The World of Cryptocurrencies has another rising star. Ethereum is once again second only to bitcoin and is the largest altcoin by quite a large margin. What is fueling Ethereum’s growth and does it have the potential to overtake Bitcoin as the World’s largest Cryptocurrency?
The Ethereum’s growth has been rapid, with its value rising from just $8.00 to $190.00 since January 1st. This mirrors the increased value of other currencies like Ripple but Ethereum’s growth seems to be more steady and less prone instability.
Ether has come to be considered the second most successful cryptocurrency, second only to Bitcoin. A combination of a steady rise and a collection of big corporate backers implies that Ethereum is unlikely to stop growing any time soon. The question is whether it can out pace Bitcoin.
Ethereum has been a launchpad for new investment methods
Ethereum is the currency used by the Ethereum network, a smart contract platform with a current cap of over $17,000,000 at time of writing. Ethereum has been so successful that it is has been used as the as the launchpad token for a number new tokens that make up the new “initial coin offering Trend”.
Initial coin offerings are kind of like a combination between crowdsourcing and investing. Crowdinvesting if you will. The process is a little confusing but essentially investors buy tokens that are backed by a cryptocurrency. Investors buy these tokens and are then able to sell them for more money down the line, assuming the company does well.
This method of funding has many of the same potential pitfalls as crowdsourcing but nevertheless it has helped to fuel purchase of Ethereum and has definitely helped to bring the currency into the mainstream.
Big Corporate players have taken an interest
Unlike many other Cryptocurrencies Ether has the backing of the Enterprise Etherium Alliance (EEA). The EEA consists of an odd collection of startups, fortune 500 companies and academics. This includes some big players like microsoft, UBS, Intel, Santander and JP Morgan.
The value of Ethereum soared when these well established giants came together to form the EAA. The aim of this group is to create a standard version of the Ethereum software called Quorum. The hope is that Qourum will allow businesses around the world to to track data and financial contracts and even facilitate international transfers, avoiding currency exchange fees.
The EEA has been incredibly successful and another 86 members have joined which will only serve to increase its legitimacy. These new members are from all over the world consist of everything from established financial services companies to fresh faced blockchain startups. The sheer variety of new members serves to highlight the potential that many industries believe Ether has.
The involvement of these big players is hardly unique. For example Ripple has recently gained the support of a number of Japanese banks. That said, the involvement of big established players has helped to give potential investors confidence in the stability of the currency and I think it is one of the main factors in Ethereum’s growth over the last few months.
A Decentralized future
A lot has been made about the potential of cryptocurrencies to change the way that we approach investment and money. Many companies, such as ConsenSys, have painted an image of a future where blockchain technology breaks us free from the chains of established authority. Decentralizing power and allowing us to adopt a more fluid approach to investment and currency exchange.
While this idea might seem a little farfetched when the likes of JP Morgan are trying to leverage influence over the currency there is something there. The simple fact that established industries are beginning to take such an interest in cryptocurrencies implies that there is a lot of potential for disruption there.
The power that Ethereum has to change the way approach currency should not be underestimated. if Ethereum’s growth continues we are certain to see a lot of new trends and experiments grow up around the cryptocurrency.
Will Ethereum supplant Bitcoin?
It is too early to tell. Both Bitcoin and Ethereum have been growing quite dramatically over the last month. Both currencies have been buoyed by the Initial Coin Offering explosion and while Ethereum has begun to close the gap at over $17,000,000,000 it is still a long way off from reaching Bitcoin’s market cap of over $41,000,000,000.
That said, Ethereum does still have the potential to catch up to and even overtake bitcoin. A single Ethereum token goes for around $180 dollars at time of writing while a Bitcoin sells for a whopping $2,514. This makes the barrier of entry for Ethereum lower and will likely make it more attractive for first time investors, which could help buoy its market share.
On top of this the backing of numerous large companies should give investors more confidence in Ethereum and if Qourum takes off it will make using the currency on a day to day basis far more convenient.
That said the world of cryptocurrency and a lot could change. A bubble could burst that could see the value of Ethereum or Bitcoin come tumbling down, governments could legislate in favor of or against either currency or new players could come in to support an alternative currency.
No matter whether Ethereum grows enough to tear Bitcoin from its throne or comes crashing down to earth one thing is certain. It’s going to be one hell of a ride.