ETH, making ETH strongly deflationary during certain periods.

Additionally, it is worth mentioning that this type of staking currency can yield about 3% annualized returns, but the currency itself is in an inflationary issuance model. This is somewhat similar to staking dollars to obtain U.S. Treasury bonds.

ETH Flywheel

Due to the inherent deflation mentioned above, the market will eventually react, and ETH is a better store of value than BTC. Therefore, there may be an increase in demand for ETH purchases, an increase in staking rates, coupled with the potential development of subsequent dapps, further enhancing the burning of ETH. This could lead to a terrifying upward flywheel.

The development potential of ETH smart contracts

New public chains like SOL and SUI currently form competitive pressure against ETH, and in scenarios with relatively low security demands, such as chain games and decentralized social networks, I believe these new public chains have more advantages.

But I believe that the reason ETH has not become SOL is not that it cannot, but that it does not want to. Decentralization, low operational thresholds, and simplicity and security are ETH's core advantages. I believe that currently, the importance of the security and stability of smart contracts is still greater than efficiency.

From the actual situation, no public chain can currently surpass ETH in terms of decentralization. If dapps only pursue performance rather than security and decentralization, then why not use web2? (Of course, decentralization is relative, and it doesn't mean that chains like SOL, which balance decentralization and performance, have no value.)

Although competition is fierce, I believe that ETH, as a world computer, has a lot of room for development. It does not necessarily have to compete with new public chains in the consumer market; the path of core financial services + L2 underlying support is also completely feasible.

In summary, I believe that one day ETH's market value will reach 50% of BTC's market value, and this will be a long-term state.