- Tuur Demeester explored why Bitcoin will develop in an Amazon-like fashion, while Ethereum could develop more like eBay.
- According to Demeester, the user experience of Bitcoin will drive a “hyper-growth” in the long run, while Ethereum is not “designed” for the mass market.
The renowned analyst and founder of Adamant Capital, Tuur Demeester, predicts that the shortcomings that have plagued eBay will also be dangerous for Ethereum (ETH). With this in mind, Demeester explained via a Twitter thread that Bitcoin (BTC) is analogous to Amazon, while Ethereum is similar to eBay.
Demeester argues that while Ethereum’s approach allows for rapid early growth at first, Bitcoin will end up being the most valued platform by consumers. To justify this, Demeester looks at the historical development of Amazon and eBay and draws parallels. Both companies were founded in 1995 and for a long time were in a neck-and-neck race.
For example, the market capitalization of Amazon in 2003 was 20 billion USD, while eBay was clearly ahead with 35 billion USD. “And yet today, 17 years later, eBay’s market cap is still $35 billion, whereas Amazon boasts $1.6 trillion,” Demeester noted.
According to the analyst, the reason for this very uneven development of the two companies lies in a “fundamental conceptual difference”:
Ebay was a very open, flexible platform: any user can list anything for sale, choose the terms of the auction, and build their reputation on the platform. As a result, growth was fueled from many directions at once, and the company often dominated the dotcom space.
Amazon was much more restrictive: Bezos only sold books, didn’t allow for third party vendors during its first five years, and each book only had one page on the website. This significantly slowed down early growth, and made it less clear where the platform would go long term.
Accordingly, Demeester sees great similarities between Amazon and Bitcoin. Both the cryptocurrency and Amazon are extremely conservative and restrictive. “The cost for publishing a byte of information on the blockchain has always been many times higher than on ETH, and there are many restrictions as to what code can be published,” says Demeester.
In contrast, Ethereum, like eBay, is much more open and flexible as a platform. “Anyone can pretty much publish anything on the platform“, so that phenomena like ICOs, smart contract applications, and DeFi are encouraged and the platform is growing fast. But in the long run, Demeester says, Bitcoin has the most important “killer” feature, the user experience.
So why is it that I suspect Amazon-like growth for Bitcoin, versus Ebay-like slugglishness for Ethereum? Imo, over the long run, the user experience on the bitcoin platform will prove to be the most reliable, predictable, and enjoyable – which is what drives hyper-growth.
In this sense, Demeester also stressed that the growth of eBay came to a halt because “the platform was not designed for user-friendly experience in a mature market environment“. Similarly, he suspects that Ethereum is not designed for the mass market. According to the analyst, Ethereum is “an unscalable experiment of a marketplace, not a methodical design of a marketplace, and therefore not a platform that can serve a mature market“.
Demeester also noted that Bitcoin will scale in the long term. Due to the conservative approach, it will only take some time before the solutions are accepted. Demeester named the following technologies as possible solutions:
– microtransations (Lightning Network)
– fast settlement & asset issuance (Liquid)
– global access (Satellite)
– sophisticated smart contracts (Simplicity)
– pseudonimity (Wasabi)