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Cathie Wood, CEO of ARK Invest, believes Bitcoin’s role in the global financial system ensures it will always remain bigger than Ethereum. In a recent appearance on The Master Investor podcast, she laid out three reasons why the top cryptocurrency by market cap stands apart from every other blockchain project.
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Wood described Bitcoin as unique because it fills three essential functions at once:
“Bitcoin serves three roles… Bitcoin is the global monetary system – rules-based, quantity rules to be sure – and that alone is a very big idea. It is also technology, a layer-1 blockchain that has never been hacked. The other blockchains cannot say that.
And so that’s why the monetary system is based on it. And it is the first of its kind in a new asset class. We wrote our first white paper on that in 2016. So a new asset class – it’s got three very important attributes to it.”
In her view, Bitcoin is not only digital money but also a technological base layer and a pioneering investment category in itself.
Wood also acknowledged Ethereum’s importance within the decentralized finance ecosystem, crediting ETH as the backbone for many applications. However, she noted that the rise of layer-2 scaling solutions is reshaping how value is captured.
“I do think uh that Ethereum is playing a very important role and therefore Ether is the native currency in the DeFi ecosystem. A lot of the fees are going to the layer 2s. Robinhood, for example, announced that it was going to start its own layer 2, like Coinbase has…
They get a disproportionate amount of the fees. Now the question is, are there going to be so many layer twos out there that they’re going to start competing against one another and confer more importance to the layer-1.”
This dynamic, she argued, ultimately reinforces Bitcoin’s dominance, since competition among Ethereum’s scaling networks may push investors back toward the original layer-1 blockchain.
At the time of her comments, Bitcoin was trading at $114,410 while Ethereum’s price stood at $4,202.