Ethereum backers rejoice! The world’s second most popular Cryptocurrency has broken the US$3000 mark for the first time. Ethereum is currently showcasing recurrent profits of 42%, quadrupling in value in 2021 alone. This amazing rally has outshone its bigger cousin Bitcoin, with many investors betting that Ethereum ‘will be of even greater use in a decentralised future financial system’.
On Monday morning, Ethereum rose 3% on the Bitstamp exchange to a record high of $3,144.81. It is up 325% for the year so far, comfortably outpacing a 95% rise in the more popular Bitcoin. This makes Ethereum’s total market capitalisation of US$352 billion (AUD $436.5 billion) more than that of major companies such as PayPal (AU$307 billion) and Nestle (US$337 billion)!
On top of that, Ethereum’s NET capitalisation currently leads industry giants such as The Walt Disney Company, Bank of America, Proctor and Gamble ‘ and Roche’. This upward trend is most likely to continue to grow as the currency proceeds to ‘come of age’ and emerge as an independent asset, much like Bitcoin.
So, what is Ethereum? According to Forbes, ‘Ethereum is usually associated as the second most popular cryptocurrency, after Bitcoin.’ But unlike Bitcoin, and the majority of other virtual currencies, Ethereum is intended to be much more than simply a medium of exchange or a store of value.
Ethereum, or ‘Ether’, is the digital currency used on the Ethereum network. Similar to Bitcoin, Ethereum operates via a public blockchain network; while Bitcoin is used to track ownership of currency, the Ethereum blockchain focuses on running the programming code of any decentralized application. That makes an open software platform that allows users to build a range of decentralised applications.
These applications may comprise voting systems and methods of payment.
Vitalik Buterin is the mastermind behind Ethereum. He launched the first version of the platform in 2015, with the help of several co-founders. Since then it has grown to become the second-largest cryptocurrency and has helped inspire an increase of new competitors to Bitcoin, like XRP or Dogecoin.
What’s driving this latest Ethereum rally? One theory is that as the price of Bitcoin becomes increasingly high, people are turning to Ethereum as a more ‘affordable’ way to get into the Cryptocurrency market.
One thing is for sure, Bitcoin and Ethereum pricing are correlated. When the two assets are connected with each other, it means that their price moves similarly. When the price of Bitcoin goes up, so does the price of Ethereum. The same thing occurs when the price of Bitcoin drops, Ethereum follows.
Lastly, it’s important to note that it takes approximately 15 seconds for an Ethereum block to be completed while Bitcoin takes 10 minutes to complete a block. Therefore, it is unmistakable that Ethereum is growing faster than Bitcoin.