Ethereum remains one of the most widely talked about cryptocurrencies in the cryptosphere, and there’s a good reason why. Although the cryptocurrency has fallen from its all-time high, it has only fallen down to its support of mid-2021.
What Makes Ether Different
Unlike other cryptocurrencies out there that might not have their own use cases, Ethereum is on a completely different level. It has its own use case; it is known as one of the largest blockchains in which Dapps or decentralized applications can be built.
Ethereum was established as a way to leverage blockchain technology as a building place for developers. With the help of Ethereum, developers were finally able to build decentralized apps, even including the widely popular Axie Infinity game.
Since Ethereum was the first to establish this technology, it is generally more secure than other blockchains that are still developing their sophisticated security metrics to protect it from hackers, unwanted sabotages, or other cyber attacks.
Ethereum has managed to avoid multiple cyber attacks with its advanced security metrics, but it wasn’t always like this.
Also read: Step-By-Step Creation of a DApp
What Happened to Ethereum?
When Ethereum was actually hacked back in the day, this resulted in a decision to fork or split the project. This resulted in the creation of both Ethereum and Ethereum Classic. Ethereum Classic contained the original code, while Ethereum was modified in order to allow users to build Dapps on its blockchain.
After this, the blockchain has been evolving to its current state of being able to offer a platform to fully develop centralized apps. The good thing about this is with adaptation, there are more uses for its cryptocurrency.
Aside from this, Ethereum has also gotten a lot of attention due to its market cap being only second to Bitcoin. With Bitcoin considered the largest crypto in the cryptosphere, achieving the second-highest market cap is no small feat.
How Did This Affect the Price of Ethereum?
Due to more and more people using Dapps on the Ethereum blockchain, there is a lot of activity on its crypto. With more people buying, selling, and trading Ethereum, the price of its cryptocurrency gets more volatility.
The more volatile a project is, the more traders can make money from either shorting the crypto when it is going down or entering a long position when it is going up. With the help of a reputable trading platform, investors and traders can enter these positions in order to make money. Here are some of the best websites that provide access to these trading metrics in order to place the right positions on Ethereum:
- Bitcoin Era
Due to the trading happening with Ethereum, this provides volatility for the platform in a unique way. Aside from the platform being more and more popular, developers and NFT artists are launching their projects on the blockchain.
NFTs on the Ethereum Blockchain
Aside from decentralized applications being built on Ethereum, NFTs are also starting to spread on the blockchain as well. With platforms like OpenSea that allow NFTs to be traded, collections like Bored Ape have started to see mainstream success as celebrities like Justin Bieber, Mark Cuban, Stephen Curry, Marchmello, and even The Chain Smokers all holding the BAYC NFT.
Due to their popularity, NFTs, especially on Ethereum, have seen many activities as people try to buy these rare NFTs. With every purchase of NFTs, Ethereum is transferred from one wallet to another, providing more activity for the platform.
The Downsides of Ethereum
Like every investment, Ethereum has its upsides and its downsides. Ethereum’s downsides include the fact that it can be extremely expensive to interact within the blockchain. This poses a huge problem for users or developers when using the blockchain.
Alternatives to Ethereum include Solana and Cardano; the projects are nowhere near close to the blockchain. They do, however, provide advantages compared to using the Ethereum blockchain.
One major advantage is that they are way more affordable compared to Ethereum. Due to their affordability, they provide a way for new developers without big budgets to either create NFT games or Dapps on the platform.
Another rising problem for Ethereum is that it is also extremely slow. Due to the slow transaction speeds, this can be problematic for certain users of the blockchain and can slow down the development process of certain decentralized applications.
On the other hand, other blockchains like Solana offer faster transaction speeds at an extremely low fraction of the price. However, the problem with Solana is that it is not fully decentralized compared to Ethereum.
Also read: What is Trust Wallet A Guide for Beginners
How Ethereum Aims to Fix Its Problems
Ethereum is planning to make up for problems regarding fees and transaction times by working on the Ethereum 2.0. The project reportedly promises faster transaction speeds at relatively more affordable costs.
This will allow more developers to build on the blockchain without having to worry about delays or spending too much on transaction fees. Changes with the Ethereum 2.0 include the company’s transition from proof of work to proof of stake.
Ethereum currently uses the proof of work model, which means it requires physical hardware in order to verify transactions or mint new ETH, its native cryptocurrency. However, with proof of stake, transactions can be validated by owners of a certain amount of ETH.
Validators are an important part of the decentralization process, and with the help of Ethereum 2.0, stakers will be able to verify transactions as opposed to having to build expensive mining rigs or spending too much on electricity. Electricity consumption has been a huge part of the discussion, and with Ethereum 2.0, the blockchain aims to change this.
Before investing in Ethereum or any other cryptocurrency, it is important to ensure that the capital you shell out won’t affect your finances. Consulting a financial advisor is recommended for investors or traders that want to start trading or investing in any crypto whatsoever.