In a note to investors on Tuesday, Goldman Sachs explained its reasons for claiming that Ethereum will eventually become a better store of value than Bitcoin.

According to a report published by Goldman Sachs, the investment bank believes that Ethereum currently appears to have the highest real use potential.

The Goldman Sachs report added that Ethereum is the most popular development platform for smart contract applications.

The bank went on to explain that Bitcoin may have the strongest brand due to the advantage of being the first, but it does, however, lack some of the real use cases found in Ethereum due in part to the slow transaction speeds of only 7 transactions per second.

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Also, Ethereum is not much faster, as it has a transaction speed of 15-20 transactions per second, but it intends to improve even more with the upcoming upgrades (Ethereum 2.0)

Goldman Sachs: Gold is bigger than cryptocurrencies

The bank stated that none of the cryptocurrencies can be compared to gold especially in the point of storage of value.

The bank argued that cryptocurrencies are highly volatile unlike gold.

The following is stated in the Goldman Sachs report:

Gold competes with cryptocurrencies as much as it does with other risky assets such as stocks and cyclical commodities.

We view gold as a defensive hedge against inflation and cryptocurrencies as a hedge against risk-based inflation.

While when we compare the investment returns between gold and Ethereum, we find that gold fell by 5.4%, while Ethereum achieved more than 200% and this includes a correction of 46%.

Goldman added that competition between different cryptocurrencies prevents them from becoming a safe asset at this point.

Goldman Sachs’ changing positions:

The banking giant’s vision and attitude toward cryptocurrencies and even gold have recently flipped.

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In its June report, the bank contradicts its current findings, as it previously stated the following:

The argument that bitcoin and cryptocurrencies are a digital version of gold confers no value on bitcoin and other cryptocurrencies, because gold itself is not a stable or reliable store of value.

What made the crypto audience surprised by the rapid change of positions of the bank and some of them advised them to stop providing such reports:

Goldman Sachs Investment Strategies Group should sign its pieces of research into cryptocurrency with “Have Fun Staying Poor”. pic.twitter.com/TiedRBxWhI

– Alex Kruger (@krugermacro) June 14, 2021

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It is clear that there are divisions within the bank over the approach to cryptocurrency.

In May, Goldman Sachs led a $15 million investment round for blockchain analytics firm CoinMetrics.

Last April, the bank added bitcoin to its annual returns report, and in March submitted an application for authorization to operate a bitcoin ETF from the SEC, according to crypto custody firm NYDIG.

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