The blockchain technology has produced an amazing new ecosystem of technologies and currencies. This technology’s core benefit is a method to transact valuable information or currency with complete security and transparency. Bitcoin was the first major currency to emerge out of the blockchain technology. However, in recent months and years the Ethereum price has also started to gain steam. Ethereum has its own unique benefits and has been rising rapidly in price.
The coin was introduced to the market in 2015 with about 13% of its total circulating supply. The coin was based off the ideas of a former Bitcoin researcher named Vitalik Buterin. Miners use an Ethereum Virtual Machine (EVM) that uses intense processing power to mine new Ethereum coins. As the computing needs increase over time to obtain new coins, miners inevitably have to raise the price that they sell the coins in order to make a profit. For that reason, the Ethereum price is almost guaranteed to continue to increase.
According to Coinmarketcap.com, the Ethereum price has risen from around $25 a coin in the Summer of 2015 to around $350 in June of 2017. That dramatic 14x increase in two years beats almost every other commodity or asset. In fact, it even surpasses the growth in the value of Bitcoin itself. Our own research team estimates that the price of Ethereum could reach $1,000 in the near future. More and more people are choosing Ethereum over Bitcoin.
In fact, at a recent conference the positive feelings for Ethereum were extremely high and much better than the feelings toward Bitcoin. Almost 69% of respondents felt extremely positive with another 21% feeling moderately positive towards Ethereum. In contrast, Bitcoin only had 15% extremely positive and 22% moderately positive.
The reasons that people feel a little mixed on Bitcoin are varied but important. Firstly, Bitcoin transactions tend to be more expensive than the Ethereum price. There are many intermediaries for Bitcoin that take a high percentage of each interaction.
Secondly, the concentration of miners in Bitcoin is becoming concerning. While fewer and fewer players dominate Bitcoin, they have the ability to hold back supply and artificially raise the price. That may have happened over the past year, leading to the exponential growth in Bitcoin prices. This is a problem for users of Bitcoin that want to see a more stable rise in the value of the coin.
Lastly, Bitcoin is becoming more a store of value, like “digital gold”. While this is a valuable proposition, it is less value than a true unit of currency exchange. As people use Dollars, Euro and Yen everyday to make transactions, these currencies are much more important to our everyday lives. According to respondents, Ethereum seems to be positioning as more like a currency that can be used for all types of real transactions in contrast to Bitcoin.
Ethereum is generally viewed as a coin that is much more friendly to developers that are seeking to build functions and features on top of the platform. Its API is intuitive and easy to use. As more developers create more products, more people will also switch over to Ethereum.
To project the growth in the Etherum price, many people are using the number of merchants and users as a proxy. As more and more people accept the currency, it becomes more valuable. This is a virtuous cycle of productivity. Today, with the value around $350 per coin, the number of merchants is still tiny compared to the overall universe of online stores. However, this number is rapidly increasing every day in line with the increasing use of Bitcoin and other currencies. If the users increase 10%, one could reasonably expect a minimum of a 10% increase in price. Amazingly, the number of users and owners in the last couple of years has grown by over 1000% so if the trend continues the Ethereum price will also continue to rise rapidly. While no one knows where it will go, the sky is the limit on the Ethereum price.