Five years later, the growth of the Ethereum network echoes Nvidia’s bull run prior to 2016

In July 2016, just four years ago, Nvidia was a $ 26 billion company focused on GPU chips and graphics card production. In comparison, the long-standing industry leader was Intel Corp, with a market capitalization of $ 166 billion.

The nearly 40-year-old chipmaker was a top-tier Fortune 500 company And, at the time, he was probably unfazed by such a small competitor.

Nvidia’s previous maximum market capitalization occurred in October 2007 when its value was close to USD 22 billion. After the 2008 financial crisis, stocks collapsed by more than 80% and took nine years to recover.

Ether (ETH) faced a very similar battle in 2018 after peaking at $ 138 billion market cap, and has yet to pick up those long-awaited glory days.

Intel (INTC) and Nvidia (NVDA) market capitalizations

Market Cap from Intel (INTC) and Nvidia (NVDA). Source: Koyfin

Ethereum and Nvidia share several similarities

In addition to looking alike in market capitalization to the current $ 35 billion of Ether, Nvidia’s shares traded about $ 10 billion in monthly volume in 2016, compared to the current transparent current volume of $ 13 billion Ether, according to data from Messari.

The manufacturer of graphics chips It became world famous after the launch of the Unified Computing Device Architecture, or CUDA, in 2006. CUDA is basically a parallel computing platform and an API model.

In the same way, Ether stood out above Bitcoin (BTC) by creating multiple layers on your blockchain and allowing additional processing capabilities.

Nvidia CUDA architecture

Nvidida CUDA architecture. Source: Quora

Ethereum 2.0 architecture

Ethereum 2.0 architecture. Source: Hackeroom

As shown above, Both the CUDA and Ethereum 2.0 multi-layer architectures proposed fragments of parallel processing.

Nvidia strategically embraced difference and competition

Rather than compete with Intel’s CPU processing power and mastery, in 2016, Nvidia released a supercomputer designed to train deep learning models based on eight of its high-end GPUs using a single Intel Xeon CPU. Yes, a competing item was included in the product developed by Nvidia.

Similar to the strategy used by Nvidia, Instead of emulating the qualities of the leader, Ethereum is taking an approach to capitalize on their differences. Just three months ago, Vitalik Buterin proposed a DEX bridge solution to provide easy movement between the Bitcoin network and Ethereum.

In dissecting the core Ethereum 2.0 solution, one can find an exaggerated current differences with Bitcoin. Ethereum 2.0 is increasing the number of independent layers, further reducing the capacity of each node to validate all the processing power.

The same can be said for the ERC-20 token, Wrapped Bitcoin (WBTC), operated by a decentralized autonomous organization. Meanwhile, solutions running in Ethereum’s decentralized finance ecosystem have been mimicking the success of Compound and MakerDAO, using Bitcoin, supposedly one of its competitors.

Ethereum network goes beyond Bitcoin’s proposal to safeguard value

The Ethereum team doesn’t seem to care about competing with Bitcoin to become the best solution to safeguard value or means of payment.

The upcoming proof of stake / PoS migration is further evidence that Ethereum is using a similar strategy to that used by Nvidia. It is mathematically impossible to determine the valid string without an additional source of confidence, according to a Cornell University study.

Ending the Ethereum mining era could mark the definitive break between Bitcoin and the second-largest cryptocurrency by market cap. Chances are the two very different products will no longer be evaluated with the same valuation metrics after the complete Ethereum 2.0 makeover.

The divergence of the use case narrative carries its risks

Almost all options have an opportunity cost, and this is especially true in the world of technology. The more robust integrated processors could have easily absorbed the graphics GPU markets.

For example, last month, Apple announced that it would design its CPU, hinting that it could also enter the GPU production markets.

In addition to increasing the competition from other native smart contract blockchains like Tron and EOS, Ethereum presents certain obstacles facing the next update of its network. Even if everything goes as planned in terms of PoS scalability, security, and incentives, there is no guarantee that decentralized applications, smart contract developers, and users will continue after these updates are rolled out.

As Ethereum’s proof of work / PoW incentives shrink and eventually die out, That will undoubtedly power smaller projects using compatible mining equipment, such as Ethereum Classic and Haven Protocol.

One battle at a time

Ethereum undoubtedly has the largest active number of developers, as well as a constantly growing DApps ecosystem. Meanwhile, development activity from its competitors, EOS and Tron, has recently plummeted.

Not a long time ago, Ethereum finally surpassed Bitcoin, becoming the most widely used blockchains. Such an impressive feat was fueled by the DeFi sector and ERC-20 stablecoin transactions.

Ether’s recent rise above $ 300 to its highest level in 11 months shows that the strategy appears to be working successfully. Whether it will be able to replicate Nvidia and eventually outperform the long-standing industry leader in a couple of years will remain an open question.

The views and opinions expressed here are solely those of the Author and do not necessarily reflect the views of Every investment and business move involves risk, you must do your own research when making a decision.

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