Cryptocurrencies are growing at an exponential rate, spearheaded by the two largest coins: Bitcoin and Ethereum. While most are familiar with Bitcoin, 2nd placed Ethereum is fast gaining traction as a coin that may possibly overtake Bitcoin’s market capitalization in the near future. The price of Ethereum grew from $7 in the beginning of 2017 to a high of over $400 in June 2017.
Aziz Bin Zainuddin.
As you can see from the chart above, that’s a stunning 5400% increase in a span of 6 months. What is Ethereum and what is fueling its rapid growth?
“Ethereum is in effect, a super world computer that no one can shut down.”
Ethereum is a decentralized platform that allows for the development of a wide-range of applications powered by smart contracts. Smart contracts are programmable codes that are self-executing; they do not need any third-parties to operate. Though Bitcoin functions primarily as digital money, Ethereum aims to expand the uses cases of Blockchain, which is the underlying technology behind Bitcoin. Based on my analysis, there are several reasons to support Ethereum’s rapid rise which include:
Backing of Major Corporations
The inclusion of several major corporations such as Microsoft, Intel and J.P. Morgan in the Ethereum Enterprise Alliance (EEA) – an initiative to standardize Ethereum’s blockchain for business applications – is testament to the exciting potential that Ethereum offers. EEA started with an initial 30 members in February 2017, and 86 new corporations have joined since then. With hundreds more in the process of application, I would foresee Ethereum gaining credibility as not only an attractive cryptocurrency, but a game-changing technology that warrants increased legitimacy.
Rise of Initial Coin Offerings (ICO’s)
The proliferation of blockchain technology has allowed crypto-backed startups to raise huge amounts of money through ICO’s – in a short duration, often raising millions in a matter of days. Most of these projects leverage on Ethereum to build their applications and issue their native currency. You would need to possess Ethereum tokens to invest in these up-and-coming ventures, in exchange for their respective native tokens.
Bitcoin Losing Steam
There is an ongoing civil war within Bitcoin’s community due to differences in solving the issue of scalability. The increasing number of Bitcoin transactions has led to a bottleneck, which entails longer waiting time and higher fees. This pertinent issue has been bitterly dividing the community for years, and would certainly threaten Bitcoin’s first-mover advantage. In comparison, the Ethereum network can support more transactions with much lower fees. Considering Ethereum’s strong development team and advanced features, I would not be surprised that many are jumping ship and transiting towards Ethereum.
Constant Protocol Enhancement
What sets Ethereum apart is its relentless efforts to further improve their infrastructure. According to their roadmap, there are several protocol enhancements in the pipeline that include increasing Ethereum’s transaction capacity, enabling anonymous transactions and switching to a protocol that is environmentally-friendly. With some of the best minds in the crypto space, Ethereum is constantly pushing the boundaries and finding solutions for the betterment of the industry.
As public awareness on cryptocurrencies grows, Ethereum will undoubtedly be one of the most attractive coins to look out for. Its ground-breaking platform allows anyone to develop applications that expands the possible uses of Blockchain technology. With a slew of constant positive news and increasing adoption, you can expect Ethereum to continue in its path of innovative dominance.
Note: As of this writing, prices across all cryptocurrencies have plummeted, with Ethereum currently trading at around $200. I’m confident of a rally coming soon with all the new exciting developments though.