Bitcoin Pioneer Muneeb Ali on Ethereum's Decline: It's Not Dead

As Bitcoin surges to new all-time highs near $100,000 and Solana tops its old all-time high, the second-largest cryptocurrency Ethereum has a long way to go — so much so many in crypto are wondering: Will it be able to regain its former glory?

It still has about 30% to rally to challenge its former all-time high north of $4,600 set back in 2021, but its problems seem larger than just that, according to the founder behind one of Bitcoin's hottest new Layer-2s.

As the founder of Bitcoin Layer-2 platform Stacks, Muneeb Ali has been at the forefront of innovation for over a decade in crypto, navigating the ups and downs of blockchain's evolution — and even invested in Ethereum's initial coin offering. Speaking recently on Coinage for inclusion in our Crypto Project of the Year series, Ali didn’t hold back on what he sees as Ethereum’s declining relevance in a rapidly changing ecosystem.

For years, Ethereum has been heralded as the blockchain that could challenge Bitcoin, with its proponents envisioning a “flippening” where Ethereum surpasses Bitcoin in market cap and adoption. But according to Ali, that narrative has quietly faded. “There was almost consensus that Ethereum is going to flip Bitcoin — not just in market cap, but in every metric they were tracking,” Ali recalled. “Nobody is talking about this right now.”

Ethereum’s Missed Opportunities

Ali attributes Ethereum’s struggles to fundamental missteps in its design and strategic focus. While Bitcoin has cemented itself as the gold standard of digital money — simple, durable, and uncompromising in its security — Ethereum has pursued a different path. In its attempt to cater to a broader range of applications, Ethereum’s complexity may have become its Achilles’ heel.

“If you want to compete with Bitcoin, you should be going in the opposite direction — making ETH more simple and more durable,” Ali said. “They’re absolutely not doing that. So you don’t stand a chance to compete with Bitcoin.”

This issue, coupled with Ethereum’s shifting focus on Layer-2 scaling solutions rather than improving the base Layer-1 protocol, has left Ethereum caught between a rock and a hard place. While Bitcoin continues to dominate as digital money and Solana emerges as a leader in building high-performance application platforms, Ethereum seems adrift. “They’re not simple, they’re not durable, and they’re also not focusing on giving developers what they want, which is low latency and high bandwidth at the L1,” he noted.

That said, considering Ethereum recently pivoted quite strongly into its Layer-2 build out to reduce fees and cut its total inflation rate — there are many in the Eth community who would say these are just growing pains as Layer-2s take time to build out projects of their own to catch up to Solana while continuing to leverage the security of Ethereum.

The Rise of Solana and Ethereum’s New Reality

Ali pointed to Solana as a stark contrast. Unlike Ethereum, which is pulled in multiple directions, Solana has laser-focused on becoming the best platform for decentralized applications. This focus is paying off, he said, with a vibrant developer community and rapid innovation. “When I go to a Solana event, I see people who are building fast, excited about the future, and rowing in the same direction,” Ali observed. “When I go to Ethereum events, I just come out confused.”

Ali predicts that Solana and other emerging platforms like Avalanche and Aptos will increasingly eat into Ethereum’s market share. “Solana is likely going to outperform Ethereum in pretty much any metric, including market cap,” he said. The reasoning is simple: these alternatives have matured into robust ecosystems, reducing the risk for developers and investors alike. “The risk factor was very high in previous cycles, but that is no longer the case.”

To be fair, Solana still only accounts for about 30% of Ethereum's market cap and currently has an inflation rate that far exceeds that of Ethereum's after its latest upgrade.

Is Ethereum “Dead”?

While Ali stops short of declaring Ethereum “dead,” his outlook is far from optimistic. “I don’t think it’s going to just die,” he said. “There’s a lot of staying power in a large network.” But Ethereum’s days as the center of innovation and capital in crypto may be over. “Right now, when people look at app platforms, they have serious alternatives to Ethereum that might have a much bigger upside.”

For Ali, the future of Ethereum hinges on whether it can address its architectural challenges and regain focus. But in a market where Bitcoin is consolidating its role as digital gold and app platforms like Solana are building rapidly, Ethereum’s middle-ground approach risks making it a relic of crypto cycles past.

As Ali put it: “Unless something drastically changes, this trend might continue.”

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