Ethereum replacing Bitcoin? Tom Lee: It seems like a replay of Wall Street disrupting gold in 1971.

Tom Lee, Chairman of BitMine, stated in an interview that Ethereum could eventually surpass Bitcoin's market share, just as the U.S. stock market overtook gold when the U.S. abandoned the gold standard 54 years ago. “Ethereum could disrupt Bitcoin in the same way Wall Street and the stock market disrupted gold after 1971.”

Nixon Shock Analogy: How the Dollar Disrupted Gold

(Source: CoinMarketCap)

The core argument for Ethereum replacing Bitcoin lies in the historical analogy of the “Nixon Shock” proposed by Tom Lee. On August 15, 1971, U.S. President Richard Nixon announced the decoupling of the dollar from gold, ending the Bretton Woods system and turning the dollar into a “completely synthetic” fiat currency, no longer backed by gold. This decision is known as the “Nixon Shock” and fundamentally changed the global financial landscape.

Lee stated that when this happens, “the direct beneficiaries are gold demand and the gold market.” In the early stages of decoupling, gold prices indeed skyrocketed, soaring from $35 per ounce to $850 in 1980, an increase of more than 24 times. Many believe that gold will become the ultimate hedge asset against inflation.

However, in response, “Wall Street has created products that have allowed the dollar to dominate, with the current market value of stocks at 40 trillion dollars and the market value of gold at 2 trillion dollars.” Lee pointed out that Wall Street attracted capital into dollar-denominated assets through innovative financial products—including stocks, bonds, derivatives, and later ETFs. These products offer liquidity, returns, and growth potential that gold cannot provide.

He stated: “By the end of that period, the dominance of the US dollar in GDP rose from 27% to 57% of central bank reserves, and its dominance in financial transactions rose from 80% to 80%.” This consolidation of dominance was achieved not through coercion, but by creating better financial instruments.

How Tokenization Becomes Ethereum's Nixon Moment

Lee believes that “the dominance of the US dollar will become an opportunity for Ethereum,” as “everything is becoming tokenized.” This is the core logic of the argument for Ethereum replacing Bitcoin. As the US dollar, stocks, real estate, and other traditional assets move onto the blockchain, Ethereum, as the most mature smart contract platform, will become the primary layer for these tokenized assets.

He said, “Therefore, when we transfer US dollars to the blockchain (i.e., stablecoins), we are transferring stocks and real estate.” The stablecoin market has proven this trend. The total market capitalization of dollar stablecoins such as USDT and USDC exceeds $150 billion, with most deployed on Ethereum. These stablecoins are not only used for cryptocurrency trading but are also beginning to enter the real economy fields such as cross-border remittances and trade settlements.

Tokenization of RWA (real-world assets) is crucial. BlackRock CEO Larry Fink has emphasized that tokenization represents the biggest opportunity for the financial industry in the future, with traditional assets such as real estate, bonds, and artwork being converted into on-chain tokens. Ethereum, with its ERC-20 standard, mature DeFi ecosystem, and extensive developer community, has become the preferred platform for RWA tokenization.

This trend is similar to the financial innovations created on Wall Street after 1971. At that time, the stock market attracted capital that might have flowed into gold by offering higher liquidity and more investment options. Today, Ethereum provides functionalities that Bitcoin cannot offer through smart contracts and programmability—from DeFi to NFTs, from stablecoins to tokenized securities.

However, Lee emphasized that this is still a “feasible theory,” and he remains optimistic about Bitcoin. This cautious statement reflects the complexity of the market; the replacement of Bitcoin by Ethereum is not a foregone conclusion but depends on the pace of the tokenization trend and the continuous innovation of the Ethereum ecosystem.

Flip Controversy: Perspectives of Supporters and Opponents

“The Flippening” refers to the idea that Ethereum will one day surpass Bitcoin in market capitalization, a topic that has been debated for years but has gained attention again in recent months. Currently, Bitcoin's market cap is about $2.17 trillion, while Ethereum's is $476.3 billion, meaning Ethereum needs to grow 4.6 times to achieve the flippening, which is extremely challenging under the current market conditions.

In August this year, ConsenSys founder Joseph Lubin stated that Ether will “soar 100 times, replacing Bitcoin as the 'monetary foundation'.” Lubin's argument is based on the technological advantages and ecological diversity of Ethereum. He believes that Ethereum is not only digital gold but also a programmable economic infrastructure, and this functionality will ultimately be reflected in its market value. A 100-fold prediction means that Ethereum's market value will reach about 47 trillion dollars, far exceeding the current global gold market value.

Back in August 2021, DeVere Group CEO Nigel Green stated, “The rise of Ethereum in the cryptocurrency space seems unstoppable.” Green emphasized, “Aside from price and fame, Ethereum has been ahead of Bitcoin in many other aspects for years.” He referred to Ethereum's smart contract capabilities, its active developer community, and its dominance in the DeFi and NFT sectors.

However, the opposition is equally strong. Bitcoin advocate and Jan3 founder Samson Mow stated that once the ETH price is high enough, Ethereum investors will shift back to Bitcoin. Mow's logic is that the narrative of Bitcoin as “digital gold” is more pure and straightforward, and when the price of Ethereum rises, investors will take profits and transfer their funds into the more stable Bitcoin.

This debate reflects two entirely different sets of values. Bitcoin maximalists believe that the core function of money is value storage, and the fixed supply and level of decentralization of Bitcoin make it more suitable for this role. Ethereum supporters argue that the value of blockchain lies in applications, and Ethereum's programmability and ecosystem richness will drive greater market capitalization.

From the data, Ethereum has led Bitcoin in certain indicators. This year, Ethereum's spot trading volume has surpassed Bitcoin for the first time, indicating that market demand for trading ETH is increasing. The number of daily active addresses and transaction counts for Ethereum also far exceed those of Bitcoin, reflecting its ecological activity. However, market capitalization is the final judge; for Ethereum to achieve a turnaround, it needs not only a technological advantage but also favorable macro conditions—such as accelerated tokenization trends, increased institutional adoption, and clearer regulations.

The possibility of Ethereum replacing Bitcoin depends on the development direction of the blockchain industry in the next 5 to 10 years. If tokenization becomes mainstream, Ethereum will hold an advantage; if the narrative of value storage continues to dominate, Bitcoin will maintain its lead.