Cryptocurrencies have recently gained popularity, and there is no indication that this trend is declining. Given the excitement about this digital asset, you might wonder if it's time to invest. But it's always good to understand the underlying asset before pulling the trigger. Cryptocurrency is no exception, very different from the bond or stock investments. In recent weeks, markets have witnessed cryptocurrency price turbulence, with Ethereum, the second-largest crypto-monetary behind bitcoin, losing nearly 50% of its worth.
Ethereum is a decentralised blockchain and software platform for peer-to-peer or 'smart' contracts and decentralised apps. Smart contracts are blockchain programmes that automatically execute the contract whenever the preset circumstances are met. The Ethereum network uses a global server network to monitor data and conduct transactions instead of a centralised server. For those wishing to leverage Ethereum’s growth, their ether token will gain value in the cryptocurrency market as the network takes root. Another crucial feature of Ethereum is decentralised funding, a critical aspect of how the system works. Since the system is essentially decentralized, it is controlled by no one or nothing.
Like many cryptocurrencies, since its launch in 2015, the ether's price has varied dramatically. At the time, its price was about USD 1 and it stayed for several months. The price reached USD 1,358 in January 2018, its highest price ever in that year. Price began to fall, as did the value of several other cryptocurrencies; Ether fell to USD 83 in December 2018. Since then, the price has dropped and flowed but steadily grown over the time. At the beginning of April 2020, the price was about USD 140 and it was over USD 3,349 by May 18, 2021. It's a significant gain in just over a year. The Ether has an annualised 273% from December 2015 to March 2021, notwithstanding the volatility expected from a cryptocurrency market. While Bitcoin, although it has the largest market capitalisation, only climbed to just about 180% yearly.
Ether has a stronger use-case than Bitcoin. Ethereum is the pioneering blockchain technology with the first real cryptocurrency to be applied in the digital asset eco-system. Ether is the more valuable digital asset for those who can appreciate long-haul dynamics. However, Bitcoin's tremendous backing from huge banks and asset managers cannot be overlooked. Combination of both, will provide necessary short-and long-term support for your ideal asset management strategy.
It is interesting to know that a considerable portion of Bitcoin's circulation supply is currently locked in for Ethereum network use. The Block's Data Dashboard indicates 240,000 Bitcoins are already integrated into Ethereum. This integration represents 1.3% of current circulating Bitcoins supplies. Since the beginning of the year, the quantity of Bitcoin tokenized has increased by 100,000 and has grown significantly ever since. The tokenization approach works by locking a bitcoin quantity and producing Ethereum tokens.
Ethereum project generates long term benefits to its user’s. Growing numbers of new decentralised financial institutions or DeFi are adopting the Ethereum smart contracts technology. Ethereum is one of the first networks to support smart contracts to grow the network further. In cryptography, the digital asset values can change significantly within months and even days. Diversifying your investments into an emerging asset like Ethereum and monitoring other trends in this new market empower your long-term asset growth strategy.
