Ethereum is a leading cryptocurrency and blockchain platform that has empowered intelligent contracts and transactions. Blockchains provide a secure, decentralized consensus method with little to no transaction fees. In many ways, Ethereum is providing an economy of its own: a programmable global market that rewards participants in proportion to the amount of computing power they contribute to the network. If you are looking for the newest sensation for cryptocurrency trading, you may visit https://ethereumcode.app/.
Ethereum (ether) has seen significant gains in price against bitcoin over the last month, as it accounts for 34% of its total value (of all cryptocurrencies). So why is there such a large gap between the price of ether and other cryptocurrencies? Experts believe it’s due to the nature of the Ethereum network – one that allows for a global economy of participants who can contribute their computing power in return for ETH, which people can use to pay transaction fees on the network.
It provides value and utility to the Ethereum network and will propel ETH into a position of dominance in market capitalization. The recent price action has also helped alleviate some concerns investors had surrounding cryptocurrency regulation by certain countries, such as China, seeking to ban cryptocurrency activity or have recently halted their operations altogether.
The factors that drive the value of Ethereum are:
1. Supply and demand:
The second largest cryptocurrency in the market, ether (Ethereum token) supplies are controlled by programming code. As a result, the collection of Ethereum tokens is limited, and the demand will only increase over time as new developers and businesses looking to build on the Ethereum platform.
2. Ethereum Utility:
Over the last few months, the price of Ethereum has risen significantly due to the increased use of the platform for innovative contract development. As more and more businesses across various industries leverage blockchain to reduce costs and increase efficiency, it will only increase the demand for ETH and thus cause a rise in its price over time. The recent increase in price is likely due to investor anticipation surrounding these facts, which may lead the digital currency to become a store of value comparable to bitcoin.
3. Future-Proof Technology
Ethereum provides a platform that allows smart contracts to be programmed in a human-readable language, allowing businesses to connect directly to consumers and provide an opportunity for peer-to-peer transactions. As more businesses begin to adopt this technology, demand will increase and thus drive up the value of ETH. In addition, Ethereum has become a platform attracting new developers and innovative projects. These projects are all built on Ethereum’s technological platform, which would lead to a rise in the demand for ether.
4. Government regulations:
While some governments try to restrict and ban certain activities within the blockchain industry, others embrace it. One of the most notable cases is China, which banned ICOs and ETH trading. However, many companies have found loopholes within these regulations to continue their operations in the country.
In time Ethereum will need to adapt to these changes to remain relevant in this space. New technology, like cryptocurrencies, is susceptible to change over time, so it will be important that Ethereum continues to provide a platform where developers can build upon its core technology and build a new economy. In addition, government regulations play an essential role in determining the global market value of Ethereum as they set the tone for future investment.
5. Price fluctuation:
The price of Ethereum will also be driven by the amount of mining its network is undergoing. As Ethereum is becoming more popular, its blockchain size continues to grow, so it takes longer to process transactions on the network. It, in turn, means higher transaction fees, and miners are paid less for their efforts on the network.
Miners will need to continue to create new ether blocks for the platform to remain functional and secure, which will lead them to buy more ETH tokens on exchanges, thus increasing demand in a positive feedback loop that continues driving up the value of ETH over time.
6. Ethereum competition also determine its value:
The competition will also play a key role in determining the future value of Ethereum as we move forward. There are many other blockchain platforms out there, many of which are improving upon the technology that Ethereum uses. If one of these platforms were to offer better functionality and scaling, this might lead to a decrease in value for ether as it would no longer be the go-to platform for blockchain development.
On the other hand, if Ethereum were to gain recognition amongst the masses and become more widely adopted by developers and businesses across industries worldwide, its value could significantly increase. Furthermore, this lack of standardization among blockchain platforms could lead ETH to take over some other platforms in market capitalization and popularity.
7. Ethereum technical issues determine its value:
Any negative news related to the Ethereum network can significantly impact its value and sentiment. For example, Ethereum has recently been under scrutiny for problems with the Parity smart contract. This vulnerability was found within one of the smart contracts, and all those built on top were affected.
It, in turn, potentially allowed any user of the Parity wallet to steal every other user’s funds. While there have been no attacks, a developer may make another error in their code, leading to a significant security breach that may affect hundreds of millions of dollars worth of value. Any such event could lead investors to rethink their strategies and lead to severe declines in its value going forward.
