Cryptocurrency

Why Ethereum Needs To Be On Your Know List

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Understanding Ethereum

Ethereum, which is also known as Ether, positions itself as the second-largest cryptocurrency in the world in terms of valuation.

Ethereum

This is mainly because of the important path it took since its inception. Ethereum network was started to act as a technological platform through which other decentralized solutions could ride.

Over the years, Ether has gained greatly in value and is currently valued at over 4000 USD in 2021. Since its creation, Ether has been trailing bitcoin as the number two cryptocurrency in market valuation, a position that it has maintained to date.

In 2021, Ether has appreciated by over 400% outpacing the market leader Bitcoin. This goes to show its potential and the level of investor confidence.

Below is a graphical representation of the price in the last one year.

Courtesy: CoinDesk

Usage

Ethereum, brands itself as a technology or a programming language through which other blockchain solutions can ride on. The open source model allows developers to plug in with ease and ride on its infrastructure.

These are some of the things that have made Ether very popular. Some of the common uses of Ethereum technology are listed below

Non-Fungible Tokens (NFT)

NFT is a recent concept that allows tokenization of art thus enabling its sellability. NFT rides on the blockchain ledger technology ensuring that confirmations and authentication processes are on point.

We have witnessed an explosion in its acceptability in the last few years and people rushing in to cash in their art collections.

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What You Need To Know About Non- Fungible Tokens

NFT concept could be termed as evolutionary as it has created a market for thousands of art creators. Other than traditional art, there is an influx of influential people selling some of their valuable digital items including pictures, tweets, and even letters.

Seemingly, there are no obstacles in the development and support of NFT by the government as it has little effect on society compared to the financial effects of Ether.

Decentralized Financial Institutions (DeFI)

The main driver of cryptocurrency uptake is its capacity to decentralize financial services. This rids the need to use intermediaries when doing peer-to-peer transactions.

The objective of eliminating third parties while conducting these transactions is to facilitate the reduction of transaction costs and achieving higher transactional speeds.

The only setback is that majority of these objectives have not been realized because the supporting infrastructure is yet to be deployed optimally. To achieve this, there are a number of obstacles to overcome.

They include regulations from the policymakers, competition from the previously established financial services providers, and acceptability by the consumers.

Future

Ethereum is one of the blockchain technologies that I believe has a solid and bright future due to its one of a kind value proposition.

ethereum

By positioning itself as a technology rather than a product, it makes itself a must-have component in the development of future blockchain networks.

Developers and startups will be able to ride on it because it is much easier working with a ready-made platform rather than developing it from scratch.

However, Ether as a cryptocurrency will most likely follow the path of its peers. Still positioned as a contender with the traditional fiat currencies, Ether is most likely to be caught up between demand and supply issues as well as regulatory policies. Ether has no known supply cap making it vulnerable to inflationary issues in the long term.

I would love to know, have you heard of Ether before? What do you know about it? Let me know in the comments section below.

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