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The Rise And Growth of Ethereum Gets Mainstream Coverage

Last Updated March 4, 2021 4:47 PM
Lester Coleman
Last Updated March 4, 2021 4:47 PM

Ethereum, considered by many to be the most promising altcoin, has grabbed the attention of The New York Times. The “newspaper of record” has run a big feature story  on Ethereum, noting its value has spiraled 1,000% in the last three months and is attracting interest from major financial companies that are using it for private blockchains and smart contracts. The story notes the first public version of Ethereum was recently released.

The story noted there are numerous applications built on Ethereum that allow new ways to place bets, pay bills, and even launch Ponzi schemes.

Some cryptocurrency observers claim Ethereum will face more security issues than bitcoin due to its more complex software. The alt. currency system has faced less testing and suffered fewer attacks than bitcoin. The unusual design could also invite more regulatory scrutiny considering some potentially fraudulent contracts can be written into the system.

Capabilities Draw Interest

However, the system’s capabilities have drawn interest from major corporations. Last year, IBM announced it was testing the alt.currency system as a way to manage real-world objects in the Internet of Things.

Microsoft has been working on various projects that make it easier to use Ethereum on its Azure computing cloud.

Marley Gray, business development and strategy director at Microsoft, said Ethereum is a platform for solving problems in different industries. He called it the most “elegant” solution seen to date.

Private Blockchains Expand

Many companies have created private blockchains using Ethereum. These private blockchains could eventually undermine the value of the Ether, the individual unit in the alt.currency system that people have been buying.

Major banks have shown interest in using blockchains to make transferring and trading money more efficient. Several banks have examined how to use Ethereum. JPMorgan has developed a tool called Masala that enables its internal databases to interact with an Ethereum-blockchain.

Michael Novogratz, who helped lead Fortress Investing Group invest in bitcoin, has been examining Ethereum since leaving Fortress last fall. He said he has made a significant purchase of Ether.

Novogratz said in the last few months that the alt.currency is getting more validation.

Ethereum Value Soars

Ether’s value has increased to as high as $12 from $1 since the beginning of the year, taking the value of all Ether currency to above $1 billion at times. This surpasses the value of any virtual currency besides bitcoin, which claimed more than $6 billion in value last week.

Ethereum leads all altcoins in the size of its following

One difference between Ethereum and bitcoin is that the latter came into being in a more transparent fashion. Where bitcoin was created by Satoshi Nakamoto, whose identity remains a mystery, Ethereum was developed by Vitalik Buterin, a 21-year-old Russian, who created it after dropping out of Waterloo University in Ontario.

Aim Was Smart Contracts

Ethereum’s basic aim was to make it possible to program agreements into the blockchain. This is the smart contract concept. Two people could, for instance, program a sport bet directly into the Ethereum blockchain. Once a mutually-accepted source announced the final score (such as the Associated Press), the winnings would transfer automatically to the winner.

Ether can be used as currency. Ether is also necessary to pay for the network power required to process the bet.

Ethereum has been characterized as a single-shared computer operated by the network of users on which resources are doled out and paid for by Ether.

Buterin’s team raised $18 million through an Ether presale in 2014 to help fund the Ethereum Foundation, which supports the development of the software.

Ethereum’s Following

Ethereum has attracted followers who have supported the software and hope that Ether will rise in value. There were 5,800 nodes, or computers, last week supporting the network. The bitcoin network had about 7,400 nodes.

Joseph Lubin, a co-founder, established ConsenSys, which has hired more than 50 developers to create applications on the alt.currency system. One enables music distribution while another permits a new type of financial auditing.

Lubin said he became interested in Ethereum after determining it delivered on some of bitcoin’s failed promises, particularly when it came to permitting new types of online markets and contracts.

He said Ethereum presented the crystallization of how to deliver on the broad strokes vision that bitcoin presented.

Joseph Bonneau, a Stanford computer science researcher, said Ethereum is the first system that caught his interest since bitcoin.

Ethereum is nonetheless far from a certainty, Bonneau said. He said bitcoin is still most likely the safest bet, with Ethereum number two. He said Ethereum’s longevity will depend on real markets developing around it.

Featured image from Shutterstock.