Ethereum, is it the new bitcoin

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Is Ethereum The New Bitcoin?

Why is Ethereum sudden rise?

During the last month, Ether, or the digital asset that fuels the whole Ethereum blockchain, has grown more than 300%, reaching its all time high of about $60 a few days ago.

At present time, Ether has a value of $50.59 with a market capitalization of $4,469,204,016, the second most important cap right after Bitcoin ($16,278,519,837).

But why this sudden rise? Why the younger brother of bitcoin rose so much during the last few days?

As often happens in the financial markets, the answer is not only one, but a combination of many factors that more or less affect the trading.

Let’s see the most crucial facts.

Bitcoin potential fork

In period of political and economic uncertainty, people often decide to invest in non traditional assets.

For example, when Donald Trump was elected president, investors started to buy bitcoins and the stronger demand drove the digital currency price.

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The same thing happens when bitcoin faces a period of crisis, so that altcoins (or how all the other digital currencies besides bitcoin are defined) start to become the new alternative.

In fact, during those days Bitcoin is facing a great issue: the block size debate.

Just for those who don’t know, the block size debate is an open discussion about the possibility to increase the size of the blocks which the bitcoin blockchain is composed by, in order to have faster transactions and maybe lower fees.

In order to solve this issue, the bitcoin community and developers are deciding how to proceed and how to implement a soft or hard fork.

In the latest case, this would lead to a disruptive event that would also open the door for a new digital currency to steal part of the Bitcoin-related interest.

Of course, this issue is causing a growing insecurity among investors that are opting for safer and more stable (right now, at least) digital assets such as Ethereum.

As you can see, in fact, bitcoin price is falling down and the Ethereum one is rising. This cannot be considered only a coincidence.

SEC rejected Bitcoin ETF

Another important news that drove the Ethereum price is the one occurred on March 10th, when the U.S. Securities and Exchange Commission (SEC) rejected a rule change that would have allowed the creation of the first Bitcoin ETF to begin trading on the Bats BZX Exchange.

The initial hope about the approval of Winklevoss’ proposed ETF pushed bitcoin as high as $1,327, hitting its all-time high. But the denial caused a collapse – momentary, at least – of the bitcoin price with a drop of $300, so investors began to favor Ethereum.

We have to say, in fact that the greatest part of Ether trading volume comes always from Bitcoin/Ether trades.

Ethereum Enterprise Alliance

Another main factor that is influencing the Ether rally is that its underlying technology – the Ethereum blockchain – is reaching much interest among big companies.

In fact, a new working group called the Enterprise Ethereum Alliance was recently created in order to connect large enterprises to technology vendors with the main goal of working on new projects with the use of the distributed ledger.

Major companies that are involved in the Enterprise launch include JPMorgan, IBM, Microsoft and Intel among the others.

Of course, this move added more legitimacy to the ether digital asset.

Also, we need to tell that this new Enterprise Ethereum Alliance requires ether to be transferred and stored in order to get full access to the applications that use Ethereum.

In fact, we should remember that any application or contract need an ether transaction to be correctly executed and stored in the Ethereum blockchain.

More Ethereum tokens and ICOs

Clarified briefly how the so-called dapps can work on the Ethereum blockchain and having this in mind, we also need to say that recently there are more and more projects, tokens and ICOs launched on the network.

The Ethereum digital assets, in fact, recently hitted a market capitalization of about $260 million ($262,877,525 USD according to March 24th data) with projects like Golem, DAO and Augur and more coming soon.

For example, Brave Browser is going to launch a new ICO later this year for its project of a new web and mobile browser that reward users that decide to switch on ads.

Also, Storj decided to move its tokens from Counterparty to Ethereum because of its active development, speed in executing transactions and negligible fees.

This means that more projects are exploiting the Ethereum blockchain with the immediate consequence of an increasing of the ether price and amount of transactions executed within the ledger.

Why Ethereum is Beating Bitcoin So Far in 2020, And Why It May Continue

Bitcoin got a Twitter emoji but it is Ethereum that is doing better as the market enters February 2020.

The second-largest blockchain asset by market valuation was up by 51.75 percent on a year-to-date basis as of 0100 UTC, Tuesday. In comparison, leading cryptocurrency bitcoin underperformed by rising a dwarfed 34.81 percent, according to data provided by BitStamp exchange.

Ethereum running ahead of Bitcoin in 2020 | Source: TradingView.com, BitStamp

Pitted against each other, the ETH/BTC pair surged by circa 14 percent against bitcoin – from 0.017 BTC to 0.020 BTC – showing a considerable capital inflow into the former’s market.

What’s Pushing Ethereum Higher?

Gains in the Ethereum market came under the influence of a macro cryptocurrency pullback led by Bitcoin. The beginning of 2020 saw an escalating geopolitical conflict between the US and Iran. That sent risk-averse investors looking for havens which, in turn, benefited bitcoin.

Ethereum, which has the highest correlation efficiency with bitcoin, merely tailed the bitcoin’s price rally at first. Nevertheless, the coin later picked momentum of its own as global media shifted attention on decentralized finance, a p2p lending feature offered atop the Ethereum global ledger by a series of startups.

The Financial Times, for instance, named Ethereum for its ability to grow distributed lending via its smart contracts. That, coupled with bitcoin’s uptrend, helped the second-largest cryptocurrency to register an attractive price rally this 2020.

Market signals are now hinting a bullish continuation. As spotted by Su Zhu, the CEO of asset management firm Three Arrow Capital, traders have placed $1.5 million worth of long positions on Deribit Exchange, some even suggesting a rally towards $520 and $600.

Decent volume today on @DeribitExchange today on $ETH deep out-of-the-money March2020 calls, 520 and 600 strike, around 9k ETH notional total pic.twitter.com/RNyb5I5Ejc

As of this time of writing, Ethereum’s rate is $189.49.

Trends appear similar across the derivatives market. Data aggregator Skew reported that bulls are expecting Ethereum-linked futures contracts to grow to $600 by July 2020. It also noted a spike in the volumes of Ethereum futures and options all across 2020.

“Sunday was an unusually busy session with $2bln trading,” stated Skew, adding that Ethereum could outperform Bitcoin if its market grows at the current pace.

Beating Bitcoin

Bitcoin’s projection for the year 2020 is higher owing to its halving event. In May 2020, the cryptocurrency’s daily supply rate will get slashed from 1,800 BTC to 900 BTC per day. Experts believe the event would make bitcoin scarcer and more expensive.

Meanwhile, Ethereum has DeFi as a major bullish indicator. Experts, nevertheless, are weighing on the possibility of a breakout solely driven by technicals.

$ETH looks like it is gearing up to snap this resistance like a twig

Target in chart

As bitcoin grows to become a more macro asset like its mainstream rival Gold, Ethereum may undertake the role of the next best thing. That said, a drop in bitcoin’s rate could have a maximized impact on Ethereum, as well.

Yashu Gola

Yashu Gola is a Mumbai-based finance journalist. He is profoundly active in the bitcoin space since 2020 – and has contributed to several cryptocurrency media outlets, including NewsBTC, FxDailyReport, Bitcoinist, and CCN.

What is ethereum and how does it differ from Bitcoin?

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E thereum is a rising star in the cryptocurrency world. It has quickly become the second largest digital currency, booming in value and spurring the rise of hundreds of new rivals to Bitcoin.

Launched in 2020, the value of ether (ethereum’s currency) has increased rapidly. It hit highs of $1400 in January before showing intense volatility, slumping to less than $400 and then rising to about $560.

But to put it all in context, last year saw near continual growth in cryptocurrencies like Bitcoin and Litecoin. Ethereum started 2020 trading for about $10 per coin.

What is ethereum?

Ether is the second most valuable form of digital money after Bitcoin in terms of market value. The technology it runs on is called the ethereum blockchain, which was first described by the then 19-year-old bitcoin programmer Vitalik Buterin in 2020.

The ether cryptocurrency has rocketed in popularity – and price – in recent months. The total value of all the ether in circulation as of July 6, 2020 was $47 billion (£35bn) at $462 per coin, against the $113 billion value of all the $6,500 Bitcoins.

Buterin envisaged ethereum as an improvement on bitcoin. Like Bitcoin, it is a decentralised payment network, with its own cryptograpic currency, that allows anonymous payments to be sent across the internet without the need for a bank or other third party.

C oded transactions are stored in a decentralised ledger, the blockchain, and are visible for everyone on the network to see.

How does it differ from bitcoin?

As the second-biggest cryptocurrency after Bitcoin, ethereum has inevitably drawn comparisons to it. Its rapid rise has also led to claims of a bubble. But advocates say ethereum has several advantages over bitcoin that make it more useful.

The first is that ethereum allows for “blocks”, the records of cryptocurrency transactions, that can be created much more quickly than bitcoin. While bitcoin has been more widely adopted by online retailers and even some physical stores, ethereum’s fans believe its efficiency makes it better for transactions, rather than storing value.

B ut the major advantage of ethereum is that the technology allows for third party applications, not just the currency, to run on the network. Bitcoin’s appeal lies in money that is not controlled by any one party and does not have to run through a central server, but ethereum allows not just money, but all sorts of other things to run on the network. If you store files on a cloud storage service like Dropbox, you are trusting Dropbox to take care of it, but on a decentralised storage network you are putting your faith in others who are using it and have an interest in maintaining it.

A number of apps are being built on Ethereum, and the network is also being used by start-ups to raise money with initial coin offerings, which exchange ether or other currencies for special “tokens” that grant access to a service.

What affects its price?

The price of ethereum rose rapidly in 2020, alongside Bitcoin. When first launched, it held steady at around $10 for the first 18 months. Then in March 2020 it started to climb steadily, hitting a peak of $395 in June before plummeting to $155 a month later and then rising again. In December 2020 almost doubled to more than $800.

The rise was in no small part thanks to a spike in the value of bitcoin, which has fuelled interest in online currencies. It has also received high profile backing in recent months from large organisations.

Its dramatic dips in the past have been related to security concerns and general market wobbles, including sell-offs by big investors or a rush of news. In July the price of ethereum dropped more than 20 per cent in a day following a drop in confidence and a rumour, later proved false, that founder Buterin had died.

Who created ethereum?

O ne of the biggest mysteries in the technology world is who created bitcoin. The enigmatic pseudonym Satoshi Nakamoto has plagued cryptocurrency users and journalists who have sought to unmask the inventor. Unlike bitcoin, ethereum’s creator has always been in the open.

A Canadian citizen born in Russia, Buterin published his idea for the digital currency in 2020 when he was 19, and went on to set it up over the next two years. Buterin was mathematically gifted from a young age and won a bronze medal at the International Olympiad in Informatics in 2020.

B uterin started writing for specialist bitcoin websites after hearing about the cryptocurrency from his father when he was 17. He proposed the idea for ethereum in 2020 as a “decentralised mining network and software development platform rolled into one”. After receiving a Thiel Fellowship worth $100,000 in 2020 he dropped out of the University of Waterloo. Buterin and Canadian entrepreneur Joseph Lubin co-founded Ethereum Switzerland GmbH later that year.

How many people use ethereum?

There are more than 20 million cryptocurrency wallets that hold ether, according to Etherscan. Wallets are the equivalent of accounts for ethereum and individuals can have more than one.

What can I spend it on?

Ethereum, like other cryptocurrencies, is known for being largely anonymous and secure against fraud and theft, as its transactions are logged in a decentralised ledger. Users can transact large sums without having to pay fees because middle men, such as banks, are cut out.

E ther can be spent in a handful of online stores and with cryptocurrency Mastercard and Visa “credit cards”. They can also be stored in online wallets in the hope the currency will gain in value and their investment will accumulate into a lucrative sum.

Should I invest in ethereum?

Ethereum’s price soared last year. But throughout its rise many conventional analysts warned that investors could get burned by the volatility of cryptocurrencies. They have been proved right during the first quarter of 2020 with huge losses.

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