Ethereum Cryptocurrency State
Cryptocurrency prices has been on a roll for the past months. Particularly Ethereum, one of the most-watched cryptocurrencies after Bitcoin, could be in for an explosive growth. Ether price has risen about 560% in the past year, while Bitcoin is only up by around 450% in the same period even with institutional investors coming up with ETFs and investment products.
Ethereum/Ether 101
Ethereum is a decentralized, open-source blockchain featuring smart contract functionality. Ether (ETH) is the cryptocurrency generated by the Ethereum. Ethereum was the second-largest virtual currency on the market, behind only Bitcoin.
Ether is used mainly for two purposes: it is traded as a digital currency exchange like other cryptocurrencies, and it is used inside Ethereum to run applications and even to monetize work.
Trading Ether is a method you can use to make money from Ethereum with a much lower entry bar. Trading Ether is similar to buying and selling shares of stock. Like all cryptocurrencies, Ether can show exceptional volatility. This allows traders to capitalize on small, short-term price movements. If you do decide to take a short-term approach to trading, be aware of the fees and commissions, which can quickly cut into your profits.
Every Ethereum transaction has an associated cost that helps power the network and prevent bad actors from spamming it. These transaction costs are paid in ether (ETH) and known as “gas.
Burn baby burn!
A major change has been approved by Ethereum developers which is to reduce the amount of outstanding Ether, the tokens used on the Ethereum blockchain. Under EIP 1559, users would send a base transaction fee to the network that would destroy or “burn” ether. It will reduce the amount of outstanding ether by destroying some of the tokens every time it’s used to process transactions. By limiting ether, this move could put pressure and spur bigger gains in the price of Ether.
Where do we go from here?
Ether (ETHUSD) already hit $2,000 milestone as more institutional buyers have boosted their positions in recent weeks. Ethereum’s market capitalization currently stands around $217 billion. By comparison, Bitcoin’s market cap is over $966 billion.
A report from Crypto.com shows there were more than 106 million crypto users around the world in January this year. Add up the renewed curiosity and enthusiasm on cryptocurrencies, we could be seeing a sharp rise in the price of Ether. Bitcoin and Ethereum hitting all time high this year, it’s set to climb even higher as endorsement of the cryptocurrency market by major investment banks further validates the digital currency market and could intensify capital inflows.
Moreover, many celebrities have announced they have large shares in various cryptocurrencies. People with powerful voices have pumped these cryptos, such as Bitcoin and Ethereum. Even coins with a relatively small tangible value or purpose like Dogecoin have been caught up in this movement.
Prices of cryptocurrencies such as Ether are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Still, the past year has witnessed more individuals and firms bring cryptocurrencies into their lives and businesses. At present, these digital currencies are accepted by more people. Consequently, I am anticipating the growth in cryptos to continue in general.
