Digital copper, the backbone of Web3

Bitcoin (BTC) has been hogging the crypto spotlight since its genesis in January 2009 in response to the GFC.

It recently hit an all-time-high of US$109,000, before correcting to current levels of ~$85,000, bringing it to the attention of more people. Some call it 'digital gold' because of its scarcity—hard capped at 21 million—and its value being rooted in trust, security, and adoption.

Sure, Bitcoin is perpetually virtual (assuming the power stays on), portable, and acts as a store of value—but it lacks physical utility, and its digital nature unsettles plenty of investors (and SMSF auditors).

Then again, if more people understood monetary policy and how fractional banking and Eurodollar gnomes endlessly debase fiat currencies by creating new money, they'd be calling the dollar 'rat poison' too.

I like both gold and Bitcoin as anti-debasement assets, but it’s easy to fixate on them in today’s climate, so I wanted to fixate on the second most valuable crypto asset.

Ethereum (ETH). Why? Because unlike Bitcoin’s 'store of value' role, ETH is a totally different ball of wax. It’s the fuel for the Ethereum smart contract network—and what I call 'digital copper.'

In the physical world, copper transmits electricity to power industrial economies. In the digital world, Ethereum transmits value, trust, and programmatic execution—enabling an entire ecosystem of blockchain-based commercial transactions, smart contracts, and Web3—where decentralisation reduces costs, eliminates middlemen, and enforces truth via code.

Think of the Ethereum network as the virtual copper rails powering the matrix, with ETH being the legal tender you use within the matrix as a means of exchange. If that sounds interesting to you, read on…

Digital productivity runs on virtual copper rails

In the real economy, GDP is the pie that results from the baking of a mix of land, labour, capital, and entrepreneurship—all of which require energy to work. That energy, whether sourced from oil, coal, gas, nuclear—or some woke feedstock—flows through a vast copper-powered substrate.

So, what’s the Web3 equivalent? What powers digital GDP and what are the rails made of?

Ethereum. Ethereum isn’t flashy, but to the digital economy it’s as essential as the global copper network.

It’s the quiet, reliable workhorse of the blockchain world—the digital copper carrying the energy of the matrix, i.e., decentralised finance (DeFi), non-fungible tokens (NFTs), and Web3, ultimately enabling a multi-trillion-dollar digital economy where creators are rewarded by the crowd instead of monetised by duplicitous billionaire Web2 overlords with bad hair.

Bitcoin might remain the gold standard for value preservation in the digital world (so you may want some of that as well), but Ethereum’s role as the foundational layer for decentralised applications (dApps) in the matrix gives it unparalleled utility.

Launched in 2015, Ethereum has evolved into a stable, battle-tested substrate and its coin, ETH, commands the number two position inside the cryptocurrency pantheon, at 1/7th of the value of one BTC in dollar terms.

After transitioning to Proof of Stake (PoS) in 2022 (the consensus mechanism that Bitcoin still uses), it slashed its energy consumption by 99.95% while simultaneously locking up over 30 million ETH—almost 25% of its supply.

This means that during high network activity, ETH becomes a deflationary asset, making it even more valuable when demand surges.

Ethereum’s real strength? Smart contract network decentralisation. As of 2024, it has over a million validators securing the network—making it one of the most decentralised blockchain platforms on the planet. The longer it survives without major disruptions, the stronger its network effect becomes (cue the Lindy Effect).

Institutions, developers, and investors increasingly see Ethereum as the foundation for smart contracts and blockchain applications.

What sets digital copper apart from digital gold?

Consensus mechanisms

Bitcoin runs on Proof of Work (PoW), where miners compete to solve cryptographic puzzles to validate transactions. While secure, it’s energy-intensive (anti-woke) and limits scalability.
Ethereum began with PoW but switched to PoS in 2022. Instead of miners, validators stake ETH to secure the network. They risk losing some of their stake as a disincentive for bad behaviour, while earning rewards for maintaining network integrity. This shift reduced energy consumption by over 99.9% while enhancing security and scalability.

Staking and security

Bitcoin relies entirely on mining for security, with no direct incentive for holders to participate beyond price speculation.
Ethereum enables staking, where participants lock up ETH as validators, earning rewards while strengthening the network. With over 500,000 validators, Ethereum’s staking model adds security, reduces energy consumption, and provides a passive income stream. Quite a clever use of incentives.

Speed, scalability and costs

Bitcoin processes ~7 transactions per second (TPS) and prioritises security over speed, making transactions costly during network congestion, but totally secure.
Ethereum natively handles ~11 TPS, with a theoretical limit of 119, but Layer 2 (L2) solutions push its throughput much higher. These L2s aggregate transactions off-chain before settling on Ethereum’s mainnet—slashing congestion and costs.

A younger digital copper comp

Ethereum isn’t the only kid on the block when it comes to smart contract Layer 1 blockchains. The most notable rival? Solana.

Solana, which has only been around for 5 years approaches the 'blockchain trilemma' (security, decentralisation, and scalability) by optimising speed:

Proof-of-History (PoH) + PoS consensus
Faster scaling with less security than ETH
Less decentralised than ETH
High speed, high TPS design
1,120 TPS with theoretical limit of 65,000TPS (way more than a ~5,000TPS credit card)

Oh, and if you want to see the effect of this, compare the total transactions count in the blue box below to BTC and ETH above. At 4m per hour versus 23k to 41k, you get a sense for what the Solana network was optimised for.

Multiply that out and in a day, with Solana, you’re talking about 89 million transactions, or 2.1 billion transactions each 30 days. It’s the Bugatti of smart contract substrates.

While Ethereum has let in a handful of competitors into its space while it continues to develop (like SOL), it is constantly evolving and seeking to optimise the trilemma.

Its Ethereum 2.0 upgrade aims to simplify the protocol, improve data management, and boost efficiency—ensuring it remains at the cutting edge of blockchain technology.

The future of digital copper is probably brighter than physical gold

Ethereum’s L2 ecosystem, featuring solutions like Arbitrum and Optimism is already handling a large portion of network traffic. L2s process transactions off-chain before finalising them on the Ethereum mainnet, delivering massive improvements in scalability and cost efficiency.

In short, Ethereum is digital copper, and while Bitcoin remains the ultimate store of value Ethereum is the economic engine powering the future of the digital economy.

And, ownership of its coin, ETH, provides fractionalised ownership of a truly global digital copper network—operating 24/7 and enabling programmatic agreements and exchanges of value at the speed of light.

So, if you’re focused on the transition to programmatic GDP, Ethereum or one of its few L1 competitors like Solana is the kind of digital copper you’re looking for—whether to use or invest in since its utility is only becoming more valuable as the ecosystem grows.

Me, I like physical and digital gold. But in terms of copper, it’s the digital version that gets me excited.

See you in the market.

Mike

Well, its digital copper for me

Digital copper, the backbone of Web3

Digital productivity runs on virtual copper rails

What sets digital copper apart from digital gold?

A younger digital copper comp

The future of digital copper is probably brighter than physical gold