The price of bitcoin has recently hit a new all-time high of over $5,850 after rallying by over 475 percent since the beginning of the year. This impressive rally also helped to boost the value of other cryptocurrencies and the biggest benefactor of this has been Ethereum.
Since January 1, the price of Ethereum’s ether has rallied from $8 to a current price of over $340. This rally marks a 4150 percent year-to-date return on investment for ether (ETH) holders. In the past seven days alone, ether rallied by over 20 percent to hit a one-month high of $348.
Ethereum is an open-source decentralized blockchain platform that allows users to run smart contracts and decentralized applications (DApps) that function exactly as programmed without the possibility of censorship, downtime, fraud or third-party interference.
Ethereum’s cryptocurrency ether (ETH) currently has a market capitalization of over $30 billion, which makes it the largest blockchain network after the bitcoin. The main reason for Ethereum’s success lies in the fact that it has taken the underlying technology of bitcoin and has expanded upon it to create a new blockchain that allows users to create customized smart contracts that can be applied to a broad spectrum of commercial and non-commercial use cases ranging from securities issuance, insurance policies, and electronic voting, to royalties distribution, electric vehicle charging stations, and electronic medical records.
Ethereum’s Meteoric Rise in 2017
The increase in value of Ethereum has been driven by several factors including the explosion in Ethereum’s use in commercial blockchain trials, the launch of the Ethereum Enterprise Alliance, the boom in initial coin offerings launched on the Ethereum network, bitcoin investors diversifying into altcoins, and increasing investor funds flowing into cryptocurrency as an asset class.
In effectively every major industry, companies are currently running blockchain trials to see how they can implement this innovative new technology to create new solutions that increase efficiency and lower the cost of doing business. The preferred blockchain network for these trials in the past 10 months has been Ethereum.
Financial institutions are testing Ethereum for securities settlement, oil companies are trialing it to digitize the supply chain management process, the UN is using it to proceed aid payments, and the Ukraine is testing it for e-voting, just to name a few recently announced proof-of-concept trials.
It is, therefore, no surprise that the Ethereum Enterprise Alliance (EEA) consortium boasts over 100 members. The aim of the EEA is to develop Ethereum-based enterprise solutions. The EEA’s members include blockchain startups, financial institutions, public sector institutions, as well as corporations across a span of industries. The diversity of the EEA’s members reflect the possibility that the Ethereum provides for disruptive innovation.
Given that anyone who makes use of the Ethereum network also needs to use its digital currency ether, its value has shot up after the launch of the Ethereum Enterprise Alliance as this was a clear sign that major industries are backing this particular blockchain project.
The price of ether was further boosted by bitcoin investors who want to diversify away from bitcoin into other promising digital currencies. Given Ethereum’s potential, ether is a natural choice for investors who want to hold a diversified portfolio of cryptocurrencies.
This is also reflected in the amount of new digital currency-focused hedge funds that are buying ether as part of their core portfolio holdings, which has been another key driver behind the increase in the value of Ethereum. The wave of new “crypto hedge funds” will likely boost cryptocurrency values across the board but with Ethereum’s position as the second most popular cryptocurrency, it will likely benefit greatly from the new money flowing into this new asset class.
On the Way to the $1,000 Milestone
Ethereum’s impressive rally in the past 10 months may be surprising to those new the world of cryptocurrencies but industry experts have long predicted that Ethereum would be one of the most valuable blockchains in the future as it is the first to allow for the creation of decentralized smart contracts solutions.
Given the impact that blockchain technology and smart contracts are likely to have on both the private and the public sector combined with the backing that Ethereum is receiving from major businesses, Ethereum’s ether is well positioned to continue to gain in value over the coming months and years.
As more and more businesses and public sector agencies develop Ethereum-based solutions, the value of its digital currency will likely continue on its path towards the $1,000 milestone mark.
Article written by Alex Lielacher, Founder of SmartMoneySmartLiving.com and cryptocurrency expert.