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Coinbase has recorded its largest loss in history. Are Bitcoin and Ethereum Going Down?

It hasn’t been the best year for crypto, and it certainly hasn’t been an easy year for Coinbase. At the beginning of 2022, the second largest centralized exchange worldwide had to ban over 30,000 wallets that were somehow connected to Russian accounts. What began as a noble effort to combat money laundering and bypass economic sanctions imposed by the Western World on Russia has led to a slightly different outcome.

To make things even worse, a few days ago, Coinbase was subject to another class action lawsuit following the SEC allegations. Henry Gensler, the head of the SEC, has pushed the company to let any user buy Coinbase securities over the past year and a half. The SEC is notoriously meticulous when it comes to taking down crypto companies, and at the time of writing, things aren’t looking too good for Coinbase.

On the back of this news, it’s almost impossible not to think about whether this is a sign of an existential threat facing the crypto industry. This becomes especially evident if we consider the fact that the third largest crypto asset, Terra, by market capitalization, has dropped to the atomic level in a matter of days. Join me in this editorial to see if the same fate awaits Ethereum and Bitcoin. Let’s dive in.

Is this the end of Bitcoin?

While it is tempting to paint the current situation as dire and hopeless, as always with cryptocurrencies, nothing is certain. Well, not quite, as Bitcoin’s value proposition is something akin to the bible or holy grail. The elegance behind its design is what makes someone like Jack Dorsey believe in Bitcoin (BTC) as the only viable future for crypto.

The founder of Twitter takes on a quasi-spiritual role in leading the crypto group known as the Bitcoin Maximalists. The central premise behind their argument is simple: Bitcoin’s inherent design is the only safe and efficient way to transition from the world of traditional finance to cryptocurrency. To be sure, Bitcoin’s network use cases are somewhat limited compared to traditional DeFi.

For example, a new project Youniverze Finance provides a cross-chain platform to participate in many DeFi activities. This is unthinkable on Bitcoin, purely by its default settings. Despite its limitations, Bitcoin has a bright future ahead of it. With the recent Taproot upgrade, allowing for faster processing of more transactions than ever before, the first cryptocurrency ever created will continue to reign supreme.

Will Ethereum decline under pressure?

Like Coinbase, the past eight months have not been so good for Ethereum (ETH) and its community. It all started when the London junction, also known as EIP1599, arrived last summer. What was supposed to be a game changer for Bitcoin’s direct successor failed to achieve its original goal. The plan is to reduce the amount of ETH in circulation by burning too much.

This was done to reduce the ridiculously high gas fees and make them more predictable. However, after a year has passed, and even though more ETH has been taken out of circulation, the gas fees have remained the same.

In a sense, Ethereum is the opposite of Bitcoin, as its network design and smart contract capabilities allow users to build virtually anything on top of it. This is both a huge benefit and a drawback, as a system is more vulnerable to outside attacks and security breaches because of the inherent complexity involved.

However, Ethereum believers don’t seem too worried about it and hope that another upcoming upgrade, ‘The Merge’, will put Ethereum in the stratosphere. The long-awaited hard fork actually has the potential to be a pivotal moment for Ethereum’s growth.

Ultimately, it will combine the smart contract potential of Ethereum enhanced by EIP1599 with a Proof-of-Stake (PoS) system to exploit its full potential. The worlds of DeFi and GameFi have been massively built on top of the Ethereum blockchain, and ‘Consolidation’ will only reinforce this trend.

Look forward

Unless a planetary killer meteor hits the earth or a third world war breaks out, it is safe to assume that Bitcoin and Ethereum are not going anywhere anytime soon. While both cryptocurrencies have specific weaknesses that need to be addressed and remedied in the future, the value proposition behind these projects is on point.

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