Is Ethereum Really Digital Oil Why the Metaphor Still Matters and Where It Falls Short

Is Ethereum Really "Digital Oil"? Why the Metaphor Still Matters—and Where It Falls Short

For over a century, oil has been considered a strategic resource powering core industries like transportation and manufacturing. So when Ethereum (ETH) supporters hear the phrase “Ethereum is digital oil,” the comparison can sometimes feel underwhelming—especially when Bitcoin maximalists proudly declare Bitcoin to be “digital gold.”

Ethereum, often described as an “internet computer,” boasts a massive decentralized network and a wide range of utility. While calling it “digital oil” helps newcomers grasp its function, the metaphor is far from complete.

Decrypt reported that former banker Vivek Raman, co-founder of Ethereum-based company Etheralize, has begun “seriously onboarding Wall Street” into the Ethereum ecosystem.

In an interview with Decrypt, Raman said

“Our efforts are focused on evangelizing, educating, and marketing Ethereum.”

“I always refer to Ethereum as digital oil. As the digital asset ecosystem evolves, people won’t just want to own this asset—they’ll realize they need to.”

Much like Bitcoin earns its “digital gold” title thanks to its fixed supply of 21 million coins, Ethereum earns its oil comparison because it is consumed when sending transactions or executing smart contracts. This fuel-like function makes the analogy accessible, especially for those new to crypto.

However, Raman and his team’s work encouraging financial institutions to build products on Ethereum has revealed shortcomings in the "digital oil" metaphor.

Zach Pandl, Head of Research at Grayscale, noted

“It’s hard to land on a perfect metaphor. Even if Ethereum isn't yet used widely as a medium of exchange, it’ll be key to watch whether investors begin recognizing ETH’s scarcity.”

Raman and co-founder Danny Ryan—a former Ethereum Foundation researcher—highlight a crucial difference: oil has elastic supply, meaning production rises with demand. But Ethereum’s annual issuance is capped at 1.5%, and ETH is burned as part of transaction fees, meaning the actual supply can decline over time.

“Ethereum doesn’t have a fixed total supply cap, but it does have a predictable and stable issuance cap. Its supply model is intentionally designed for long-term sustainability,” explained Raman.

Another major distinction is yield. Holding barrels of oil provides no return, but staking ETH can generate around 3% annual yield by helping secure the network and validate transactions.

In the coming years, financial institutions are expected to become increasingly familiar with tokenization, and potential regulatory shifts under President Donald Trump’s administration could accelerate the trend.

While some firms are opting for Ethereum competitors like Solana as tokenization infrastructure, major traditional players such as BlackRock and Franklin Templeton continue to tokenize funds on Ethereum.

As more assets go on-chain, the “digital oil” metaphor may gain renewed relevance. Raman explains that like physical oil connecting industries globally, ETH could act as a neutral, non-sovereign asset that connects tokenized assets across jurisdictions.

“In an ecosystem where real-world assets are tokenized by various counterparties, ETH can be the one global neutral asset linking them all. If you want to maintain neutrality across diverse tokenized ecosystems, holding ETH as a strategic asset becomes increasingly important.”