Second, only to Bitcoin, Ethereum is one of the most well-known cryptocurrencies out there. Having been around for quite a while, Ethereum has steadily built up its ecosystem to create a powerhouse in the crypto space.
This build-up in utility has come with constant changes in market capitalization over the last year. Let’s take a look at how Ethereum is doing now and where it will go in the future.
Ethereum is a platform powered by blockchain technology that attempts to create programmable money for the masses. With blockchain and smart contract technology, Ethereum uses its token ETH as fuel for various financial and authentication applications.
Ethereum first launched in 2015 thanks to the work of crowdfunded developers and experts like Vitalik Buterin, Gavin Wood, Charles Hoskinson, Anthony Di Iorio, and Joseph Lubin. By introducing smart contracts, or programmable admittance and releases of tokens, a wide range of applications became possible in the Ethereum ecosystem.
Of note, applications like decentralized finance (DeFi) applications, non-fungible token (NFT) marketplaces, and stablecoin lenders all became possible thanks to Ethereum’s smart contract functionality.
In addition to this functionality, Ethereum also has its ERC-20 token creation protocol. Using the Ethereum ecosystem, a user or company can create a token that trades on top of the Ethereum blockchain. With this feature, cryptocurrency tokens can be created without the need to code and create an independent blockchain.
Ethereum is considered to be one of the safer bets in the cryptocurrency space right now. Thanks to the active development on Ethereum’s blockchain, including the ongoing change to the Proof of Stake (PoS) model and the development of Layer 2 blockchains, Ethereum doesn’t seem to be going anywhere soon.
Additionally, the change of Ethereum to Proof of Stake means that more ETH will be locked up in validator nodes. Overall, the belief is this change will decrease the amount of Ethereum floating around, reducing active supply and driving the coin's price up by automatic market makers.
Staking nodes also reward participants with fees, much like how ETH miners receive gas fees right now for committing hardware to confirm transactions. With this change, folks would be incentivized to stake their ETH in validator nodes, helping lock up coins.
Even without these changes, Ethereum is still the most popular blockchain for DeFi and NFT applications. As more people enter the DeFi space, the value of Ethereum will go up as people buy into the Ethereum ecosystem.
Ethereum initially traded for less than one euro and remained around that rate until January 2017. By December 2017, Ethereum opened at more than €370 per coin and steadily rose through the beginning of 2018 before dropping off that summer.
Unfortunately, Ethereum proved just as fickle as other cryptos with plummeting rates over the next twelve months with prices falling to less than $100 at some points. It didn’t surpass €200 again until mid-2020. Of course, things looked up at the end of 2020 and heading into 2021 as Ethereum doubled and then tripled in price.
ETH saw some slight dips but hit an all-time high in August 2021 when it surpassed the €2,000 mark and kept going through the rest of the year. Plenty of momentum and work has been building up for Ethereum, especially by the developers building applications on the Ethereum blockchain.
Moving forward, as Ethereum moves into the future, a combination of factors promise to keep ETH’s valuation: the continuous burn of ETH through EIP-1559 and the upcoming change of Ethereum to proof of stake.
The Ethereum Improvement Proposal (EIP) 1559 was implemented. As part of its attempt to fix gas fees on the Ethereum blockchain, a burn mechanism was introduced to reduce the total amount of ETH in the ecosystem. Over time, this burn will create heavy deflationary pressure on ETH, helping keep its price up.
The change to proof of stake will also help keep ETH locked up in nodes rather than sitting liquid in the various market makers in the Ethereum ecosystem.
Ethereum has managed to survive several ups and downs in the cryptocurrency market thanks to its development team and breakthrough tech. Second, only to Bitcoin, Ethereum is a veteran of the crypto space and considered safer than other coins and tokens.
The easiest way to participate in this experiment is to buy and hold onto your own ETH. By buying in and safely storing your ETH, you can join in this new, programmable money.
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