Even those who don’t have an interest in digital currencies are likely to have heard of Bitcoin, however they might not be quite so familiar with one of the latest cryptocurrencies: Ethereum. The relative newcomer to the cyber currency sector has been making waves ever since its early days, when it was first launched back in 2014.
The recent rise in value of Ethereum has also been impressive. Earlier in 2017, Ether, the currency used by the ethereum platform, had risen in value by more than 2,000 percent and there’s numerous predictions that Ethereum is going to be the one to watch over the next few years.
What Is Ethereum?
Ethereum was established by a Switzerland-based non-profit named the Ethereum project. Through the Ethereum wallet, users can create contracts, proof of memberships and virtual shares. It can also be used to create tokens to develop cryptocurrencies, or even create a central bank.
In the developers own words, Ethereum is:
“A decentralized platform that runs smart contracts and applications that run exactly as programmed without any possibility of downtime, censorship, fraud or third party interference.
The developers describe Ether as “a form of payment made by the clients of the platform to the machines executing the requested operations”.
The platform is aimed at “Developers who intend to build apps that will use the Ethereum blockchain. Users who want to access and interact with smart contracts on the Ethereum blockchain”, according to its official website.
The wallet is available via a download and it’s compatible with a range of systems. And like the Bitcoin, Ethereum is powered by blockchain technology.
Giving his take on the potential of Ethereum, Brian D. Evans of BDE Ventures said:
“This means that the possibilities are almost limitless, since decentralized applications can be built and deployed on Ethereum”.
Ether vs. Bitcoin
Perhaps unfairly, the two cryptocurrencies are often compared to one another. However, aside from the fact that the Bitcoin was created to function purely as a currency, there are several key differences between the two.
Below are some of the main variances:
- Ethereum has a faster blocktime of just 10-15 seconds, compared with the 10 minutes taken by Bitcoin, according to cryptocompare.com.
- Ethereum was made possible through crowd funding and prior to its launch became one of the highest funded crowd funding campaigns.
- The coins were made available in different ways. On the first distribution, Bitcoins were mined, while Ethereum, coins were offered via an Initial Coin Offering.
- Ethereum provides a greater flexibility because of its inbuilt Turing complete internal code.
You can read more about the main differences here.
Is Ethereum’s Recent Slump in Value Cause for Concern?
Ethereum had been trading at record prices and there has been a considerable increase in its value during 2017.
However, as reported on CNBC, Ether hit a slump in value, losing nearly 20 percent in late June. Rumors surrounding the founder of Ethereum are thought to have been a factor in the decline, according to CNBC, however, it is felt there were other causes behind the fall too.
In addition, there was a similar slump the week before, when it dropped in value by 15 percent. On that occasion, the fall was attributed to ‘growing pains”, however, the cryptocurrency was quick to recover and soon bounced back.
Volatility is often the way with cryptocurrencies in general, and the recent slumps aren’t deterring entrepreneurs who predict that the cryptocurrency is in for big climbs in the future.
Entrepreneurs Back Ethereum
Despite the rocky period, analysts and entrepreneurs both foresee big things ahead.
By 2018, some senior business figures feel that Ethereum could be out performing Bitcoin. Olaf Carlson-Wee and Fred Wilson of Union Square Ventures are two of the high-profile figures who are taking an interest in the currency.
Speaking in an interview with Bloomberg Television, Carlson-Wee, who is CEO of the Polychain Capital Fund, a cryptocurrency hedge fund, said:
“What we’ve seen in Ethereum is a much richer, organic developer ecosystem develop very, very quickly, which is what has driven Ethereum’s price growth, which has actually been much more aggressive than Bitcoin.”
Meanwhile, during a video interview with Bloomberg, Wilson stated simply:
“The market cap of Ethereum will bypass the market cap of Bitcoin by the end of the year.”
However, it’s not just entrepreneurs who have taken an interest in the potential of Ethereum: corporations are too.
The Enterprise Ethereum Alliance (EEA) now how more than 80 members, including some of the world’s top corporations like Microsoft, JPMorgan Chase, Toyota and ING. And it was set up with the aim of: augmenting Ethereum, and “enabling it to serve as an enterprise-grade technology, with research and development focused on privacy, confidentiality, scalability, and security.
Ethereum: The Years Ahead
There are mixed views about the years ahead for cryptocurrencies.
Billionaire Michael Novogratz has placed considerable investment in digital currencies including Ethereum and Bitcoin, but has recently expressed concerns that the boom in cryptocurrencies had “topped out”.
Nevertheless, Ethereum has risen in value by 3, 000 percent in 2017 and others are more confident about the future of such currencies, especially Ethereum, with some making bold predictions about its potential increase in value.
Others forecast that it will rise to $550 in 2017, and in 2020 some feel Ether could be worth as much as $1,000. However, no one can say with any certainty where the prices are heading in the future.
Although some experts urge caution, cryptocurrencies have a vast potential and they are forecast to grow ‘exponentially’ in the years ahead. They are seeing wider acceptance and cybercurrencies are also making their way into the financial world, with banks like Barclays, Citibank and Goldman Sachs trialling them, and China reportedly developing its own cryptocurrency.
For the most part, the Bitcoin has been leading the race, but judging by its recent performance, experts and entrepreneurs anticipate the Ether could eventually steal Bitcoin’s crown as the number one cryptocurrency.