In the week ending on 26 May, the price of Ethereum (ETH) gained nearly 25%, rising as high as 3,900 USD. The 4,000 USD price mark, crossed last in March, is clearly in sight after the US Securities and Exchange Commission approved the listing and trading of spot Ethereum exchange-traded funds (ETFs). In the long-term perspective, the situation also looks highly promising for the ETH ecosystem as its prospects are buoyed by the growing adoption in various sectors and the strong developer community. Since becoming the second-largest cryptocurrency behind Bitcoin in 2018, ETH has maintained this position. But what makes it so successful in the highly volatile cryptocurrency market?
A new era of blockchain technology
The idea of Ethereum was born in the mind of Vitalik Buterin, a visionary entrepreneur and cryptocurrency enthusiast. He first became engrossed in blockchain technology in 2011 and two years later proposed his own blockchain platform, Ethereum, as a new type of digital environment that can go beyond financial transactions.
The Ethereum project was crowdfunded in 2014, raising over 18 million USD in Bitcoin, and the network went live on 30 July 2015. While Bitcoin was created as a decentralised digital currency to serve as an alternative to traditional currencies, ETH aimed to extend the capabilities of blockchain technology.
In comparison to Bitcoin, Ethereum offers a more versatile blockchain capable of supporting smart contracts, which are self-executing contracts with the terms directly written into code. The new blockchain allowed for revolutionary possibilities: users could build new cryptocurrencies based on Ethereum by creating an ERC-20 token, which is a technical standard for establishing fungible assets on the Ethereum blockchain. Many altcoins were created based this way, allowing for a wide range of applications. For example, one of the top Ethereum-based altcoins is Chainlink, or LINK—a decentralised Oracle network that allows smart contracts on Ethereum to securely interact with real-world data, APIs, and other external sources.
The new versatile framework facilitated the development of various decentralised solutions. The existing practical applications of Ethereum include:
Ethereum 2.0: a leap into the unknown
On 15 September 2022, Ethereum introduced a new phase in the development and evolution of its blockchain by transitioning to Ethereum 2.0. The upgraded platform boasted the following advantages:
The Ethereum ecosystem can expand almost indefinitely with various new applications mushrooming in different sectors. However, in practice, some significant bottlenecks impede this progress. The main concerns that Ethereum 2.0 might have to address include:
Conclusion
Ethereum’s commitment to innovation is not limited to the PoS switch. The network is also exploring layer-2 scaling solutions and other upgrades to enhance its performance and user experience. This continuous evolution makes Ethereum an attractive platform for developers and investors, ensuring its continued relevance and growth.
Some experts predict ETH will pass its current record peak as a response to the launch of spot ETF products in the US. This much-anticipated event is also expected to trigger price changes in the currency exchange market. With that in mind, those trading in Ethereum CFDs on investment platforms such as Octa may be able to capitalise on the predicted market movements.
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