As bitcoin clips along at a rapid pace, it stokes Ethereum, the second-largest cryptocurrency, at an even faster pace. Ether, Ethereum’s token, has catapulted from $8.24 Jan. 1 to $203.30 yesterday, a 2,367% gain.
As of Wednesday evening, Ether’s price was $199.08, giving Ethereum an $18.295 billion market capitalization, marking a 5.49% gain in a 24-hour period, according to coinmarketcap.com.
While bitcoin’s rise feeds investors’ appetite for Ether and other altcoins, a host of factors play into Ethereum’s popularity, especially in the business and financial communities.
Ethereum supports smart contracts, contracts that automatically execute according to a computer algorithm when contract terms are met. Several financial institutions have invested in Ethereum technology to be able to use smart contracts.
The Enterprise Ethereum Alliance (EEA) recently formed to link technology providers with companies to use the Ethereum blockchain. The group includes Microsoft, Intel and JPMorgan. The alliance on Tuesday announced an additional 86 companies joined the group, enhancing Ethereum’s credibility. Toyota, which handles some $260 billion of yearly revenue, Samsung, the South Korean giant which manages some $300 billion of yearly revenue, The Depository Trust & Clearing Corporation (DTCC), which handles trillions, the San Francisco Stock Exchange and far too many others to mention, have all joined the alliance.
Bitcoin’s rally, meanwhile, attracts interest in alternative cryptocurrencies like Ethereum. It is also bringing a broader investor community.
More than 83% of Ether buying was purchased using bitcoin a year ago, according to CryptoCompare. This Wednesday, bitcoin only accounted for 32% of the buying. Fiat currencies like the U.S. dollar and the Korean won have contributed a growing portion.
Ethereum also made history this week by becoming the most secure public blockchain, overcoming bitcoin for the first time ever since its inception, as measured by what it’s called a Köppelmann Constant.
Ethereum’s transaction volumes reached 50% of bitcoin’s recently for the first time, suggesting Ethereum is being widely used.
Charles Hayter, CEO of CryptoCompare, said fiat options are fleshing out of the Ethereum ecosystem, showing its broad appeal, according to CNBC.
All observers are not convinced Ethereum’s rally will last, however. Jason Hamilton, a bitcoin trader, worries that Ethereum can be cloned. He said the main interest is in technology. In time, he thinks users will be able to make their own token, leaving Ether to be used for trading.
Hamilton said he doesn’t typically trade Ether, and that he fears the “bubble will burst.” But he is unsure how soon this will happen.
Featured image from Shutterstock.
Last modified: March 4, 2021 4:56 PM