Are you still wondering what the heck is happening with Ethereum?
If you are still new to the crypto world, Ethereum was created in 2013 to use the blockchain — the online ledger system introduced by bitcoin, but in an entirely new way. The idea is to use blockchains (especially Ethereum) to improve more complex financial applications like lending, wills, and insurance and even stablecoins.
In April 2020, Ethereum was stuck in a three-year market downturn. It reached a peak of nearly $1,200 in early 2018, but was then dragged down to below $100 as the rising market wave crashed spectacularly, leaving investors worried about the ability to recover.
But those who have been patient have been rewarded. Over the last 12 months, the tide has indeed turned. Helped by a resurgent Bitcoin, Ethereum has risen well beyond its previous peak to hit a series of all-time highs.
When it comes to current value in dollars, Ethereum’s value increased by more than 62%, reaching its current value of more than $2,876, while Bitcoin’s increased by just over 1% to its current price of over $57,947 (prices current 5/1/2021). This has some analysts predicting an Ethereum rise to $3,000 in the short term and $5,000 or more in the long term.
So why is Ethereum outperforming Bitcoin so spectacularly? How does it make sense that the name-popular crypto has started to slump while the second-game player surges ahead?
Technology. That will always be the watchword in crypto for the leaders of the pack.
Ethereum’s underlying technology allows it to be far more useful in the emerging industry of Decentralized Finance (DeFi). Bitcoin continues to be a store of value, but Ethereum was designed to be a software platform that enables smart contracts for any asset without the need for a third party.
Still looking to put that in simpler terms?
Bitcoin is a reliable Buick like your dad drove. It has all the standard features, and drives like a dream. But if you are taking it on the road, you have to have your little sister in the back seat. Ethereum is a red Mustang convertible. It’s faster and shinier, only seats two, so when you drive it, there’s just room for you and your friend. Your little sister has to stay home. It’s way more gas-efficient than dad’s Buick.
Bitcoin is decentralizing finance, but Ethereum is hot on its heels to decentralize every transaction on the internet. In a drag race, who wins — the Buick or the Mustang?
This kind of potential has lots of people estimating that it is just a matter of time before Ethereum overtakes Bitcoin. The Buick will wind up in the garage, and the Mustang will be out on the road full time.
So long as Ethereum continues to upgrade, more and more users will flock to it, and investors will look across the wider scope of assets to assess which has the best overall potential in the long-term. While the Buick has been a faithful car, more will look to the Mustang for its speed and beauty, and Ethereum will be there to provide both.