Stephanie Douse 
According to a new analysis from Morgan Stanley’s Global Wealth Management Investment Office, Ethereum’s supremacy may wane if robust market competition emerges.
Morgan Stanley’s Report Findings
The report is titled “Cryptocurrency 201: What Is Ethereum?” and it gives a full explanation of the ecosystem, as well as its benefits and drawbacks when compared to Bitcoin (BTC).
“Ethereum confronts more competitive threats, scalability concerns, and complexity challenges than Bitcoin, in part because of its larger potential market.” Ether is also more volatile than Bitcoin, according to the analysis.
Morgan Stanley has said that Ethereum’s smart contract dominance could be lost to cheaper and quicker blockchains, a claim made by supporters of Ethereum’s killer market, which includes networks like Cardano (ADA), Solana (SOL), Polkadot (DOT), and Tezos (XTZ):
“Ethereum faces more competition in the smart contract market than Bitcoin faces in the store-of-value market. Ethereum may lose smart contract platform market share to faster or cheaper alternatives.”
Ethereum poses more investment risks
Ethereum, according to the investment bank, is a higher-risk investment than Bitcoin since it confronts more competition in the smart contract industry than “Bitcoin faces in the store-of-value market.”
“To ‘use’ Bitcoin, which is similar to a decentralized savings account, fewer transactions per user are required. The demand for Ethereum is increasingly directly linked to transactions. As a result, scaling limits impact Ethereum demand more than they hurt Bitcoin demand, according to the analysis.
Other worries highlighted regarding the network included the changing regulatory status of Ethereum-based apps like as Decentralized Finance (DeFi) and nonfungible tokens (NFTs), which may be subject to tighter laws in the future, resulting in lower demand for Ethereum transactions.
The paper also emphasized Ethereum’s centralization, noting that the majority of Ether’s supply is held by a “very small number of accounts”:
“It is less decentralized than Bitcoin, with the top 100 addresses holding 39% of Ether, which compares to 14% for Bitcoin.”
On the bullish side of the equation, the Morgan Stanley report claimed that Ethereum has a higher market potential than Bitcoin, that it has deflationary characteristics thanks to its transaction-based burning mechanism, and that its performance will improve significantly once it switches to a proof-of-stake consensus mechanism:
“Ethereum has a much bigger addressable market than Bitcoin and can therefore be worth more than Bitcoin, which is simply the market for store of value products like savings accounts and gold.”