Cryptocurrency market has been rather volatile over the time. Let’s see whether it is worth investing and which crypto coin seems more profitable.
Ethereum Creation: A History in Brief
Today, we know Ethereum as a cryptocurrency created to compete with Bitcoin, but until its first success, it passed through some really tough times.
After Vitalik Buterin (creator of Ethereum) failed to get an agreement that Bitcoin needed a scripting language, he decided to create a new platform. Now, we call it Ethereum. In cooperation with Mihai Alisie, Anthony Di Iorio, and Charles Hoskinson, Buterin presented the Ethereum platform in 2015.
In 2017, the project split in two, resulting in the appearance of Ethereum Classic (new separate version) and Ethereum (original project). That same year, the Ethereum currency (Ether) rate rose over 13,000%, making it the second biggest world cryptocurrency after Bitcoin. This market boom attracted huge interest among investors and gamblers.
Ecosystem
In terms of similarities, Ethereum is often compared to Bitcoin; however, Ethereum is a near-Turing-complete, smart-contract-oriented platform that allows the creation of DApps (decentralized applications). Its engine (the Ethereum Virtual Machine) runs smart contracts that are predominantly written in Solidity (a Turing-complete programming language oriented toward security).
Everything is about degrees, so let’s outline a comparison showing the differences between Bitcoin and Ethereum features:
- Mining time. Although Bitcoin is the world’s first cryptocurrency, its mining remains dramatically more time-consuming in comparison with Ether. On average, it will take 10 minutes to get one Bitcoin, but only about 15 seconds to mine one Ether.
- Amount of tokens. When a miner solves an NP-class problem and gets an Ether, he/she basically creates a new one. Meanwhile, on the Bitcoin platform, there is a limited amount of coins. Moreover, it halves in 4 years. So, in time, all Bitcoins will be owned by nodes.
- Price. The fee for transaction execution has a fixed price per byte on Bitcoin, while Ethereum uses gas, which is price-dependent. Gas fees (Ethereum’s definition of fees) depend on the amount and type of computational power required for a transaction or DApp execution.
What Does the Price Depend On?
In 2018, the price for Ether was predicted to have an explosive increase; however, market conditions depend upon plenty of factors. It’s worth mentioning the people earn money on cryptocurrency fluctuation. They wait until the coin price declines, purchase it, and then sell whenever the price increases. These speculations also determine the ups and downs in price for any coin.
This description lists the precise factors that determine market conditions:
Supply and demand
The balance between these two factors is extremely important, as a cryptocurrency that has a wide supply but poor demand will experience a significant downfall or a very small price increase. However, in a vice-versa situation, a coin that has a limited supply but is in demand will have a substantial upward movement.
Unlike Bitcoin, which has its highest supply rate capped at 21 million, there is no fixed market upper cap in Ethereum. This leaves users preoccupied with possible Ethereum inflation. Later on, in April 2018, Vitalik Buterin suggested accepting the Ethereum Improvement Proposal (EIP). The idea is to cap the Ether supply at 120 million; however, with hasn’t been agreed upon yet.
Utility
One of the crucial factors that investors consider is a coin’s utility. The higher the utility, the higher the probability for its purchase and sale.
A lot of users find Ethereum quite useful due to the fact that it is a platform that runs DApps to figure out certain problems. An excellent example of these could be TenX, the project that offers its users a wallet and a card for cryptocurrency spending possibilities.
Mining difficulty
The time and effort spent on the mining of one coin can also affect its popularity among investors. While we’re talking about two whales of the cryptocurrency market (Bitcoin and Ether), the first has a much more difficult network architecture. Therefore, to mine one BTC, the miner needs around 10 minutes. However, Ether is less complex when it comes to mining. It takes approximately 15 seconds to mine one Ether, which influences the miner’s choice between BTC and ETH considerably.
Obviously, there are many more factors that influence a coin’s value, even when it comes to Bitcoin price. As the first cryptocurrency ever, its ups and downs often reflect the fluctuations of others.
Scalability
This is a novelty in cryptocurrency assessment, as it means the number of transactions per second (tps) and the ability to withstand system overflow without delays. This is extremely important for any payment system that relies on security, which cryptocurrencies do. For now, Bitcoin can handle 7 tps, while Ethereum is up to 15-20 tps. Other cryptocurrencies can reach higher speeds, but have other cons.
Despite Ethereum’s low tps capacity currently, it is probably the only project that works simultaneously in all areas of scalability. The Plasma and Plasma Cash projects are extremely successful in their implementation, as they introduce sidechain scalability similar to the Lightning network of Bitcoin. The Raiden project is in the process of introducing the possibility of network sharing, and EVM will increase its capacity with bandwidth and parallel programming.
The Casper protocol will introduce Proof-of-Stake consensus, taking into account the advantages of other PoS or dPoS that already exist and increasing the tps amount. The Ethereum team is investigating zk-SNARKs technology and its ability to increase privacy and tps output of the network. If all of this is implemented, this technology will be scalable enough to compete with the biggest cloud providers.
Past Ethereum Coin Trends
Despite the fact that Ethereum is a relatively young blockchain, it has overcome two hacker attacks: one in 2016 and one in 2017. However, those scandals didn’t prevent the Ethereum project from becoming widely popular. Even though there’ve been significant financial losses, the project got its weak spots revealed and became more secure as a result.
Having analyzed Ether pricing from its very first moment, we can state that the first rate increase took place in March-January 2017. During the first quarter of 2017, the Ether price rose up to 500%, and kept fluctuating before reaching a peak of $1,417.38 USD in early 2018.
Let’s have a brief look at how Ethereum’s price is performing in 2017. Judging from the graph provided by Coindesk, we can state that 2017 was rather successful. It started the year at $7 USD for Ether, and saw a confident increase in price until it peaked on the edge of 2018, as you can see in the graphic:
Price Analysis in 2018
Unlike 2017, when the ETH rate experienced its rise (look up chart 1), in 2018, Ethereum’s price started from going up, and ended up having two dramatic downturns so far. However, Ether is considered to be a relatively stable cryptocurrency.
This year seems to be hiding a lot of surprises. Let’s have a look at this Ethereum price chart, which represents Ethereum’s price so far in 2018:
It becomes quite clear that there has been a downward trend in Ether price. In the last nine months, this was associated with volatility. The Ether started the year peaking at $1,404 USD and $1,257 USD in January, dropping to $369 USD in April. There was another rise up to $831 USD in May, but, as we can see from the graph, it dropped again to $173 USD in September.
Any cryptocurrency can be characterized by its fluctuations, and Ethereum is no exception.
Another issue is the phenomenon of ICOs and the wild character of their market. A lot of ICO projects aim to collect funds and immediately convert them into cash. For the last nine months, different government agencies worldwide have been trying to take the behavior of ICOs under control. As a result, a lot of past ICOs have already run out of cash, while the number of ICOs with the ability to appropriately use Ethers as a form of payment has decreased. This has created pressure on Ether price and influenced its downward volatility.
Price Predictions
Speculators and investors are the main audiences for price prediction articles. Unlike investors, speculators are interested in near-future ups and downs. Investors are more likely to analyze perspective into the distant future. This article will be more useful for those who want to invest rather than profit from fluctuations.
Ethereum Coin Predictions 2018
Let’s consider this graphic, posted on ethereum.org:
According to this resource, by the end of 2018, Ethereum’s price will exceed $500 USD with low probability, although a large amount of money is at stake for this outcome.
Some predictions rise up to $2,000 USD by the end of 2018, referring to the fact that Ether cost was $10 USD in January 2017, and later went sky-high at $770 USD. Still, to reach $2,000 USD, Ether should have a $200 million market cap. According to the latest research, the Ethereum market cap is $25.8 billion for now. Considering this, we can hardly imagine Ethereum overcoming the figure of $2,000 USD by the end of 2018.
Based upon the figures above, it becomes obvious that there is a more than 50% probability that Ethereum will exceed $300 USD by the end of 2018. Taking into account the fluctuations, Ethereum stock predictions show that the price could reach this point several times by the end of 2018.
Ethereum Price 2020
If you own Ethereum now or are going to purchase it in the near future, experts think you will have a profit of over 500% by the end of 2020.
Despite the current Ethereum price level and decreasing trend over the last few months, long-term predictions seem rather positive. According to Longforecast, Ethereum will hit $724 USD by the end of 2020. Experts state that the price could range between $474 USD and $672 USD over the next few months.
Another Ethereum coin prediction is even more promising. Coinkir assumes that starting at around $720 USD in 2020, Ether will continue to rise to $1,488 USD by the end of the year. The scale provided by Coinkir shows that they expect Ethereum’s price to start the year 2020 at $720 USD and show a slight increase until April, when it is expected to boom. According to Coinkir, Ethereum’s value prediction alleges that the price will end up at $1,488 USD in December 2020. The data in this resource is based on technical price analysis. This considers past trends and tries to foresee which trends could possibly repeat in the future.
Smartereum has published another prediction, which seems quite radical. It says Ethereum will rocket up to $2,500 USD by the end of 2018, and even higher by the end of 2020, to $31,000 USD.
Imagine those figures appearing in Ethereum’s rate history, as it is a rapidly-expanding cryptocurrency with great potential. This outcome becomes real if we look at these three factors:
- the increasing number of DApps
- the engagement of more companies in DApp use
- the rise in smart-contracts utility
The more a platform is in use, the higher the price of the coin. With the growth of smart-contract users and the number of DApp projects, it is obvious that Ethereum’s future price prediction is fairly positive.
Ethereum Long-term Predictions
It was previously mentioned that Ethereum price depends directly on the demand and supply. Both are constantly growing as there are more and more investors, who want to implement Ethereum blockchain. That’s why Ethereum price predictions for 2025 and even 2030 are rather optimistic.
Ethereum Classic Price Forecast
After the hard fork on Ethereum occurred and resulted in the appearance of two cryptocurrencies (ETH and ETC), each continued its path to success separately.
The current ETC rate stands at $10 USD for now; however, the future ETC value is expected to double.
According to data provided by WalletInvestor, in 2019, Ethereum Classic’s price prediction is that it will reach $20 USD.
Is Ethereum Classic a profitable investment? Yes. The predictable profit per year is 82%. Is there a threat of Ethereum Classic’s price falling? No. According to the analysis, ETC is going to grow and double within years, in spite of its fluctuations. There is no evidence of it skyrocketing in the near future, however.
Will Ethereum Overtake Bitcoin?
We are now talking about two giants of the cryptocurrency market: Bitcoin, worth $6,402 USD, and Ether, at its current price of $210 USD. The difference seems huge, but let’s examine perspectives.
Bitcoin was created as a digital currency that can be mined and exchanged between nodes. Now, it’s about acceptance. Will we be able to pay for milk at the local shop with Bitcoin?
However, Ethereum is oriented toward decentralized applications that solve certain issues. Moreover, TenX, offers a wallet and card to pay with Ether.
Most ICOs bring profits in Ether, which is then converted into fiat money. This opportunity should not escape your attention.
The potential of Ethereum is quite promising, including the fact that it is the only viable contender to Bitcoin.
Find out more information on this topic here.
Is It Worth Investing In?
Ethereum was designed to become the first distributed cloud and the core market for DApps. In case you are planning to create one, it is worth establishing a certain reserve of Ethers now. As a speculation instrument, Ethereum has protection in the form of all the ICOs launched on top of it, as their volatility is higher and has a higher number of arbitrage gains. In the long-term perspective, Ethereum has huge potential for further growth, and must be an element of any investment portfolio with high risk.
Possible Risks
Financial investment has always gone hand in hand with risk. Encounter them now, as you’d better know your enemy’s name and face. Here is a list of possible risks when investing in Ethereum:
- ICOs increase the supply of Ether after public sale, but this will change, as a lot of ICOs used to have lock-ups on their usage.
- A lot of upgrades increase demands on Ether, but there will be numerous tests due to the novelty of the technology. This will fuel volatility each time an update is introduced.
- Casper will lead to PoS, which will reduce Gas fees, which will result in decreased demand for Ether from the ICO and DApp side. This decrease will be sporadic.
- Plasma, Plasma Cash, and Raiden will introduce enterprise-scale hybrid chains that allow businesses to use Ether in their value chains and increase demand for Ether itself.
Conclusion
Ethereum has experienced rather tough fluctuations throughout its history. Despite its recent trend of declining prices, long-term Ethereum market predictions are even more promising than the ones for this year.
Specialists claim Ethereum will break the line of $1,500 USD by the end of 2020. This will bring its owners an incredible profit of over 500%.
Ethereum Classic’s price prediction for 2018 and further is also positive, due to the fact that specialists believe it will double each next year, bringing to its owners a profit of over 80% each year.
Both ETH and ETC are worth considering for investment, though there are a number of risks that investors should count.
If you have any questions this article did not reveal, the Applicature team would be happy to answer them.
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