A growth rate of more than 60 per cent in just over a week’s time was noted by the cryptocurrency ethereum as it hit an all-time high on Wednesday.
According to CoinDesk, a website that tracks the prices of the digital currency, a record high of $1,417.38 was hit by the crypto currency before it lost some of the gains. There has been a phenomenal 13,000 per cent rise in the price of the virtual coin in the last one year.
CoinDesk data shows that the market capitalization value of ethereum is $131.5 billion and is touted as the second biggest crypto currency in the world in terms of market cap just below the market cap of bitcoin.
The technology that drives Ethereum is more or less the same as that of bitcoin – blockchain, except for a slight difference. The technology for ethereum is focused on the specific use of smart contacts. Ethereum is a virtual currency that is being experimented with by large companies and therefore many see this as a cryptocurrency with a real world use.
Applications making use of the Ethereum blockchain is being attempted to be developed by a consortium that is known as the Enterprise Ethereum Alliance and incudes names like Microsoft and JP Morgan.
With the price of bitcoin reaching astronomical prices, a section of investors are also looking out for alternative cryptocurrencies for making a profit. There has been record gains made by ripple this year before it plunged. Many believe that a part of the money from ripple has been funneled into ethereum. According to CryptoCompare, bitcoin has been used to make purchases of over 43 percent of the purchases of ethereum.
“Ether’s price rally is a testament to the growing popularity of ethereum as a platform for decentralized applications. Over the last year and a half, we’ve seen that the majority of tokens issued during ICOs and traded on exchanges, have been coded to run on the ethereum network,” Thomas Glucksmann, head of APAC business development for cryptocurrency exchange Gatecoin, said.
There has been public talk about ethereum by some of the developers of the cryptocurrency. In 2018, a so called “flippening” can be triggered by the enhanced number of projects built on the Ethereum blockchain, said Steven Nerayoff, one of the co-creators of ethereum. This can lead to Ethereum beating out bitcoin. Flippening is the term used to denote the putting of money by investors into alternative cryptocurrencies.
By the end of the year, there can be an almost doubling of the price of ethereum “easily”, said Nerayoff.
But alarms about the cryptocurrency market have also been sounded by many. There would be a crash in the cryptocurrency market and then a consolidation process, said Charles Hoskinson, another Ethereum co-founder. the cryptocurrency boom will end disastrously said noted Wall Street bear Davis Stockman, Ronald Reagan’s former director of the Office of Management.
“It’s basically a class of really stupid speculators who have convinced themselves that trees grow to the sky,” he said in a TV interview earlier this month.
(Adapted from CNBC.com)