Part of the strangeness of cryptocurrencies is getting used to voluptuous price gains.
Over the last year, bitcoin (BTC) has risen more than 300% and Ethereum (ETH) almost 700%.
This week, ETH broke new all-time highs as it hit $ 4,300, or R67,000 on South African crypto exchanges. A year ago, ETH was trading at R8 500.
Farzam Ehsani, CEO of crypto exchange VALR, explains why this is an extraordinary success story: “Ethereum is currently worth half a trillion dollars. Some businesses alone are 5 times this value, and for an ecosystem that has the potential to disrupt much of the traditional world of finance, many think that Ethereum, like the valuation of the cryptocurrency space in general, is extremely undervalued. ”
Microsoft and Apple are each valued at around $ 2.5 trillion, and Saudi Aramco ranks third with $ 2 trillion. Next up is Google’s parent company Alphabet at $ 1.9 trillion and Amazon at $ 1.7 trillion.
Ethereum (ETH) in USD
In sixth place is Tesla, worth $ 1.18 trillion by market cap, and just slightly ahead of Bitcoin, worth $ 1.15 trillion this week.
Cryptocurrency enthusiasts believe that it is only a matter of time before Bitcoin overtakes Microsoft and Apple in claiming the world’s most valuable asset.
Ethereum, the second largest crypto asset in the world, cannot be left behind.
As of September 2021, Tesla Inc co-founder Elon Musk became the richest man in the world with a net worth of $ 292 billion, removing Amazon’s Jeff Bezos from the number one spot.
Elon Musk is now three times richer than Warren Buffett
The rise of Bitcoin through the value rankings is an amazing story in itself, but perhaps just as fascinating is the story of Ethereum’s rise from zero to $ 507 billion in the last four years.
To put that in perspective, it puts Ethereum ahead of JPMorgan Chase, a banking group with a lineage dating back more than 100 years and the twelfth largest group in the world measured by market capitalization.
It took Ethereum only four years to dislodge JPMorgan Chase from its position as the world’s most valuable banking group.
Ethereum is just four years old
Ethereum was conceived by Vitalty ‘Vitalik’ Buterin in 2013 as a network where developers could deploy their applications.
From that idea came decentralized finance (DeFi) and smart contracts. These are contracts that allow users to lend, borrow, “participate” (earn interest), transfer, and transact using ETH as currency. These smart contracts happen without human intervention.
You can borrow using your cryptocurrencies as collateral, without having to submit realms of documents for credit approval.
And no one wants to know your name, address, or if you legally acquired your crypto.
This is the “uncensored” world of decentralized finance.
Fees and complaints, but commitment
Users of the Ethereum network pay ‘gas fees’ in ETH, and these are painfully high, a point that has earned Ethereum many complaints from users, who nonetheless return again and again to use it.
To remedy the problem of network congestion and high gas rates, Ethereum has embarked on a series of updates known as Ethereum 2.0 that will only go into effect next year.
Richard de Sousa, CEO of AltCoinTrader, the cryptocurrency exchange, explains the recent price movements in ETH: “Although we have recently seen Ethereum hit all-time highs, it is still incredibly undervalued in my opinion. This token incorporates smart contracts, decentralization, and the Ethereum virtual machine. It is going to be the blockchain or infrastructure on which many decentralized applications (dApps) are based.
“Many people complain that Ethereum cannot be used due to the extremely high fees we are seeing, but this is contrary to what is actually happening.
“The fact that the rates are so high points to the fact that people use it so much,” says De Sousa.
“It is the strongest network, it has many competitors, but when Ethereum 2.0 is released hopefully in 2022, we will see this network once again increase dramatically.”
It’s about flow
Says Brett Hope Robertson, investment analyst at crypto investment firm Revix: “It’s all about crypto money flows. With the incredible rise in the price of BTC over the last month, countless investors have made a profit on that trade and are looking to turn it into riskier assets. This normally results in investors moving their earnings from BTC to ETH. Not only this, but ETH first turned deflationary a couple of days ago with net coin issuance turning negative due to the amount in ETH ‘burned out’ [or removed from circulation]. This is a very positive price mechanism.
“As we know, decreasing supply and increasing demand only go one way.”
Many analysts see ETH’s recent rally as a mere way to stop much higher levels for the second largest cryptocurrency, with some calling for $ 10,000 as achievable before the end of the year.
Market analyst Spencer Noon notes that Ethereum dwarfs all blockchains in terms of fees paid, as the network settles $ 30.5 billion of value every day, more than bitcoin and the $ 2.5 billion settled by PayPal daily. While Bitcoin is considered a digital store of value and a pretty thin business case, Ethereum makes huge profits on a daily basis.
Another bullish sign for ETH is the number of active daily addresses, which continues to hit new records, indicating that more people are buying ETH or using it to transact.
The average cost of transacting on the Ethereum network is $ 50, compounded by the network’s inability to process large volumes of transactions (it currently performs 1.3 million transactions a day).
This has opened the door for the emergence of so-called ‘Ethereum killers’ such as Solana, Polkadot, and Cardano, all of which were designed to overcome the cost and congestion issues that Ethereum faces.
There is a race underway for dominance of this space, but so far, Ethereum is at the forefront.
Listen to Ryk van Niekerk’s interview with Protea Capital Management founder Jean-Pierre Verster: