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Ethereum has been around for seven years. But a lot has happened in the short time since its unveiling on July 30, 2015. Ethereum has developed itself as the most active blockchain network, with its native token, Ether, now ranking second in market cap and daily volume. We will examine some reasons for its intrinsic value to mark its seventh birthday. If you are looking for a trusted trading platform that will help you earn more profit by trading, you can directly visit Ethereum Code
Capability for Smart Contracts
Ethereum’s creation was to establish a platform for executing algorithmic smart contracts and software using its currency, Ether.
Real-world use cases are already emerging and sustaining value, as the Ethereum blockchain can implement smart contracts that power decentralized apps (DApps) such as De-Fi and NFTs.
People can use DApps, which are smart contracts, repeatedly. As of June 2021, more than 3,000 DApps are running on Ethereum. And this exceeds the number of DApps launched on any other blockchain platform worldwide.
DeFi is a highly bullish Ethereum catalyst. Because it gives power to many cryptocurrencies in the decentralized finance sector, Ethereum is practically synonymous with DeFi. Ethereum is home to over 200,000 ERC tokens, some of which are among the top 100 most valuable cryptocurrencies. DeFi enables users to trade assets, borrow and lend directly to one another.
A Different Kind of Connectivity
Consider Ethereum to be an infrastructure that has the potential to transform both finance and technology.
DeFi has the potential to recreate the entire financial system. Ethereum-based applications will likely impact markets, governance, public services, and possibly identity management. In the future, we could use the Ethereum platform to revolutionize mortgage transfers, securities trading, and other fields.
Scalability and Speed
According to two key metrics, Ethereum differs from bitcoin. Ethereum block times are currently between 10 and 15 seconds, compared to bitcoin’s 10 minutes; additionally, an ether transaction will appear in about five minutes, whereas bitcoin takes approximately 40 minutes to finish a transaction.
That’s because the priority of bitcoin is security. Because of its coding language and restricted commands, it is more difficult to hack the blockchain, but it takes longer to complete a transaction.
Deflationary Supply
Because Bitcoin has a limited supply of 21 million coins, some people frequently regard it as a measure of value and investment against inflation. Unlike Bitcoin, Ethereum has an unlimited supply of Ether but restricts the number released yearly through mining. And this eliminates the perceived scarcity that may have contributed to bitcoin’s higher valuation. The availability of Ether grows through a disinflationary mechanism whose adjustment occurs as the network matures.
Bitcoin Correlation
The bitcoin price, as well as the price of Ether, plays a significant role in defining the overall cryptocurrency market picture. These two are positively correlated, which means that when bitcoin rises or falls, so does Ether. Because most DeFi projects’ creation occurs on the Ethereum blockchain, Ether’s price surged to its highest level over two years during the market’s explosive DeFi boom in the summer of 2020.
Bitcoin was trying to break a similar two-year record at the time. With the bitcoin price rally at the tail end of 2020, there was a BTC-to-ETH price rotation, with investors viewing Ethereum, particularly the DeFi apps established on it, as a constructive complement to bitcoin, while bitcoin became too “expensive.”
With the correlation between the two most popular cryptos, they are the most traded, and one can easily exchange one for the other. After all, investing in ETH and BTC would be a good idea.
Future of Ether
Since its launch, people have completed almost 320,000 Ether futures contracts (600,000 equivalent ether) trades. Strong institutional adoption and increased trading in comparison to Bitcoin futures have occurred, as market players use the contract to increase exposure to the token and hedge the price risk of Ether.
And this is the type of market activity to watch as participants better understand all the use cases and applications of this revolutionary digital currency.
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Disclaimer: Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. Cryptocurrency trading involves high risk, and is not suitable for all investors. Before deciding to trade cryptocurrencies, tokens or any other digital asset you should carefully consider your investment objectives, level of experience, and risk appetite. TaxGuru does not recommend that any cryptocurrency should be bought, sold, or held by you. Do conduct your own due diligence and consult your financial advisor before making any investment decisions. By the use of the above information, you agree that Author / TaxGuru is not responsible or liable in any manner for the authenticity, accuracy, completeness, errors or any kind of omissions in this piece of information for any action taken thereof
